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Guide

What is the Fair Work Act?

Australia is governed by complex labour legislation that controls employment relations, workplace health and safety, and related matters. The employer-employee relationship is governed by laws, regulations and instruments that every Australian employer should know. In this guide, we explain the Fair Work Act, its importance, National Employment Standards (NES), minimum wage, and modern awards. Fair Work Act summary The Fair Work Act 2009 (the Act) is one of the primary pieces of legislation that govern the employment relationship in most of Australia’s private workplaces. It is the foundation of all minimum standards and regulations for employment that fall within the national workplace system. The Act is something employers in all industries and of all business sizes that fall within that system should be familiar with. The Fair Work Act 2009 and the Fair Work Regulations 2009: Provide a safety net of minimum entitlements. Enable flexible working arrangements. Provide fairness at work and prevent discrimination against employees. The Fair Work Act aims to provide a balanced framework for workplace relations by: Providing for terms and conditions of employment. Setting out the rights and responsibilities of employees, employers, and organisations regarding employment. Providing for compliance with, and enforcement of, the Act. Providing for the administration of the Act by establishing the Fair Work Commission and the Fair Work Ombudsman. On top of these provisions and guidelines, the Act also gives employees a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions through the National Employment Standards (NES), Modern Awards, and National Minimum Wage orders. National Employment Standards (NES) Among the Fair Work Act’s purposes, it includes a provision of legislated National Employment Standards (NES). These minimum standards are mandatory for employees covered by the national workplace relations system regardless of industry, business size, or unique circumstances. The purpose of these standards is to protect the minimum entitlements of employees working in Australia under the national system regardless of their award, registered agreement, or employment contract, and as such they are unbiased and cover the following areas: Maximum weekly hours of work Right to request flexible working arrangements. Parental leave and related entitlements. Personal/carer’s and compassionate leave and family and domestic violence leave. Community service leave. Annual leave. Long service leave. Public holidays. Notice of termination and redundancy pay. Fair Work Information Statement (FWIS) and Casual Employment Information Statement (CEIS). Casual employment and the employee choice pathway. Allowing eligible casual employees to transition to permanent (full-time or part-time) employment. Superannuation contributions. The right to disconnect. Allowing eligible employees to refuse work-related contact outside of their working hours. The Fair Work Commission and The Fair Work Ombudsman Of course, the practical application of the Fair Work Act 2009 and any other underlying entitlements in workplaces is not entirely left to the discretion of employers. Two regulatory agencies oversee the correct adherence to the Act in workplaces around Australia: the Fair Work Commission and the Fair Work Ombudsman. Together, these agencies administer, govern, and cooperate in fair work within Australia. To be more specific about what the two bodies work to achieve: The Fair Work Commission administers the provisions of the Act, making, reviewing, and updating the legislation, awards, or registered agreements including award entitlements, and national minimum wages. It also operates as a tribunal to hear disputes and make rulings for employee claims regarding unfair dismissal and unlawful terminations or bullying and harassment.The FWC is responsible for enforcement of the FWA. The Fair Work Ombudsman provides information, advice, and guidance on the Act, ensures compliance and investigates allegations of breaches of the Act in the workplace. Modern awards While the National Employment