Probation Employee - An Interesting Position To Be In

While securing a job in today’s times could be a task, many organizations have a mandatory “probation period” that the new employee must successfully undergo subject to which the employment is confirmed. The probation period is used by the employer to assess the capabilities of the employee and see if they are a “good fit” for the organization.


What is the Meaning of Probation?


Merriam-Websters dictionary defines probation as “subjection of an individual to a period of testing and trial to ascertain fitness”. Probation is therefore, a pre agreed fixed period between the employer and employee which is used by the employers to evaluate if the employee is a right fit for the organization, has the right behavioural temperament, has the skills claimed by the employee during the recruitment process and is capable of adding value to the organization. In fact, the Hon’ble Supreme Court (“SC”) in Rajesh Kumar Srivastava vs. State of Jharkhand and Ors.[1] while discussing the meaning and purpose of probation, held that “A person is placed on probation so as to enable the employer to adjudge his suitability for continuation in the service and also for confirmation in service. There are various criteria for adjudging suitability of a person to hold the post on permanent basis and by way of confirmation. At that stage and during the period of probation the action and activities of the appellant are generally under scrutiny and on the basis of his overall performance a decision is generally taken as to whether his services should be continued and that he should be confirmed, or he should be released from service.” The period is also used by the employee to ascertain if he is comfortable with the organization, its people, the team, culture and work ethics, amongst other aspects.


If either of the parties is dissatisfied with the other, the contract may be terminated. Whereas, if the parties are satisfied with each other, especially the employer, the employee’s employment with the organization is confirmed. An employee who is on probation is not guaranteed permanent employment with the organization and the same is subject to the employer being satisfied with the suitability of the employee.


While terms of probation are generally contract driven, the Industrial Employment (Standing Orders) Central Rules, 1946 (“Rules”) defines the term “Probationer” as a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months’ service therein. The Rules under rule 13 state that no Probationer shall be entitled to any notice or pay in lieu thereof if his services are terminated. However, the Rules are applicable to a Probationer who falls under the definition of the term “workman” as defined under the Industrial Disputes Act, 1947.


Apart from the Rules, certain states have legislated on the concept of probation. For instance, Tamil Nadu Conferment of Permanent Status Act, 1981 mandates an employee to be made permanent or deemed as a permanent employee once the employee has worked for 240 (Two Hundred Forty) days a year. But by and large, the probationary period and the terms thereof are governed by contract.


Probation is a Matter of Contract


The requirement of an employee to undergo probation with the employer before confirmation of his employment is covered under the employment contract or appointment letter. As such, probation is a matter of contract and the terms of probation usually include, the period of probation, provision for extension of probation, remuneration terms, termination, terms of confirmation of employment etc.


The period of probation may vary from a few months to a year or more with or without a provision for extension of probation at the instance of the employer. However, it is advisable that the probation period does not exceed 240 days, as several human resource laws become applicable to employees after the said period.


Remuneration agreed for the probation period is usually less than that for a permanent employee with the probationer being compensated for the difference in the pay if the employment is confirmed. As for confirmation of employment, it may be express or implied, where an employee is considered to have been confirmed by the end of the probation period unless employment is terminated earlier or confirmation could be subject to an express written notice/letter by the employer.


As for termination, the employer is free to terminate the services of an employee under probation without giving any reasons but subject to prescribed notice period, if any. The employer is not under any obligation to either prove the unsatisfactory performance of an employee under probation and/or give any reasons for termination.


Confirmation of an Employee on Probation


Regarding confirmation of a probationer as a permanent employee, the SC in High Court of Madhya Pradesh Vs. Satya Narayan Jhavar[2] laid down the following principles, namely,


1. Where in the service rules or the letter of appointment a period of probation is specified and power to extend the same is also conferred upon the authority without prescribing any maximum period of probation and if the probation is continued beyond the prescribed or extended period, the probationer cannot be deemed to be confirmed. In such cases there is no bar against termination at any point of time after expiry of the period of probation.


2. Where there is a provision in the service rules or contract for initial probation and extension thereof, a maximum period for such extension is also provided beyond which it is not permissible to extend probation, the inference in such cases is that probationer is deemed to have been confirmed upon expiry of the maximum period of probation in case order of termination has not been passed before the expiry of the probation period.


