Probation Dilemma: How Should We Handle Termination or Extension Decisions?

Hi all, Requesting your advice on the matter below:

We have onboarded five employees, and their probation period was 90 days, which ended on 13th October. They were kept under review for the rest of this month and were informed of the same (no letter was initiated since it was under review). We have almost reached a decision as some of them will be kept under an extended probation, and others would be terminated from service due to serious performance and behavior issues.

Appointment Letter Clauses

Their appointment letter contained the following clauses:

1. You shall be initially on probation for a period of 90 days before being considered for absorption as a regular employee. However, the organization reserves the right to extend the probation if required.
2. During your probation, your services can be terminated without assigning any reason with one month's notice or gross salary in lieu of notice on either side.
3. Unless it is communicated to you that you are confirmed, you will be deemed to be under probation.

Actions Required

Under these circumstances, what actions do we need to take or letters do we need to initiate if it's a termination or extension?

Looking forward to your valuable feedback.

Thanks and regards,
Drishya

Dear Colleague,

The Terms of Appointment are clear, stating a 90-day probation period with Management retaining the right to extend it if necessary. The termination clause specifies a 1-month notice period or notice pay in lieu of notice in case of termination. Confirmation of talent status is contingent upon the issuance of a "communication." Probation ended on October 13, 2021, and as of October 28, 2021, reviews and further communication are still pending, with some individuals facing performance or behavioral issues.

The Way Forward:

1. Issue an official letter promptly to all talents interim, stating that their probation is under review and may be extended, or concluded without confirmation. Clearly outline (Letter 1) the expected performance/behavioral indicators, any performance lapses supported by data or incidents, and inform them of a panel review on a specified date for each individual.

2. Prior communication for transparency purposes is essential. If performance reviews were conducted and documented during the initial 90 days, mention them. Otherwise, establish a system for new talents in probation, ensuring monthly reviews, documentation, and communication.

3. Officially conduct a performance review meeting (with the Reporting Manager and HR) inviting the Talent, documenting identified gaps, and providing a summary of the gaps to the individuals.

4. For those requiring an extension of probation, implement a Performance Improvement Plan (PIP) detailing expected performance indicators and timelines. Conduct monthly official performance reviews and document progress.

5. In cases of serious performance/behavioral issues, following the above process, terminate services by providing a 30-day notice or pay, issuing an official termination letter (Letter 2).

Establish a robust performance review system for monthly official performance review meetings, documented records, and monthly communications to probationers outlining performance expectations versus actual performance. This practice will inform future decisions effectively.

The underlying principle is to establish a transparent system, conduct genuine reviews, document findings, utilize PIP processes, and provide probationers with opportunities to demonstrate their abilities.

All the Best, God Bless
Dr. P. SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu

You may evolve a comprehensive review system as proposed by Dr. Shiva Kumar to meet your requirements in the future.

For the present, regarding those found unsuitable, you may consider issuing them a notice stating that upon a review of their performance during the probation period, it has been decided to terminate their services with immediate effect as of ../../21. I would suggest terminating with immediate effect and paying for the notice period of one month, as otherwise, such a person may spoil the atmosphere.

For those whose probation period is extended, a communication can be issued informing them that based on a review of their performance during the probation period, it has been decided to extend their probation period by - months. It should be noted that further retention in service would depend on the review conducted at the end of the extended probation period. You are hereby called upon to serve the organization with full commitment and dedication, bringing about all-round improvement in your performance. Your key performance parameters for the extended probation period are being issued separately.

Understanding the Appointment Letter Clauses

The third clause of the appointment letter is ultra vires of clause 1 of the same letter, which states that "Unless it is communicated to you that you are confirmed, you will be deemed to be under probation." This means that if a probationer has been working with your company even after 90 days (the initial probation period), their status does not change, and their probation remains ongoing. The company needs to continue their appraisal until they are either confirmed or terminated with one month's notice payment as per clause 2 of the appointment letter, upon finding them unsuitable according to their appraisal.

