When used correctly, probation periods are an essential part of a small business's hiring process. They act as an extended job interview, giving you a valuable period of time to make absolutely sure that a new recruit is the best person for your company. In this article, we'll take you through a complete Probation Period Guide – showing you exactly how to use probation periods at your small business.

What is a probation period?

A probation period (or probationary period) is the stretch of time immediately following a member of staff's first day in their new role. Probationary periods will last for different lengths of time depending on the company, but in general, they usually last for 1-6 months.

It's helpful to think of probationary periods as a kind of trial period or extended job interview after you've made the job offer – a chance to evaluate someone's performance at work before you make them a permanent member of staff.

During that time, it's standard for the notice period for ending that member of staff's employment contract to be much shorter than normal.

Likewise, the notice period for them to hand in their resignation is usually shorter too. Similarly, some companies choose to delay the introduction of certain benefits (such as sick pay or enrolment into a company-specific pension scheme) until the after the end of probation review.

However, they are still entitled to many of the same statutory employment rights enjoyed by other employees – things like holiday pay or the minimum wage cannot be held back as part of a probationary period.

If you're running a small business, then a well thought-through probationary period is a key part of your hiring toolbox.

They can be a really useful way of making sure that new recruits are the right fit for your organisation. No matter how thorough the interview process or how well researched the job description, no hiring process is perfect – probation periods are your insurance policy, helping you to make sure the new starter is exactly the right person.

How long should a probation period be?

There is no law defining just how long or short a probation period can be. However, there is an expectation that the employer is reasonable. They aren't supposed to be in place permanently just to make hiring and firing easier for a company – there must be a reasonable endpoint and if an employee's probation is going to be extended, it needs to be for a good reason.

Here at Charlie, we've settled on a three month probation period. For us, a one month probation period is too short – you don't have enough time to make a really good assessment of the new member of staff.

However, any more than three months and it starts to become a little unfair on the new employee. They won't feel secure in their role or particularly trusted by their new employer – it's likely to feel more like a probation period will feel more like an extended performance review rather than a fair crack of the whip.

In that scenario, it's unlikely that you'll get an accurate impression of their capabilities.

How many weeks notice do you need to give someone in their probation period?

UK employment law stipulates that if you want to end a new starter's contract of employment during their notice period, you must give them at least one week's notice.

Once they've passed their probation period, the amount of notice will increase in line with what you've set out in their contractual terms.

If it's the employee that wants to leave during their probationary period, they must also give at least the statutory one week's notice before they do so. However, the employer is able to define a longer notice period in the employment contract if they wish.

Probation Period Guide: How to use probation periods

1. Clarity – and clear expectations

First things first – any probationary period you want to use needs to be set out in the new starter's employment contract. It's really important that all your new recruits understand the details of their probation period before they sign up to it.

If you want to let a new starter go from your business but there's no probation period set out in their employment contract, you don't really have a leg to stand on.

If you try and let them go anyway, you could end up being taken to an employment tribunal for unfair dismissal – so make sure you're covered.

What's more, the new starter needs to know what is expected from them in order to pass their probationary period. We're moving away from legal requirements here, but this is still best practice – how can you expect someone to succeed in their new job if they don't even know what success looks like?

Work with the new recruit's line manager to set out in writing what they need to achieve during their probation period. What do they need to deliver? What would poor performance look like in their role?

When it comes to the end of the probationary period and you meet up for the employee's review meeting, having these things set out in writing is going to make your life much, much easier.

2. Frequent and constructive feedback

There's no use writing out and defining what the new member of staff needs to achieve unless you keep the new starter up to date on how they are performing.

By scheduling in regular review meetings – maybe with yourself, maybe with their line manager – you can encourage a process of continuous feedback that will give them the best chance of succeeding in their new role.

However – remember that it's important to keep these meetings positive and constructive. Spend too much time criticising a new employee's performance and those meetings will quickly become daunting and demoralising. Instead, frame these review meetings as positives opportunities for self-improvement to ensure that their probation period is nothing more than a formality.

Making a decision on the probation period

Once the probation period has finished, it's up to the employer to make a decision.

You have three options available to you:

• 'Pass' the new employee through their probation and make them a permanent hire
• Extend their probation period
• 'Fail' the new employee and terminate their contract of employment

'Pass' the probation period

If you and your team are happy with the new starter and want to keep them on as a permanent member of staff, then all you need to do is inform the employee that they've passed their probationary period.

After that, the full contractual terms of their contract will take effect (full-length notice periods, pension schemes etc).

Extend the probation period

If you are still unsure about the new starter, then there is no harm in extending a probation period by another couple of weeks or a month. This is an important decision and not one you want to make without feeling confident that you've got it right.

The important thing here is to be clear with the new starter about your reasons for extending the probation period. Having your probation period extended can be a really unsettling experience – it's natural for them to feel uncomfortable and frustrated. If you're going to make this extension a success, you have to provide clear feedback about why you didn't feel able to pass them so they are fully equipped to change your mind in the coming weeks.

'Fail' the probation period

The final option available to you is to fail the new starter. This results in the termination of their employment contract – they'll leave the business as soon as their notice period is up.

If you decide to fail the new employee, then it's a good idea to let them know in a formal probation review.

It's important to bear in mind here that your reasons for failing somebody on a probation period need to be good ones. That is, reasons related to the employee's performance that meant they weren't the right person for the role.

In the UK, the Equality Act of 2010 is in effect even during a probationary period – if any of your reasons for failing the employee are found to be discriminatory, then your decision to dismiss them could be ruled as wrongful dismissal by an employment tribunal.

Need help running effective probation periods at your small business? Our HR Advice service can help.

Our professional Advisors are CIPD-qualified and specialise in helping small businesses overcome their HR challenges. To find out if HR Advice is the right fit your company, just schedule a call.