Standards provide a base level of provisions that apply to all employees in the national workplace system, most minimum entitlements for wages and employment conditions are found in Modern Awards or registered agreements. The Fair Work Act 2009 also contains provisions for Modern Awards and registered agreements which provide an additional set of minimum entitlements and conditions for employees, within which employers must operate employment agreements for certain industries, occupations or, in cases of a registered agreement, group of employees within a business or group of businesses. These awards and registered agreements also provide additional enforceable minimum employment standards for specific job roles within both the industries and occupations that they cover. In short, employers must provide their employees with at least their minimum entitlements under the relevant award or agreement. If an industry or occupation is not covered by a Modern Award, there is a Miscellaneous Award which generally covers employees who are not covered by any other Modern Award, or else the employee is Award-free, in which case the NES will still apply. The conditions of Modern Awards and registered agreements are administered by the Fair Work Commission. Modern Awards and registered agreements such as Enterprise Agreements typically contain terms and entitlements relating to minimum wages, penalty rates, types of employment, flexible working arrangements, hours of work, rest breaks, classifications, allowances, leave and leave loading, superannuation, and procedures for consultation, representation, and dispute settlement. Modern Awards, and agreements may also cover terms about industry-specific redundancy entitlements – that is, additional provisions regarding what employees being made redundant are entitled to within a certain industry. National minimum wage As the name suggests, a minimum wage is the base rate an employee is entitled to be paid for their ordinary hours of work. The minimum wage can be based on a Modern Award, Enterprise Agreement, or National Minimum Wage order. Minimum wages under modern awards may differ depending on the employee’s employment type, age, or work capacity, and can include: Wage rates for adults, in some cases, at different rates according to experience and qualifications. Wage rates for juniors, employees with a disability, and employees to whom training arrangements apply. Casual loadings. Regardless of which industrial instrument the employee is working under, they cannot be paid less than the national minimum rate of pay or the minimum award rate of pay for the specific job they do. Even if a lower amount is agreed upon by the employee. The national minimum wage and pay rates under Modern Awards are reviewed by the Fair Work Commission (FWC) every year. This is to determine if an increase is justified based on national living standards. Any changes to the national minimum wage or pay rates under Modern Awards need to be in effect well in advance of the next financial year. Employers must remain vigilant in being aware of any changes to their relevant Modern Awards or national minimum wage to ensure they are not underpaying their employees. Fair Work Act and your responsibilities As a business owner or employer in Australia, you are generally bound by the Fair Work Act 2009. You are responsible for treating all your employees fairly and issuing them correct entitlements. Under the Act, employee entitlements such as the NES, Modern Awards, and Enterprise Agreements set the minimum pay rates and conditions and contracts. You cannot take away the minimum entitlements found in the NES or appropriate Modern Award. So, it is important to be well informed of your obligations under the Act. Like most legislation, the Fair Work Act 2009 can be complex.   Understandably, business owners and employers may find themselves confused by the technical language or legal terminology. For clear guidance on managing these complex obligations, you can access dedicated Fair Work employer support to keep your business protected, or call our team for initial expert advice 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.