3. Where under the service rules or contract maximum period of probation is prescribed, but the same requires a specific act on the part of the employer by issuing an order of confirmation and/or of passing a test for the purposes of confirmation, even if the maximum period of probation has expired but an order of confirmation has not been passed and/or the probationer concerned has not passed the requisite test, he cannot be deemed to have been confirmed merely because the said period has expired.


Termination of an Employee on Probation


It is important for employers to understand that termination of an employee under probation needs to be done in accordance with the law laid down vide judicial precedents. Numerous courts in India have held that the termination should not be done by a stigmatic order. Reference is made to Pavanendra Narayan Verma v. Sanjay Gandhi PGI of Medical Sciences[3], where the SC held that, the services of a probationer can be terminated at any time before confirmation, provided that such termination is not stigmatic. In this background, it is important to understand the meaning of a 'stigmatic' order i.e. a punitive order, and 'non-stigmatic' order as interpreted by courts.


Stigmatic Orders


According to Webster's New World Dictionary, stigma is something that detracts from the character or reputation of a person, a mark, sign etc., indicating that something is not considered normal or standard. The Legal Thesaurus by Burton gives the meaning of the word to be blemish, defect, disgrace, disrepute, imputation, mark of disgrace or shame. The Webster's Third New International Dictionary gives the meaning as a mark or label indicating a deviation from a norm.


The SC in Allahabad Bank Officers' Association and another vs. Allahabad Bank and others[4], while interpreting the meaning of the term “stigma” observed that, if the order of compulsory removal from service casts a stigma in the sense that it contains a statement casting aspersion on his conduct or his character, then it can be treated as an order of punishment.


In Pavanendra Narayan verma v. Sanjay Gandhi PGI of Medical Sciences[5], the SC held that although stigma is implicit in termination, a simple termination is not stigmatic and a termination order which explicitly states what is implicit is also not stigmatic. The court held that in order to amount to a stigma, the order must be in a language which imputes something over and above mere unsuitability for the job.


In Indrapal Gupta vs. Managing Committee[6], the SC held that material which amounts to “stigma” need not be contained in the order of termination of the probationer but might be contained in any document referred to in the termination order or in its annexures. This view was reiterated in Dipti Prakash Banerjee v. Satyendra Nath Bose National Center for Basic Sciences, Calcutta and Ors.[7].


The courts while adjudicating on the issue of stigmatic termination orders, have held the following instances to be stigmatic, such as, in Jagdish Mitter vs. Union of India[8], the order of discharge stated that the employee was found undesirable to be retained in Government service. The SC held that it did cast a stigma on the employee and, therefore, it was not a mere order of discharge but an order of dismissal. In State of U.P. vs. Madan Mohan Nagur[9], the SC held that the termination order stating that the officer had “outlived his utility” amounted to stigma. In Jagdish Prasad vs. Sachiv Zila Gaon Committee[10], the SC held the termination order stating that the officer had concealed certain facts relating to his removal from an earlier service on charge of corruption and therefore not suitable for appointment, as stigmatic. In Chandu Lal Management of M/s Pan American World Airways Inc.[11], services of the workman were terminated on the ground of "loss of confidence in him". It was held that the order attached a stigma on the workman as want of confidence indicated an adverse facet in his character, namely, that he had failed to behave upto the expected standard of conduct. In other words, it amounted to a dereliction on the part of the workman.


Non-Stigmatic Orders


In the matter of Chaitanya Prakash and Anr. Vs. H. Omkaraappa[12] the SC observed that “It is no longer res integra that even if an order of termination refers to unsatisfactory service of the person concerned, the same cannot be said to be stigmatic.” The principle was followed by the SC in Rajesh Kumar Srivastava Vs. State of Jharkhand and Ors.[13], where the court while adjudicating on the validity of termination of a probationer Munsif held that “In the present case, in the course of adjudging such suitability it was found by the respondents that the performance of the appellant was not satisfactory and therefore he was not suitable for the job. The aforesaid decision to release him from service was taken by the respondents considering his overall performance, conduct and suitability for the job.”. The court further held that The order of termination passed in the present case is a fall out of his unsatisfactory service adjudged on the basis of his overall performance and the manner in which he conducted himself. Such decision cannot be said to be stigmatic or punitive. This is a case of termination of service simpliciter and not a case of stigmatic termination”.