Whatever the company decides, in all cases, they must communicate with all probationers about their positions after the appraisal.

Appointment Letter Clauses

The third clause of the appointment letter is ultra vires of clause 1 of the same letter, which states that "Unless it is communicated to you that you are confirmed, you will be deemed to be under probation." This means if a probationer has been working with your company even after 90 days (initial probation period), their status does not change, and their probation continues. The company needs to continue their appraisal by the time:

1. Either they are confirmed, or,
2. They are terminated with one notice payment as per clause 2 of the appointment letter, upon finding them unsuitable as per their appraisal.

Whatever the company decides, in all cases, they must communicate to all probationers about their positions after the appraisal.

Regards,
Dr. M. K. Ravi
Advocate

Thank you all for your feedback. It helped a lot!

Issuing Relieving and Experience Letters

Also, we have decided to terminate two employees. In such a case, is there a need to issue a relieving and experience letter? Please suggest.

Dear colleagues,

I want to raise some questions for discussion by the learned colleagues on the termination of probationers.

Legal aspects of terminating probationers

The legal aspect of the termination of a probationer is well explained by some colleagues. As long as the communication regarding the decision of termination is as per the terms of the contract, it may be adequate compliance with the terms, and the action may meet legal requirements.

Broader implications of termination

The broader aspects of this action of termination cause ripples and point towards possible inadequacies in the HR systems and procedures. This is what I would like to draw attention to, although I am aware it is outside the scope of the query.

Introspection for HR systems

I think HR needs to ask the following questions in introspection to check if there are robust systems in place and whether they deliver the desired outcomes:

1. Why was there a mismatch between the competencies of the candidate and the performance requirements? (Examine the candidate assessment process)

2. Was onboarding/induction done effectively to acclimatize the talent with the performance parameters, culture, with clarity?

3. Did the performance review system during probation enable timely feedback on his performance, point out any inadequacies, and create an urge to transparently show improvements?

I am pointing out the fact that just as the talent may fail to meet the expectations of the performance standards, so do the organizations due to system inadequacies.

Need for system improvements

The above areas and other related aspects will point to the need for system improvements when put to strict review. In my view, if the system is robust, the organization will have no opportunity to take the action of terminating a probationer. In fact, sound HR systems should preempt the need for such unpleasant action.

Despite the strong presence of such an enabling HR system, if talent fails, which is very few and far between, the action of termination of a probationer, however unfortunate, will be legally and ethically justified.

Regards,

Vinayak Nagarkar
HR and Employee Relations Consultant

Vinayak Sir has given valuable points to ponder. Indeed, it is surprising to note in this case that out of the five probationers, two are terminated and for the rest, the probation is extended. This situation raises questions about the recruitment standards, induction process, and the performance review system. It is not a very satisfactory position.

Dear Friend,

It is not understood why organizations fail to judge the performance of employees during the probation period, which may be 30 days or any fixed number of days. Most organizations explicitly use this probation clause in an exploitative manner, putting people's lives at stake because the job market is volatile.

It is always a good thing to remove bad and unproductive people while retaining good and productive individuals. It is appreciated when tasks are completed within the specified time frame. You have reached a decision that some employees will be kept under extended probation, while others will be terminated due to serious performance and behavior issues.

As per the terms of your organization, candidates were not informed that the probation period could be extended for an additional X days before being considered for regular employment. Services can be terminated even after the extended probation period if performance is deemed unsatisfactory. Due to the clause allowing termination without reason with one month's notice or gross salary in lieu of notice on either side, it raises the question of whether confirmation is implied if not communicated at the end of the extended probation period. Dear friend, time and space matter.

I can only advise you to take a lenient view by requesting resignations from employees you wish to terminate and providing them with notice pay. It is essential to consider the opinions expressed by senior forum members to determine what is best for your organization.