What is employee probation?
‘Probation’ is not a term used by the Fair Work Act 2009 (the Act). The Act refers to a Minimum Employment Period, which is determined by the amount of time the employee has worked in the business and the size of the business. The minimum employment period is the minimum period an employee must be engaged in the business before they may have access to an unfair dismissal claim if you terminate their employment.
For a small business with fewer than 15 employees this is 12 months, otherwise it is six months. During the minimum engagement period an employee may be terminated subject to written notice in accordance with the relevant provisions of the National Employment Standards (NES), the applicable industrial instrument or their employment contract.
Many consider it is best practice for an employer to have a policy relating to managing and possibly terminating employees during their probationary period. The first step, before the employee even starts working at your business, is drafting an employment contract clearly stating the length of the probationary period including the start and the end dates. Specify in what circumstances the probation may be extended and for how long.
In the first week of employment, it is considered best practice to tell the employee what you expect from them in terms of skills, tasks, deadlines, and conduct.
Dismissing an employee during their probation period
Before the probationary period ends, you should meet with the employee and let them know whether they have passed probation. If they are unsuccessful, you can extend their probationary period if the contract, award or registered agreement allow for it, or you can end their employment.
If you are ending their employment, it's considered best practice to meet with the employee to provide feedback about their performance or conduct and explain why the probation period was unsuccessful.
Under the National Employment Standards set out in the Fair Work Act 2009, you need to give an employee written notice to end their employment. The written notice should specify the period of notice given (or payment in lieu of notice), and the date the employment will end. If they are outside the minimum engagement period, an additional process will be required. Call the Fair Work Helpline for Employers by Peninsula for free initial hr advice on terminating an employee outside of the minimum engagement period on 1300 761 935.
Always confirm the outcome of the meeting in writing to the employee whether they are successful or unsuccessful, and if you are extending the probation or terminating their employment. Keep a copy as well as a written record of the discussion during the meeting.
Termination rules during probation (notice, minimum employment period & valid reasons)
If you choose to terminate an employee during probation, always provide a reason that can be supported with evidence if required.
If the probation period has gone beyond the minimum employment period, the Fair Work Commission has determined you should not dismiss any employee without a valid, sound, and defensible reason given the circumstances, and a fair dismissal process. Minimising the risks of a subsequent unfair dismissal claim. Valid reasons are varied and fall under four key areas:
- Capacity – if the employee lacks the ability, or is incapable, of completing the inherent requirements of their role
- Performance – if the employee’s skill level or quality of work is below what is required for the job, or if they are not meeting the standards outlined in their employment contract due to a lack of care or diligence;
- Misconduct - when an employee's behaviour is out of line with company policy, goes against the terms of an employment agreement, or is unlawful.
- Redundancy - when an employer decides they no longer need an employee’s job to be done by anyone, or the employer becomes insolvent or bankrupt.
Other reasons for dismissal may be valid if the employee does not have access to an unfair dismissal claim, provided those reasons don’t give rise to a general protections claim.
The Fair Work Act 2009 provides protection from dismissal for employees in various circumstances, including in relation to workplace rights, industrial action and discrimination, among others.
Notice and warning
Employees who are on probation have the same entitlements as a permanent full-time or part-time employee, including wage entitlements, sick leave, annual leave, and notice period. Once you have decided you do not wish to continue their employment you should meet with the employee to inform them of the reasons their probation is unsuccessful. You are required to give the employee sufficient written notification of the day their employment will end. The notice period varies, depending on how long an employee has worked within the business, and the applicable industrial instrument or employment contract.
The employee can either work during the notice period or alternatively the employer must make payment of the notice in lieu, which is to be included in the employee’s final pay along with any other entitlements owing, which may include, outstanding wages and unused (annual) leave entitlements.
Notice is paid at the employee’s full pay rate as if they had worked the minimum notice period, so payment in lieu of notice can include incentive-based payments and bonuses, loadings, allowances and overtime or penalty rates.
General protection and discrimination risks when dismissing an employee
The Act provides that an employee on probation can only bring an unfair dismissal claim after employment for a minimum of six months, or 12 months for a small business employer with fewer than 15 employees at the time of dismissal.
In most cases, probation periods rarely go beyond six months. However, as an employer, it’s essential to keep the minimum employment period in mind when you decide to extend a probationary employee’s period of employment. If you extend the period of employment beyond the minimum employment period and then terminate an employee, they may be able to bring bring an unfair dismissal claim against your business. This is different to a general protections claim.
An employee may be able to initiate a general protections claim regardless of the length of their employment if the dismissal is for a prohibited reason, so due to discrimination based on race, age, gender and other such attributes, or because the employee exercised a workplace right, such as a request for work from home flexibility.
Prohibited reasons include dismissal due to discrimination based on:
- Age
- Disability
- Gender
- Marital status
- Pregnancy
- Race
- Religion
- Sex and sexual orientation
Employers cannot terminate employees for protected reasons while they are on probation, for example because they filed a work complaint, acted as whistleblowers, or made an enquiry as to their pay.
As this is a complex area, if you are considering terminating an employee during their probation period Contact Peninsula for free initial advice and HR Support to help you manage your new employees, keep track of performance issues, and employee entitlements.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.