Interestingly, the SC in Abhijit Gupta v. S.N.B. National Centre, Basic Sciences[14], while considering the reference to earlier letters of the employer to the probationer in the termination letter containing certain intemperate language such as "perverted mind" and "dishonest, duffer having no capacity to learn", as non-stigmatic, held that “True, that in some of the letters there was intemperate language used (the appellant was also equally guilty of doing that). Notwithstanding the intemperate language, we are unable to accept the contention of the appellant's counsel that the letter dated 7.4.1998 indicates that the appellant was being charged with the misconduct and, therefore, being removed from service. Read as a whole, the letter gives the impression that the removal of the appellant from service was only because the respondents, after giving a long rope to the appellant, had come to the conclusion that the appellant's service was unsatisfactory and there was no hope of his improvement.


The Hon’ble Delhi High Court (“DHC”) in The Managing Committee of Shiksha Bharati Senior Secondary Public School Vs. Director of Education and Anr.[15] had also taken a similar view wherein the respondent who was a primary teacher working on probation with the petitioner/school, was terminated by the school with immediate effect before the expiry of extended period of probation. The court held that the termination order stating that the employee lacked professional capability or was negligent and careless or her conduct was deplorable and had indulged in acts of indiscipline and insubordination was non-stigmatic.


Thus, the courts while adjudicating on the issue of stigmatic termination orders considered the following instances as non-stigmatic such as use of the terms “unsatisfactory work and conduct”[16], “unfit”[17], “found “unsuitable”[18], "lack of potential" and "found not dependable"[19] in the termination order and discharge order mentioning other instances of unauthorized absence of the probationer and concluding that he was not interested in training and had no respect for discipline, then making such remarks in the termination order[20].


Tests for determining Whether an Order is Stigmatic or Non-Stigmatic


Foundation and Motive test


The SC has gone on to lay down the principles for ascertaining whether an order of termination is stigmatic/punitive or not basis the concepts of “foundation” and “motive”. The SC in Dipti Prakash Banerjee v. Satyendra Nath Bose National Center for Basic Sciences, Calcutta and Ors.[21], held that “As to in what circumstances an order of termination of a probationer can be said to be punitive or not depends upon whether certain allegations which are the cause of the termination are the motive or foundation.” In Pavanendra Narayan verma v. Sanjay Gandhi PGI of Medical Sciences[22], the SC further clarified that terminations founded on a probationers misconduct are illegal i.e. stigmatic orders, while terminations motivated by the probationers misconduct are non-stigmatic orders.


For the purpose of differentiating between “foundation” and “motive”, the SC in Gujarat Steel Tube vs. Gujarat Steel Tubes Mazdoor Sangh[23] with regard to the term “foundation” observed as follows;


".....a termination effected because the master is satisfied of the misconduct and of the desirability of terminating the service of the delinquent servant, it is a dismissal, even if he had the right in law to terminate with an innocent order under the standing order or otherwise. Whether, in such a case, the grounds are recorded in different proceedings from the formal order, does not detract from its nature. Nor the fact that, after being satisfied of the guilt, the master abandons the inquiry and proceeds to terminate. Given an alleged misconduct and a live nexus between it and the termination of service, the conclusion is dismissal, even if full benefits as on simple termination, are given and non- injurious terminology is used."


and for explaining “motive”, the court observed as follows:


"On the contrary, even if there is suspicion of misconduct, the master may say that he does not wish to bother about it and may not go into his guilt but may feel like not keeping a man he is not happy with. He may not like to investigate nor take the risk of continuing a dubious servant. Then it is not dismissal but termination simpliciter, if no injurious record of reasons or pecuniary cut-back on his full terminal benefits is found. For, in fact, misconduct is not then the moving factor in the discharge."