Guide

What is the Probationary Employment Period?

What is the probationary period in Australia? A probationary period is a contractual trial period at the start of employment that allows an employer to assess whether a new employee is suitable for the role. While probation itself is not defined in the Fair Work Act, employees gain access to unfair dismissal protections once they meet the minimum employment period, six months for large businesses and 12 months for small businesses. Generally, an employer decides the length of the probationary period in the employment agreement, but an award or registered agreement may state a specific time period. Employers should also understand how termination in probation period works, as the rules for ending employment during probation differ from standard dismissal processes. How Long Is the Probationary Period? Most probation periods in Australia range from three to six months, depending on the role and the terms of the employment contract. Small businesses often use a six‑month probation period because employees only gain unfair dismissal protections after 12 months of service. Larger employers commonly use three months, as employees gain unfair dismissal protections after six months. Can You Extend the Probationary Period? Employers can extend probation if the employment contract or award allows it. However, extending probation beyond the minimum employment period may not prevent an employee from accessing unfair dismissal protections. Extensions should be communicated in writing and supported by clear performance feedback. Minimum Employment Period and Fair Work Act Requirements The Fair Work Act 2009 (the Act) does not use the term ‘Probation.’ It's a contractual term and there is generally no law covering what is and isn’t a “probation period”. Probation refers to a trial period at the start of full-time or part-time employment that is generally outlined in the employment contract. The Act refers to a Minimum Employment Period, which is determined by how long the employee has worked for the business, and the size of the company. If the employee has met the minimum employment period, they will have access to unfair dismissal protections if their employment ends. How long is a probation period in Australia? For a small business (fewer than 15 employees), this is 12 months. Otherwise it is six months. Peninsula recommends small business employers set a probationary period of 6 months initially - as the employee gains access to unfair dismissal at 12 months. Additionally, Peninsula recommends a 3 month probationary period for large employers, which employees gain access to unfair dismissal at 6 months. If the employer is still unsure, they can extend or edit the length of the probationary period - however it's pointless to set it longer than the minimum employment period that applies to the specific employee. During the minimum engagement period, an employer may decide not to continue the employment relationship, provided they give written notice in line with the National Employment Standards (NES), industrial instrument, or contract. Employee entitlements on probation A probationary period is not a separate period of employment. Employees on probation receive the same entitlements as full-time and part-time employees. An employee may be able to initiate a general protection claim regardless of the length of their employment if the dismissal is due to discrimination based on race, age, gender, and other such attributes, or because the employee exercised a workplace right. For this reason, it's a good idea to seek formal advice from an employment relations professional or legal practitioner before terminating an employee. Performance management during probation During the probation period, you may consider holding regular meetings with the employee to review their performance and conduct. It also provides an opportunity to address any problems or raise concerns on either side. If the employee knows what is expected of them, it gives them the best chance of passing probation successfully. Extending the probationary period If you are unsure whether a new employee is suitable for the job, but you are not ready to dismiss them, you may want to extend their probation period. This can be done by agreement between you and the employee, or if stated in the terms of the employment agreement. However, you can only extend the probationary period by whatever time is stated in the contract, depending on how the clause in the contract is worded, e.g. it may state an ‘initial period of 6 months’ and ‘subject to change’ etc. For example, if you put an employee on probation for six months and the agreement allows you extend the period by an extra three months, then you would be allowed to do so under those conditions. Failing the probationary period If an employee does not pass their probation, they are entitled to receive written notice of their employment ending. They must be paid any accrued unused annual leave hours as part of their final pay. If the probationary period is less than six months, or 12 months if you are a small business with fewer than 15 employees at the time of dismissal, the employee will not be able to succeed in the event of lodging an unfair dismissal claim. Unfair dismissal claims If you choose to dismiss an employee on an extended probation period, and that employee has worked long enough to surpass the minimum employment period of six months (12 months for small businesses) they will be entitled to make an unfair dismissal claim against your business if the circumstances warrant it. A business is classified as a small business, depending on the number of employees employed at the time of the dismissal, which includes: The employee and any other employees being dismissed at that time. Any regular and systematic casual employees employed by the business at the time of the dismissal (so not all casual employees). Any employees of associated entities, including any based overseas. So, in some cases, choosing to extend the probationary period of an employee may serve no purpose, as the employee will have surpassed the minimum employment period and will have access to an unfair dismissal claim. Notice and Resignation During the Probation Period When an employee on probation resigns, they should give notice of their intention to leave, because they have the same responsibilities as a full-time or part-time employee. The length of the notice period will depend on the terms of their employment agreement or the relevant award or registered agreement. The employer should pay out any wages owing, unused annual leave, and notice (if applicable) as part of the employee’s final pay. What happens at the end of the probationary period? Before the probationary period ends, you should meet with the employee and inform them whether they have passed probation. If they are unsuccessful, you can extend their probationary period if the contract, award, or registered agreement allows it, or choose to end their employment.   If you are ending their employment, it is 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 instead of notice), and the date the employment will end. Always confirm the outcome of the meeting in writing to the employee. Whether they are successful or unsuccessful and whether you are extending the probation or terminating their employment. Keep a written record of the discussion during the meeting. Boost your staff management with Peninsula Being an employer in Australia means keeping up with complex legislation, awards, pay rates, and intense recruitment and hiring processes. Peninsula has a team of expert advisors that can handle all your tricky questions, offer support, and provide documentation for everything from hiring, onboarding, and probation, to pay rates, management, and dismissal. 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.

Guide

What is Notice Not Worked?

