Hiring & Recruiting, HR Management

Pros and Cons of Employee Probationary Periods

Does your organization utilize probationary periods for new hires? During a probationary period, it is typically expected that the new hire’s performance will be evaluated, and the individual can be let go for any reason, including if his or her performance does not meet the established performance standards.

Probationary periods may also be utilized at times other than at the time of hire. For example, some employers have opted instead to utilize probationary periods for the employee to improve performance or risk losing the job.

Probationary Period Pros

Here are some of the potential benefits of utilizing probationary periods:

  • Having a probationary period can set a behavioral expectation for employees, which can get them started on the right foot.
  • Probationary periods can be a way around otherwise restrictive policies. For example, if the organization has a collective bargaining agreement that requires no employee be terminated without cause, a probationary period may be an exception to this rule, giving employers some leeway that otherwise might not exist.
  • When utilizing a probationary period for an existing employee (rather than a new hire), this can impress the seriousness of the situation. It lets the employee know that his or her job is at risk if performance does not improve. It can be used as a tool of communication to motivate the employee to improve performance.
  • Probationary periods may be utilized as a cost-saving measure. Some employers opt to pay new employees less during their probationary period and/or withhold or delay benefits and therefore use this as a cost-saving measure.

Probationary Period Cons

Here are some of the drawbacks of utilizing probationary periods:

  • There’s nothing fundamentally different the day before a probationary period expires and the day after. Opponents would argue there’s no logical reason to draw an arbitrary line. Most areas in the United States have an at-will employment policy such that an employee can be fired with or without cause at any time—rendering such a probationary period moot.
  • In the absence of a collective bargaining agreement, employment contract, or other employer policy to the contrary, in most states, employers have the right to terminate employment at any time with or without cause. (This is generally true, as long as the termination is not discriminatory, retaliatory, or otherwise prohibited). As such, one could argue that probationary periods serve little point in most cases.
  • The implementation of a probationary period may create a situation in which an employer has created an implied guarantee that employees won’t be fired after the probationary period without cause. This could create a liability that didn’t otherwise exist, especially if the details of the probationary program are not carefully worded.
  • Terminating an employee during the probationary period does not confer any additional legal protections.
  • Requiring a probationary period may be a turn off for some potential employees, as it can signal a lack of trust or a red flag for the working environment. In an economy with low unemployment, it could cause a potential new hire to take another offer instead. New hires may also be concerned that the probationary period could be extended—leading to less job security and possibly less income.

If you opt to utilize probationary periods for new hires in the absence of collective bargaining agreements or other employment contracts, be very careful. Be sure to emphasize that the employment remains “at will” even after the probationary period ends. Consider having legal counsel review all documentation regarding the probationary period to ensure you’re not creating additional liability. With all of the risks and minimal gain, it’s easy to see why probationary periods for nonunionized organizations are becoming less and less common.