How to create an employment contract with a probationary period

Employers often hire new employees on probationary periods in order to assess if they are the right fit for the role. Probation periods are also useful for new hires because it gives them an easy route out of the company if ever the opportunity does not turn out to be what it was advertised as during the interview process. In order to hire a new employee on probation, an employer will need to use a probationary period clause in the employment contract. This article explains how to create an employment contract with a probationary period.

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What is a probationary period?

A probationary period (also known as probation period) is a trial period at the start of employment during which both the employer and the new employee can terminate the employment at a reduced notice period. The reduced notice period will vary based on the role and usually varies between a couple of days to a month.

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How long is a probationary period?

There is no set rule to how long a probationary period should be but it usually lasts between 1 month and 90 days. The length of the probationary period needs to be long enough for the employer to see the employee in a number of situations and for the employee to produce meaningful results.

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Can a probationary period be extended?

A probationary period can be extended by the employer but this needs to be agreed in writing either in the employment agreement or in a separate letter.

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Are probationary periods compulsory?

Whilst probationary periods are common, they are not compulsory. Employers might not use a probationary period if they have already worked with the employee in the past or if the employee has taken risks to join the company.

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How to create an employment contract with a 90 day probation period?

An employment contract with a probationary period needs to include the following details in the "Term of Employment" clause:

• The duration and end date of the trial period (90 days in this case)
• The reduced notice period during the probationary period
• If the employer can extend the probationary period and by how much
• Details on how the employer will inform the employee that they have successfully completed the probationary period

For example, in the definitions section of the contract:

Probationary Period: the period of time from [Start Date] to [End Date] during which the Employee’s performance and suitability for Employment will be monitored by the Employer.

In the Term of Employment clause:

The Probationary Period shall be:

2.2.1 For the duration of 90 days and the Employment may be terminated during this period at any time on 2 weeks' notice;

2.2.2 The Employer may, at its discretion, extend the Probationary Period for up to a further 30 days. During the Probationary Period the Employee's performance and suitability for continued Employment will be monitored.

2.2.3 At the end of the Probationary Period the Employee will be informed in writing if the Employee has successfully completed the Probationary Period.

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You can can add a probationary period to your employment contracts very simply with Legislate. Simply select the option and enter the details of the introductory period.

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How to ensure a probationary period is successful?

Probationary periods should set new employees up for success. This means that the employer should prepare a plan for the new role which will allow them to objectively assess the performance and suitability of the employee. On the first day of employment, the employer should provide an onboarding session to the new hire which will explain how they should perform their duties and what is expected of them. Employee development is key for the employer as well as the employe's satisfaction in the new job.

The onboarding session should also be used as an opportunity to share a bit of background about the company culture, the vision as well as practical information such as employment rules which can often be found in an employee handbook.

During the probationary period, the employer, human resources team or line manager should check in regularly with the new employee to ensure that the employee has everything they need to succeed in their new job. Communication is key for the performance reviews to properly assess how the employee is growing within the role.

What happens at the end of a probationary period?

At the end of probationary period, the employer will inform the employee in writing if they have successfully completed the trial period or not. If the employee is successful, they will be confirmed as a full-time employee. If the employee is not successful, a performance review will highlight where there might have been gaps and why the employment will be terminated.

This article has explained what a probationary period is, how to create an employment contract with a probationary period and how to ensure the trial period is a success. Whether you're a small business or a large organisation, it is important to make sure that the terms of the probationary period are clearly communicated to the new hire at the start and during the first days of employment to set them up for success. 

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About Legislate

When hiring, it's important to have legally sound employment contracts in place to protect your company and employees. With Legislate, you can easily tailor lawyer approved agreements to suit your needs, and easily extract relevant data from these agreements. Plus, our platform allows for electronic signing, making the contract process more efficient for both you and your employees. Book a demo or sign up today.

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.