The SC has also relied on the importance of facts and circumstances of each case and the language or words employed in the order of termination of the probationer to determine whether the words employed amount to stigma or not.[24]


Enquiry test


The SC in Pavanendra Narayan Verma v. Sanjay Gandhi PGI of Medical Sciences[25], also laid down the test to determine whether an order terminating a probationer was stigmatic/punitive or a letter of termination of services simpliciter. The court held that "One of the judicially evolved tests to determine whether in substance an order of termination is punitive is to see whether prior to the termination there was (a) a full-scale formal enquiry (b) into allegations involving moral turpitude or misconduct which (c) culminated in a finding of guilt. If all three factors are present the termination has been held to be punitive irrespective of the form of the termination order. Conversely if any one of the three factors is missing, the termination has been upheld."


Principles of Natural Justice


In Progressive Education Society v. Rajendra[26], the SC held that unless a stigma is attached to the termination or the probationer is called upon to show cause for any shortcoming which may subsequently be the cause for termination of the probationer's service, the employer is not required to give any explanation or reason for terminating the services.


Whereas, the SC in Muir Mills Unit of NTC (U.P.) Ltd. Vs. Swayam Prakash Srivastava & Anr.[27], State of W.B. and Others Vs. Tapas Roy[28] and Chaitanya Prakash and Anr. Vs. H. Omkarappa[29] has repeatedly held that principles of natural justice are not required to be followed before terminating the services of a probationary officer.


The said principle was reiterated by DHC in The Managing Committee of Shiksha Bharati Senior Secondary Public School Vs. Director of Education and Anr.[30] where the court held that “principles of natural justice have not to be followed before termination of services of a probationer. If an enquiry is held and the enquiry report forms the foundation of termination of services of a probationer, only then, principles of natural justice are required to be followed, however, where the enquiry against a probationer is only for determining employee's suitability for continuing in service and the enquiry report only forms the motive for removal (as differentiated from a foundation for removal) then, a detailed enquiry in terms of the service rules is not necessary."


Conclusion


From the above discussion, it is understood that the employers need to take care while drafting contracts with probationers and related company policy, especially, the period of probation keeping in mind the applicable social welfare laws, provision for extension of probation, manner of confirmation, process of termination including provision for notice, if any, evaluation process etc. The employers also need to seek appropriate legal advise regarding any regional laws that govern probation employees and ensure that the contract is consistent with the applicable laws.


Employers also need to take reasonable care when terminating a probation employee and ensure that the reasoning given is in line with the judicial precedents of non-stigmatic orders so as to avoid a successful challenge of the termination.


Kindly treat this as an information update and the same shall not constitute as an advisory by the firm.


Optimus Legal

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[1] 2011 (4) SCC 447

[2] 2001 (7) SCC 161

[3] 2002 (1) SCC 520

[4] 1996 (4) SCC 504

[5] supra

[6] 1984 (3) SCC 384

[7] 1999 (1) SCR 532

[8] AIR 1964 SC 449

[9] AIR 1967 C.C. 1260

[10] 1986 (2) SCC 338

[11] 1985 (2) SCC 727

[12] 2010 (2) SCC 623

[13] Supra

[14] 2006 (4) SCC 469

[15] W.P. (C) No. 10573/2009 decided on 3.9.2013

[16] State of Orissa vs. Ram Narayan Das [AIR 1961 S.C. 177]

[17] Hari Singh Mann vs. State of Punjab [1975 (1) SCC 774)

[18] Union of India vs. R.S.Dhabe [1969 (3) SCC 603]

[19] Allahabad Bank Officers' Association and another vs. Allahabad Bank and others (1996) 4 SCC 504

[20] State of W.B. and Others Vs. Tapas Roy [2006 (6) SCC 453]

[21] supra

[22] supra

[23] 1980 (2) SCC 593

[24] Patna vs. Pandey Madan Mohan Prasad Sinha & Others [1997 (10) SCC 409] and Mathew P. Thomas v. Kerala State Civil Supply Corpn. Ltd. [(2003) 3 SCC 263]

[25] supra

[26] 2008 (3) SCC 310

[27] 2007 (1) SCC 491

[28] supra

[29] supra

[30] supra

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