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Employment Agreement Probationary Period

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The employment agreement probationary period refers to an initial phase in a job during which the employer assesses the employee's suitability for the position. It enables the employer to assess the employee's abilities, performance, and general fit within the company before deciding whether to hire the person permanently. This blog discusses the various aspects of the probation period.

Aspects of Creating an Employment Agreement Probationary Period

To incorporate a probationary period into your company, you must establish the duration, develop a policy, and provide relevant documentation to existing staff and new hires. You must also decide which benefits will be available to new hires and which will only be offered after the probationary period has ended. Having a valid reason for implementing a probationary period is important, as courts may scrutinize its existence and expect employees to receive some benefit upon successful completion.

  • Duration: New hires' most commonly observed probationary period ranges from 60 to 90 days. However, as the employer, you are free to choose the period that enables a thorough assessment of a candidate's compatibility with your company's culture and capacity for the position. Utilizing structured interviews and effective candidate evaluation methods during hiring can expedite the assessment process.
  • Inclusion: Determining what to add and eliminate during this stage of employment is one of the most challenging aspects of creating a probationary period. Certain perks, including sick time and health insurance, should often be provided as soon as possible after hiring and not after the probationary period.
  • Policy: After determining the timeframe and the benefits to be included, creating a comprehensive written policy that outlines the specifics of your probationary period is necessary.
  • Legal Professional: Implementing a probationary period incorrectly can potentially infringe upon local labor laws and compromise employer rights. For example, some states prohibit the deferral of sick leave until after the probation period. Moreover, there is a risk that the probationary period may undermine the "at-will" employment status, leading employees to believe their employment is guaranteed after completing probation. It is highly advisable to seek legal advice before establishing an employee probation program. Legal services can assist small businesses in drafting legal documentation, policy creation, and ensuring compliance with federal and state laws.
  • Employee Handbook: Incorporate your newly finalized employment probation policy into your existing employee handbook and new hire documentation. This ensures new employees read, acknowledge, and sign the policy before their first work day. This step creates a legally binding document that clearly outlines the details and expectations of the probationary period.
  • Policy to Staff: After completing your policy, it is essential to distribute it in written form to your existing staff. Hold discussions to clarify expectations, offer necessary training, provide resources, and establish a feedback process. Additionally, ensure that your employee probation period policy is prominently featured in your job advertisements, interviews, and job offer letters. This upfront disclosure informs potential hires that they will be subject to a probationary period.

Benefits of the Employment Agreement Probationary Period

  • Cost-Saving: Companies can reduce expenses when hiring new employees by implementing a probationary period with adjusted pay and hours. During this period, the hourly or salary rate may be lower, resulting in cost savings if the employee decides to leave or fails to meet the probation conditions. This contrasts with hiring someone directly into a full-time position without a probationary period.
  • Mutual Suitability: Given the competitive nature of the job market, finding the right talent can be challenging. A strong resume and successful interviews don't guarantee a perfect fit. Similarly, employees may realize that the new role is not as appealing as initially thought. Incorporating a probation period in the beginning allows both parties to evaluate the arrangement and provides the opportunity to opt out if necessary. It also grants the company more time to find an even better fit.
  • Seizing Opportunity: Besides enabling employers to assess new employees, a probationary period allows employees to make an impression. Particularly in larger organizations, this period can help employees highlight their skills, potentially leading to better opportunities within the company after the probationary period.
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Challenges in the Employment Agreement Probationary Period

  • Sense of Underappreciation: Employees may experience a sense of being undervalued during their probationary period. From the employees' perspective, going through a probationary period often brings added pressure. This can be particularly stressful if they join a new company and take on new responsibilities and training. Increased pressure and stress can sometimes lead to lower morale during probation. New hires must feel equally valued as part of the team during their probationary period to maintain confidence in their work and reduce the perception of a high risk of losing their new position.
  • Posing Legal Risk: Establishing clear and comprehensive contractual policies of all expectations related to a designated probationary period is essential. Managing this becomes more complex when hiring employees internationally, as many countries have stringent termination and unfair dismissal regulations. Although termination may be flexible during probationary periods, the grounds for such actions must align with the original contract provisions.
  • Damaging a Company's Reputation: The existence of a probationary period as a requirement for securing a permanent contract can discourage prospective applicants from applying. Job searchers may be discouraged from applying for positions with the organization if they believe they may have to go through a probationary period. The company's reputation may suffer, and it may be harder to recruit top people.

Key Terms for the Employment Agreement Probationary Period

  • Probationary Period: The specified duration at the beginning of employment during which the employee's suitability for the role is assessed.
  • Duration: The length of the probationary period, typically stated in days or months, as agreed upon in the employment agreement.
  • Conditions: The terms and conditions of employment, such as pay, insurance benefits, working hours, and any particular demands or expectations, are in effect during the probationary period.
  • Performance Evaluation: The process of evaluating an employee's performance, competencies, and abilities while on probation. This evaluation may include performance reviews, competency evaluations, and feedback sessions.
  • Termination: Refers to terminating an employee's employment during a probationary period, whether done by the employer or the employee and in accordance with the employment contract terms.

Final Thoughts on the Employment Agreement Probationary Period

The employment agreement probationary period is a valuable tool for employers and employees. However, it's essential to approach the probationary period with fairness and clarity. From the beginning, clear communication about expectations, performance evaluations, and the possibility of termination should be established. Properly managing the probationary period can help minimize legal risks, maintain employee morale, and protect the company's reputation.

Employers should support and guide probationary employees, ensuring they feel valued and integrated into the team. Regular feedback and constructive evaluations can help employees understand their progress and areas for improvement. Ultimately, the employment agreement probationary period serves as a trial phase that benefits both parties. Employees get the chance to showcase their skills and choose whether the role fits their expectations and aspirations, and employers may make educated decisions regarding the employee's long-term fit.

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