The Problem With The Employee Probationary Period

A close friend of mine recently hired a new employee. Things were going swell, and the employee was working out great, but then that person decided they’d rather seek employment elsewhere. During the time that employee worked there, my friend decided the best bet was to test the waters with the employee—try out an employee probationary period whereby everything that employee did was highly scrutinized, given feedback, and, if necessary, terminated for cause. It turned out the employee left before the probationary period ended, but what if they hadn’t?

My friend may have had a terrible situation on his hands. Something no employer wants to have to deal with.

An implied employment contract.

Yes, even though he meant for the employee to be “at-will” and terminable at any time for any reason (any legal reason, anyway, but that’s a post for another day), by simply having a probationary period, my friend might have unwittingly created a contractual employment relationship that could have superseded the desired at-will employment terms.

So how does this work exactly? Well, you start the employment relationship with an at-will employee agreement. That’s fine. That’s what everyone wants. But then you tell your employee that for the first 60 days, you’re going to give her extra feedback and fire her only if warnings have been given in advance. Uh oh. You see, the problem is that some courts have found that an oral employment contract can exist, and if you haven’t structured your employee handbook or employment agreement carefully, you may run right smack into a court saying that your probationary period created an oral employment agreement

There’s the problem. And here’s the solution. Ditch the probationary period all together. You can still keep an extra watch on new employees and give them feedback without the need for probation. After all, you probably tell your veteran workers when they make a mistake and if you’re an effective boss, you know exactly how well every one of your employees does their job—whether they’ve worked there a week or a decade.

Of course, if you really love the probationary period and can’t possibly let it go, you can always make sure it doesn’t affect your at-will employment relationship with a few quick fixes. First, make sure all employment agreements are in writing and include a provision that prevents the formation of any oral employment contracts. Second, include the facts of the probationary period in your written employment agreements and make sure that you outline in specific detail that the conclusion of the probationary period does not create any additional obligations for you or your employee. Third, make sure you have a well-drafted employee handbook and that the handbook explicitly states that no additional benefits, such as vacation time, paid time off, etc., will entitle your employee to permanent employment as opposed to at-will employment. If you keep those three factors in mind, and contact an attorney who can help you make sure your employment documents are in order and legally sound, you will significantly lower the risk that an employee can turn a successful employment period into an oral contract for permanent employment at your business.

Image courtesy: Victor1558

Eric Norton

Eric Norton

Business & Trademark Attorney at Norton Law Corporation
Eric Norton is a business and trademark attorney, and the founder of Norton Law Corporation, a modern law firm designed to help entrepreneurs with their legal needs. Eric also enjoys photography, gaming (tabletop and video), watches, and good design.
Eric Norton

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7 replies
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