What is a probation period? Probation meaning, rules, and salary

Article6 mins read1.1K views | Posted on March 29, 2024 | By Sureka

Whether you're a seasoned entrepreneur or looking to expand your small yet mighty team, understanding the probation period can make all the difference in setting the right tone for your workplace.

Picture this: you've just hired someone new. You're excited about the skills they bring to the table, but you're unsure how well they'll fit into your team. Before you onboard them as a regular employee, you can ask them to complete a probation period and assess their ability to collaborate and work with your team.

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This article will break down everything you need to know about probation, from its necessity to how much you need to pay employees on probation, so you're well-equipped to build your dream team.

Probation period meaning

The probation period, also known as a trial period, is a time when newly hired employees are evaluated for their performance and suitability for the job. It acts as a trial run to confirm if the hired individual aligns with the employer's expectations and fits well within the company's culture and requirements.

During this phase, both the employer and the employee have the opportunity to assess each other before making a long-term commitment to the employment relationship.  

Is the probation period mandatory?

Indian labor laws do not mandate a probation period for new hires in a company. However, it is widely adopted across industries as a best practice and is recommended to mitigate risks associated with hiring uncertainties.

Most companies follow a structured approach to hiring:

Place new hires on probation >> Train and evaluate their performance >> Onboard them as regular employees, extend their probation, or terminate the employment.

Why you need to have a probation period

Having a probation period policy in place is essential for several reasons:

  • It allows you to gauge the capabilities, work ethic, and cultural fit of new employees.
  • It sets clear expectations for you and your hires regarding performance standards and evaluation criteria.
  • t provides a mechanism to address any issues early on, minimizing potential disruptions later.

Imagine you've hired a recent college graduate for your development team. The new hire may have aced interviews with their coding skills, but they are still new to the work environment and may not understand certain procedures, like code review. Putting them on probation and ensuring their work is reviewed by their mentor before going live can help your team put out their best work. This also helps the new hire get accustomed to the team's workflow and sets them up for long-term success.

Probation period rules

Duration of the period

Probation typically ranges from three to six months, depending on the complexity of the role and industry norms.

For entry-level positions, a shorter probation period of one to three months may be enough. For management roles or roles requiring specialized skills, a longer probation period may be required to evaluate the employee thoroughly. Regardless of the role, it is important that you mention the duration explicitly in the offer letter to avoid ambiguity in the future.

Salary during probation

During probation, employees are entitled to receive a salary as stated in their offer letter.

Some companies offer a slightly reduced compensation package compared to confirmed employees to reflect the temporary nature of employment. After successful completion of probation, the employee's salary will be adjusted to align with industry standards.

Leave applicability

Employees on probation are eligible for government declared holidays and other leaves as per the company's leave policy.

Some companies offer casual leave and sick leave to their employees from their date of joining, while others may offer them only after the employees are confirmed into service.

Notice period during probation

The notice period is the time from when an employee submits their resignation letter to their last date of employment with the company. For regular employees, this period typically lasts 30 days, while for employees on probation, it ranges from one to two weeks.

The specific duration may differ among companies, so it's wise to clearly state the required notice days in writing for the position you're offering.

Resignation rules

Employees have the right to resign from a job while on probation, subject to completing the notice period mentioned in the offer letter or company policies.

What happens once the probation period is over?

Once the probation period draws to a close, there are three potential outcomes. If the employee has met or exceeded expectations, they will be issued a probation confirmation letter and converted to a regular employee. In cases where further evaluation is needed, employers may extend the probation period, providing additional time for improvement. On the other hand, if the employee isn't performing up to standard, the employer can terminate their employment.

Probation period outcomes

  • Employee meets expectations --> Confirmed as a regular employee
  • Further assessment is required --> Extend probation period
  • Unsatisfactory performance --> Termination of employment

Probation confirmation letter

A probation confirmation letter officially marks the employee's transition to permanent employment and specifies the revised terms and conditions, including salary adjustments and benefits. Below is a sample probation confirmation letter that you can customize and use.

Dear [employee name],

We are pleased to inform you that based on your performance during the probation period, we have decided to confirm your employment with [company name] as a [job title].

Effective [date of confirmation], you will be considered a permanent employee and your revised annual cost to company is ₹ xxx,xxx [in words].

You will be eligible for the company's group health insurance policy, flexible benefit plans, and 24 days of paid leave in a calendar year.

Please feel free to reach out if you have any questions.

Congratulations once again, and welcome to the team on a permanent basis!

Sincerely,

[Sender name]
[Designation], [Company name]

Download the sample probation confirmation letter

Probation extension letter

This document is issued by an employer to extend the probationary period of an employee beyond the initially agreed-upon duration. It outlines the reasons for the extension and sets a new end date for the probation period. Here is a simple probation extension letter that you can use as a reference.

Dear [employee name],

I'm writing to let you know that we've decided to extend your probation period. This decision has been made to provide us with additional time to evaluate your suitability for the role with [company name].

Your new end date for the probation period is [new probation end date].

Your terms of employment remain unchanged and you will continue to receive a monthly salary of ₹ xx,xxx [in words].

We will work closely with you to provide guidance to help you succeed in your role. Please feel free to reach out if you have any questions.

Sincerely,

[Sender name]
[Designation], [Company name]

Download the sample probation extension letter

Termination of employment

While termination is never the most desirable outcome, sometimes it becomes necessary due to the employee's poor performance during probation or changes in business needs. It is important to end the employment with a termination letter formally, protecting both parties legally and ensuring transparency.

Here is a sample termination letter:

Dear [employee name],

We regret to inform you that your employment with [company name] is terminated effective [termination date].

This decision has been made after evaluating your performance during the probation period. Despite our efforts to support you, we have not seen the progress we had hoped for in terms of job responsibilities and performance.

Your final settlement will be processed on [payday]. We kindly request you return any company property, including laptops or mobile phones, by [return deadline].

We appreciate the time you spent with us and wish you success in your future endeavors.

Sincerely,

[Sender name]
[Designation], [Company name]

Download the sample termination letter

Frequently asked questions

1. Can employees quit during the probation period?

Employees can quit during the probation period depending upon the company policies and their terms of employment. In some cases, employees on probation may be required to fully serve the notice period mentioned in the offer letter.

2. What is the maximum period of probation?

There is no fixed maximum period of probation mandated by law. However, industry standards typically range from one to six months, with longer durations for senior roles.

3. What happens during the probation period?

During the probation period, new employees undergo a period of assessment. The employer usually assigns a mentor to guide and support the new hire in settling into their role and the company.

The mentor evaluates the employee's progress and provides feedback to make them more efficient in work.

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