Dealing with multiple staff members involves dealing with conflicting leave requests, managing performance, and handling resignations and terminations. Sometimes an employee will resign and request to not work out their notice period. They may demand payment in lieu of notice. This can be frustrating if you are an employer and must fill an important position quickly. In this guide, we explain the basics of notice periods, your obligations when an employee doesn’t wish to work out their notice period, and ways Peninsula can help your business. Notice period When an employee resigns, they may have to give written notice via a letter (or email) to their employer. Although award and agreement-free employees don’t have to give notice when they resign, generally the employee’s employment contract, if not the applicable award or registered agreement, will set out the amount of notice an employee has to give when they resign. The notice period: Starts the day after the employee gives notice that they want to end their employment. Ends on the last day of employment. Typically, a notice period can be between one week to one month. Some companies have longer notice periods for senior employees or executive management. Employees who have been hired on a casual basis aren’t required to provide notice. In certain circumstances, casual employees may be required to provide notice, depending on the employment agreement or registered agreement in question. Notice periods and deductions An employee’s award, employment contract, enterprise agreement, or other registered agreement sets out: How much notice (if any) the employee must give when they resign. When an employer can withhold money if the employee does not give the minimum notice period. Taking money out of an employee’s pay before it is paid to them is called a deduction. An employer can only deduct money if: The employee agrees in writing and it’s principally for their benefit. It’s allowed by a law, a court order, or by the Fair Work Commission. It’s allowed under the employee’s award. It’s allowed under the employee’s registered agreement, and the employee agrees to it. It’s important for employers to note deductions outside of these causes run the risk of breaching Wage Theft Provisions which came into effect on 1 January 2025. Many awards say that in certain circumstances an employer can deduct up to one week’s wages from an employee’s pay if they do not provide the minimum amount of notice. Where an award allows this, an employer can only deduct pay from an employee’s wages under the award, not from other entitlements. Even if the deduction is made in accordance with an award, registered agreement, or contract, an employer can’t deduct if: It benefits the employer, not the employee, and the deduction would be unreasonable in the circumstances. The employee is under 18 years of age, and their parent or guardian hasn’t agreed in writing. Generally, the employee will work the notice period. However, sometimes the employer will not require the employee to work the notice period, in which case, the employer and employee may agree the employer can make payment in lieu of notice. If the employee does not work the notice period when the employment ends, this is notice-not-worked. Waiving notice periods If you do think it is in your best interest to waive the notice period, you can discuss this arrangement with your employee. You can end their contract immediately. You can also put the employee on garden leave if they have access to confidential information and resources. Remember that when an employee resigns, they want to leave as soon as possible. By compromising and negotiating, you are creating a comfortable situation for everyone involved. Payment in lieu of notice When an employer terminates an employee, the employer often does not require the employee to work the notice period, but the employee is still entitled to be paid for that period. In this case, the employer pays the employee in lieu as if they had worked the notice period. Besides other obligations, when terminating an employee, an employer is required to give the employee written notice of their last day of work. How far in advance they need to do this will depend on how long the employee has been employed. How much notice should employees give employers of resignation? Under the National Employment Standards (NES) employees are not required to give notice of their employment ending. Typically, a full-time or part-time employee’s award, registered agreement, or employment contract will set out how much notice (if any) an employee must give when they resign. A casual employee is not required to give notice upon resignation. Likewise, the employer does not have to give a casual employee notice when terminating their employment either due its ad hoc nature, though you should tell the employee why you are ending their employment, and there will be a requirement to consult with the employee prior to terminating them under the applicable award or registered agreement. Once you receive notice of resignation from an employee, you can either: Let the employee work out the notice period. Have the employee finish up early and pay them in lieu of notice. A combination of both, where an employee works a portion of their notice and the employer pays the rest of the notice period out. If you pay out any part of the notice period, you must pay the employee the exact same amount they would have received had they worked that notice period. Notice of termination to employee When you end an employee’s employment in most cases you have to give the employee the minimum notice period in writing or pay in lieu of notice. You do not have to give notice to casuals, seasonal workers, fixed-term workers on the expiry of the contract term, daily hire workers in the building construction or meat industries, or employees fired for serious misconduct. The amount of notice you have to give depends on the employee’s number of years of continuous service within the business. Fair work notice periods are listed as: Period of continuous service Minimum notice period 1 year or less 1 week More than 1 year - 3 years 2 weeks More than 3 years - 5 years 3 weeks More than 5 years 4 weeks Employees over 45 years of age with at least two years of continuous service are entitled to an extra week of notice of termination. When you terminate an employee’s employment, you must give the employee an employment termination letter. The letter should clearly state the reason for the termination, the date of the employee’s last day of work, and the fixed amount of entitlements and unpaid wages the employee will receive. Final payment notice When an employee’s employment ends you have to provide a final payment notice – in writing – which sets out the wages and entitlements due to the employee. It is your responsibility to ensure the last pay slip is delivered on time and correctly calculated. To calculate an employee’s final pay, refer to the applicable modern award, registered agreement, or employment contract to find out what entitlements you owe. While each contract is unique, you will most likely need to calculate one or more of the following entitlements: Unpaid wages (including penalty and overtime rates). Expense claims. Accrued annual leave entitlements. Payments in lieu of notice. Allowances. Check the terms of the employee’s modern award, registered agreement, or employment contract to find out the final pay due date. If none of the documents say so, you can process the final pay on their next scheduled payday within seven days of their employment ending. Manage notice periods and resignations Peninsula works with thousands of businesses across Australia and supports them in matters of notice periods, resignations, and dismissals. Call our free initial advice line on 1300 761 935 today. 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.

