31 Aug Probationary Period Perils

The recent High Court case of Donal O’Donovan v Over-C Technology [2020] IEHC 291 was a stark reminder about the potential problems of not using contractual probatioanry period provisions correctly, when dismissing employees during their probatioanry period.

The employee concerned, Mr O’Donovan had commenced employment as the CFO at Over-C in July 2019 and confirmation of his appointment was subject to the following probationary clause:

” An initial probatioanary period of 6 months applies to this position. During this period your work performance will be assessed, and if it is satisfactory your emplyment will continue. However, if your performance is not up to the required standard, we may either take remedial action or terminate your employment.”

The employee was called to a meeting when he returned from leave at Christmas and was told that his employment was terminating with immediate effect, with one month’s notice to be paid in lieu. The employee then queried his right to appeal the decision, after it was confirmed to him in writing that he had been dismissed due to sub-standard perfomance, which had been brought to his attention in earlier meetings. The employee denied this has been the case.

The right to appeal was confirmed and a date scheduled for a hearing, but the employee was unable to attend and requested an earlier hearing, which appears to have been ignored and the decsion to dismiss was upheld, with it being noted that the employee had not wished to proceed.

The employee subsequently successfully applied to the High Court for an interloctury injunction, pending a full hearing, in which it was determined that he had not received his contractual right to have his performance assessed, or to have performance issues brought to his attention prior to dismissal, as well as not being able to exercise his right to appeal the dismissal decision. The Judge took into account that the employee held a senior role, and that there was the potential for both economic and reputational damage from the decision to dismiss, and that there had been a contractual right to remedial action in the event of non performance.

In light of this decision, employers should therefore take note of the consequences of the difference between a no fault dismissal versus a performance related dismissal which attracts due process and the opportunity for an employee to address performance or conduct issues, which was not afforded to the employee in this case.

Employers should also check the wording of their probationary clauses and ensure that they are suitable, and if necessary provide for termination without reason during the probationary period. In addition, it is also important to provide for a compacted process for dealing with performance and conduct issues that may arise, and the clause should specifiy clearly that the full disciplinary process does not apply during the probationary period.