What’s the difference between trial and probation periods?

You’ve just had an interview with a candidate, and you think they’re perfect for the vacant role. You’re keen to offer them employment, but you’re also cautious. You thought your last candidate was the perfect fit, but things didn’t go as you hoped. And now you want to ensure that you’ve got all your ducks in a row this time around.

Trial periods and probation periods have long been used within employment agreements to assess the performance and gauge the capabilities of new employees. It’s important to ensure that any new employee you hire can perform the role effectively and to the required standard.

However, it’s not sufficient to include a trial period or probation period clause in the employment agreement for this to be effective—certain procedural requirements also need to be satisfied to ensure absolute compliance.

In this article, we explain trial and probation periods and how businesses can effectively use them to ensure they hire the right candidate.

What is a trial period?

The trial period has historically been a strong employer-focussed condition of employment that gave employers the right to undo a recruitment decision within the first 90 days by simply giving a weeks’ written notice to an employee, that their services would be terminated. The employer didn’t need to give a reason, and except for unfair discrimination, no personal grievance could be submitted and there were no grounds for review. However, changes to legislation in recent years have meant that only certain employers can now make use of such provisions.

Current legislation outlines that only small-to-medium-sized employers – those that have fewer than 20 employees in total at the time of the new employee starting – can make use of the trial period. The employee must also be completely new and hasn’t been previously employed by you.

Should you have 20 or more employees, or the employee is not completely new, those employers should use a probationary period.

Points to remember:

• The trial period must be recorded in a written employment agreement, which must be signed and dated before the first day of work;
• Notice of termination cannot be given after 90 calendar days from and including the start date;
• The notice period must be one-week minimum, and must also be in writing;
• The notice period can run over the 90 calendar days of employment; and
• Ensure that the employee has been given reasonable time and opportunity to review the employment agreement and seek independent advice before commencing. A letter of offer should outline this clearly.

Pro tip: give the employee at least three business days between issuing the employment agreement and the commencement date for review.

What is a probation period?

A probation period is also usually 90 days from the date of employment and while it’s also a testing period for new employees, it places a higher level of responsibility on the employer and terminations can’t happen for no reason. The same laws regarding fair process apply to permanent employees, but the benchmark for termination is easier to achieve.

For example, if a new employee were unable to do the task, in a trial period they could simply be terminated without having to follow a process. In a probation period, some steps need to be taken before an employee can be terminated, and not following this fair process could result in a personal grievance claim.

Each situation is different, but the steps remain largely the same:

• An initial discussion about the problem to try to understand why it is happening;
• If the employee makes valid points about system or process problems causing the performance, the employer has a responsibility to fix those and see how that works as a solution to the performance problem;
• Otherwise, offer training and guidance to assist the employee to meet the required standard;
• Have a period of evaluation and a series of meetings to measure progress, being careful to warn the employee at each meeting, that if performance does not reach an acceptable level, by the end of the probation period, termination can – and will – occur; and
• Notice of termination as per contractual requirements.

The benefit of a probation period is that you can give notice to an employee during this period to extend it for a further month should you want to keep reviewing the employee’s performance and capabilities. Whereas with a trial period you can’t extend it beyond 90 calendar days. Notice must be given in writing before the end of the contractual probation period.

Points to remember:

• Probation must be a contractual term;
• The employee must be encouraged and assisted formally to succeed wherever possible;
• The right thing to do can be different for different employees in different circumstances;
• Termination is the last resort, not the first option; and
• Written records must be kept.

Trial and probation periods exist to help businesses adequately gauge whether the employee has the skills necessary to meet the requirements of the role. However, employers must remember their legal obligations when it comes to using these mechanisms and deciding whether an employee is the right fit or not.

If you have any questions about trial or probation periods or need workplace advice, please contact our team of workplace relations experts via our 24/7 HR Advice Line.