Guide to Probation Periods

1 March 2009, the Employment Relations Act 2000 contains provisions for both “trial” and “probationary” periods for new employees.  It is important that the employer and employee are clear about what provision applies to them.

This fact sheet covers information about probation periods.

For information about trial periods, see:

www.ers.govt.nz/relationships/trialperiod.html

What does probation involve?

If an employer and an employee wish to have a probation period, they must agree to this in writing at the start of the employment relationship. A probationary employee is a permanent employee who is yet to be confirmed in their position and the probation period provides time for this to occur.

A probation period provides time for the employee to show that they are suitable for the position. Although the employee is on probation, this does not affect their statutory entitlements to annual holidays, sick leave etc. During the probation period, the employer should act fairly and reasonably in all matters.

During a probation period:

• the employee knows they will be under close and critical assessment
• the employer needs to clearly state expectations and the employee needs to show they are suitable for the position by meeting these expectations.
• the employer and the employee have agreed to review the employment at the end of the probation period.

It is good practice for employers to mark the end of the probation period by advising the employee that the probation period has been successfully completed, for example by holding a meeting to discuss progress and/or writing to the employee confirming the successful completion of the probation period.

Apart from this, there is little difference between employees on a probation period and other employees. The protections under the Employment Relations Act, such as the ability to raise a personal grievance, still apply.

Who does probation apply to?

To any new employee who has agreed to a probation period in their written employment agreement.

How is it managed?

A fair and reasonable employer who wishes to use a probation period would take the following steps:

Step 1 – Establishing a probationary period

The probation period should only be long enough for the employee to demonstrate their suitability for the position. Probation periods can be extended if both parties agree. Any discussion about a potential extension should be fair and reasonable.

Step 2 - Hiring

To be legal and to be effective, the probation period must be agreed to by both the employer and employee at the beginning of the employment period and be included in the written employment agreement.

A written employment agreement must be agreed at the beginning of the employment whether there is to be a probation period or not

The employer must inform the employee that they can seek independent advice before signing the employment agreement, and give the employee a reasonable opportunity to seek that advice.

Step 3 – Managing the probation period

In managing the employee, the employer should:

• supervise and review the employee’s progress
• provide the employee with appropriate training, tell them about any concerns, give them reasonable opportunity to improve, and warn them of the likely consequences (including the possibility of dismissal if appropriate) if expectations are not met
• tell the employee about the purpose and content of any meeting to discuss performance. It is good practice to give the employee an opportunity to be represented at the meeting.

Step 4 – Managing concerns during the probation period

If the employer has concerns during this period they should:

• give the employee clear descriptions of his or her inadequate performance so the employee knows what needs to improve, and how to do so
• give adequate consideration to any comments or explanations made by the employee
• if the employer considers the employee is not suitable, a fair and reasonable process must be followed, including giving the employee fair warning that their employment will be ending.

Please also note that in a probation period:

• the employee must still be paid, at no less than the minimum wage
• the employee can be dismissed, following an appropriate process, at any stage for serious misconduct.
• if a probationary employee is dismissed without having been treated fairly, he or she has the same right to take a personal grievance as any other employee.

Are there any special requirements?

Both the employer and the employee need to make efforts to make the probation period successful so that the employment becomes permanent. This is different from a fixed- term contract where there is no expectation of permanent employment.

Probation period clause

The following suggested wording for a probation period clause can be used in an employment agreement:

“A probation period will apply for the first [insert time period] of employment to assess and confirm suitability for the position. The employer will provide guidance, feedback and any necessary support to the employee. Both parties will promptly discuss any difficulties that arise, and the employer will appropriately warn the employee if he or she is contemplating termination. Any termination must comply with the termination clause in this agreement. This probation period does not limit the legal rights and obligations of the employer or the employee, and both parties must deal with each other in good faith.”

Th is fact sheet is a guide only and may not be accurate for all situations. It should not be used as a substitute for legislation, or legal or other expert advice.