When hiring new employees, many employers use probationary employment periods to ascertain whether the new workers will be able to handle the duties and challenges associated with their new job. Such periods are intended to provide employers time to evaluate employees before making the job permanent.
Many consultants to small business owners believe that probationary employment periods—also sometimes known as trial periods—can be quite useful to both entrepreneurs hoping to get a start-up off the ground and established small business owners seeking to maintain or increase their current level of success. As countless small business owners and researchers will attest, the quality of a small company's work force can mean the difference between business success and failure. Indeed, personnel costs (wages, benefits, training, etc.) are among the most expensive elements of business operations; this cost becomes multiplied if your business is saddled with a poor worker. Probationary periods, which can range from two weeks to ninety days in length, are simply meant to give the small business owner the best possible chance of securing and retaining quality employees—and releasing substandard employees without legal penalty.
Analysts do note, however, that companies that terminate probationary employees do not enjoy total protection from lawsuits. These terminated employees do have fewer legal rights than established workers, but they are not without recourse in certain situations. For example, the employment "at-will" doctrine that characterizes probationary periods is not a valid legal defense for employers if it can be proven that the work arrangement suggested that termination would only be made for cause. Business owners should consult with an attorney to minimize their exposure in this regard.
Business experts state that small business owners should take the following steps when implementing a probationary period with a new hire:
Of course, not every employee will be a superior one, and shortcomings in one (or even more) of the above areas does not necessarily mean that the employee should be let go. Factors such as availability of other workers, performance in critical areas, etc., usually have to be considered, and few companies are fortunate enough to be staffed entirely by workers of superior skills, excellent work habits, and healthy ambition.
But analysts indicate that new employees who perform poorly during probationary periods are rarely able to dramatically improve their performance after the trial period has ended. After all, if the worker did a bad job during a probationary period, when all parties were aware that performance would be monitored, why should the small business owner believe that the worker's performance would improve at the conclusion of that trial period, when pressure to "be on one's best behavior" would presumably be relieved somewhat. Ultimately, each business owner has to decide for him or herself whether the employee's performance during the trial period warrants continued employment.
Cann, Steven J. Administrative Law. Sage Publications, 2002.
Covington, Robert, and Kurt H. Decker. Employment Law in a Nutshell. West Group Publishing, 2002.
Moye, John E. The Law of Business Organizations. Thomson Delmar Learning, 2005.
"Trial Periods: What's your probation period for new employees?" Remodeling. March 2005.
Hillstrom, Northern Lights
updated by Magee, ECDI