Employment Probation Period: Definition, Policy Template & How to Implement

An employment probation period, referred to as a probationary period, is a time frame used to determine whether a new hire will work out. Businesses use it to allow both the employee and the company to determine if the employee is the right fit for the position. A typical time frame for an employment probation period is generally 30/60/90 days.

To ensure there’s no misunderstanding with new hires regarding your probation policy and time frame for the probation period, consider taking the additional step of crafting a probation period policy. If set up incorrectly, a probationary period may violate local labor laws and employer rights. For instance, some states make it illegal to postpone sick leave until after the probation period.

Employment Probation Period Policy Template

The best way to notify your current employees and new hires about your employment probation period is to document it in a policy. Additionally, you can provide new hires with a probation period letter that explains the policy. In the letter, reiterate your probation policy, and have the employee read, sign, date, and return a copy of the letter on their first day of employment. A letter signed by the employee may prove that the employee was fully aware of the probation policy in case of a wrongful termination lawsuit.

Click below to download our Employment Probation Period policy and letter, which you can customize to meet your needs.

Download Probation Period Policy & Letter

How to Implement an Employment Probation Period

To implement a probation period, you’ll need to select the time frame, create your policy, and provide documentation to your staff and new hires. You also need to determine what benefits the employee will receive upon hire versus what benefits will wait until after the employment probation period.

1. Determine Time Frame

The most common time frame for a new hire probation period is 60 to 90 days. However, you as the employer can set any time frame you want to fully evaluate whether an employee fits your culture and can do the job. Below are examples of when each of the following 30/60/90 day time frames makes sense.

• 30 Days: Thirty days is a good time frame for an employment probation period in an entry-level job, such as food service or retail, where you’ll know fairly quickly if the employee is going to work out. For example, if an employee is able to show up on time, display a positive demeanor, get along with co-workers, and master your POS system, they’ll probably demonstrate those traits within the first few weeks.
• 60 Days: Sixty days is a good time frame to use as a probationary period in jobs with productivity metrics. For example, if you hire workers who must master skills like assembling furniture, entering data, stocking shelves, or inspecting manufactured goods, you’ll need time for those employees to learn the job. After they master the skills, you’ll need additional time to evaluate whether they’re able to meet your hourly or daily productivity goals.
• 90 Days: Ninety days is a good time frame to use for new hires in professional roles like managers or sales executives. The reason for the longer time frame is that you may want to see how they function in the job, as well as whether they’re able to build relationships, earn business, or motivate their team.

2. Decide What to Include

Perhaps the hardest part of implementing a probation period is deciding what you will and will not include during the employment probation period. The following benefits generally should be provided upon hire and not wait until after a probation period:

• Sick Leave: What happens if a worker calls in sick during their probationary time period? Some states, like California and New York, have mandatory sick leave laws that require you to allow time off for illness. California requires employers to pay employees for up to three days of sick leave per year. New York and other states have similar laws. In either case, you can’t wait and only offer sick leave after the probation is over. It may need to start accruing upon hire or be provided as a lump sum.
• Health Insurance: If you have over 50 full-time employees, you must provide health insurance to your employees. Some health insurance companies require this to be offered within the first 30 days. Therefore, you can’t withhold health insurance until after the employee completes a 90-day probation period.
• New Hire Documents: All employees, especially those new to your company, should be given a copy of the company handbook, any company policies, job description information, and the tools to complete their assigned jobs. This also includes onboarding, training, and access to company resources.

An employer should consider withholding some benefits and perks until after the probation period is over and it knows the employee can perform the job to its standards. For instance:

• Paid Time Off: Paid time off (PTO) in the form of vacation can be withheld until after the probation period. Typically this is done by accrual wherein the employee will not be eligible to take PTO until after they have accrued their time. Be sure you do not include sick leave as part of this policy, as it may violate the laws listed above.
• Retirement Benefits: Wait to offer 401(k), stock options, or other retirement benefits until after the probationary period has ended.
• Other Medical Insurance: While you may be required by your state laws to offer healthcare before the end of your chosen employment probation period, you may wait to offer dental or vision insurance.
• Life insurance: Life insurance is usually elected and paid for by the employee. Even in the case where the employer partially or fully pays for it, you are able to withhold this benefit until after completion of the probation period.
• Company Perks: Some companies offer unique perks, such as flexible work schedules, half-day Fridays, and incentive bonuses, as part of their employment. It is advised to wait until after the probationary period is over to offer these types of benefits.

3. Create Your Policy

After you decide the time frame and benefits you want to include, it is time to create and document your policy in writing. Use the provided templates as a starting point. This document should include the above-mentioned, as well as any rules that apply during the probation period at work such as performance metrics, goals, and job expectations.

Follow these steps to create your employment probation period policy:

• Start with a paragraph that describes the policy time frame terms and lists employment as “at-will.” This ensures both the employee and the employer understand the duration of the trial employment and that either party may end employment for any legal reason.
• List all the benefits that are included during the probationary period.
• List some or all of the benefits that will be received following the successful completion of the probationary period.
• Reiterate your “at-will” employment status.
• You can also include what is expected of the employee during the probation period, any documentation the employee will receive, such as the company handbook, and any performance reviews that will be performed.

4. Seek Legal Advice

Because there is potential risk of an employment probation period undermining an employer’s “at will” employment status (employees may feel their employment is guaranteed following a probation period), or clauses within it violating local statutes, please seek legal advice before implementing an employee probation program. Legal services can help small businesses with legal documentation, creation of policies, and other legal matters required to stay compliant with federal and state laws.

Additionally, be sure that you do not include any language in your policy that could be considered discriminatory. Federal labor laws, like the Americans with Disabilities Act and Title VII of the Civil Rights Act, protect employees from day one. (This, of course, would also apply during a probationary period termination, so be sure your reason for terminating an employee during this time is legally sound.)

5. Update Employee Handbook

Once your employment probation period policy is created, add it to your existing employee handbook and new hire documentation. This will ensure that your policy is read and signed before your new employee’s first day. This also creates a legal document that clearly outlines the details of the probation period.

6. Share Policy With Staff

Once you have finalized your policy, you need to share it in writing with your staff. Discuss expectations and provide training, resources, and feedback. Be sure to also include your employee probation period policy in your job ads, interviews, and job offer letter. This clarifies upfront that the new hire will be subject to a probationary period.

Once an employee is hired under the new program, make sure you’re giving them good employee performance feedback so they understand your expectations and can proactively address issues within the probationary period.

Pros & Cons of Implementing an Employment Probation Period

Some employers feel that using an employment probation period at work reduces their hiring risk. There are also some downsides to a formal employment probation period, however. For example, courts may interpret your probation period to imply that employees can only be terminated for cause after it’s over.

Bottom Line

An employment probation period can give both the new hire and the employer a chance to decide if they are the right fit for the job. While some employers like having a new hire employment probation period, it may not be necessary if your state allows the employment at will doctrine. You may already have the right to terminate an employee without cause, as long as no anti-discrimination or labor laws are violated. If you choose to institute a probationary period, consider using our template and have your attorney review your probation period policy before implementation.