Guide

What is the Fair Work Act?

Australia is governed by complex labour legislation that controls employment relations, workplace health and safety, and related matters. The employer-employee relationship is governed by laws, regulations and instruments that every Australian employer should know. In this guide, we explain the Fair Work Act, its importance, National Employment Standards (NES), minimum wage, and modern awards. Fair Work Act summary The Fair Work Act 2009 (the Act) is one of the primary pieces of legislation that govern the employment relationship in most of Australia’s private workplaces. It is the foundation of all minimum standards and regulations for employment that fall within the national workplace system. The Act is something employers in all industries and of all business sizes that fall within that system should be familiar with. The Fair Work Act 2009 and the Fair Work Regulations 2009: Provide a safety net of minimum entitlements. Enable flexible working arrangements. Provide fairness at work and prevent discrimination against employees. The Fair Work Act aims to provide a balanced framework for workplace relations by: Providing for terms and conditions of employment. Setting out the rights and responsibilities of employees, employers, and organisations regarding employment. Providing for compliance with, and enforcement of, the Act. Providing for the administration of the Act by establishing the Fair Work Commission and the Fair Work Ombudsman. On top of these provisions and guidelines, the Act also gives employees a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions through the National Employment Standards (NES), Modern Awards, and National Minimum Wage orders. National Employment Standards (NES) Among the Fair Work Act’s purposes, it includes a provision of legislated National Employment Standards (NES). These minimum standards are mandatory for employees covered by the national workplace relations system regardless of industry, business size, or unique circumstances. The purpose of these standards is to protect the minimum entitlements of employees working in Australia under the national system regardless of their award, registered agreement, or employment contract, and as such they are unbiased and cover the following areas: Maximum weekly hours of work Right to request flexible working arrangements. Parental leave and related entitlements. Personal/carer’s and compassionate leave and family and domestic violence leave. Community service leave. Annual leave. Long service leave. Public holidays. Notice of termination and redundancy pay. Fair Work Information Statement (FWIS) and Casual Employment Information Statement (CEIS). Casual employment and the employee choice pathway. Allowing eligible casual employees to transition to permanent (full-time or part-time) employment. Superannuation contributions. The right to disconnect. Allowing eligible employees to refuse work-related contact outside of their working hours. The Fair Work Commission and The Fair Work Ombudsman Of course, the practical application of the Fair Work Act 2009 and any other underlying entitlements in workplaces is not entirely left to the discretion of employers. Two regulatory agencies oversee the correct adherence to the Act in workplaces around Australia: the Fair Work Commission and the Fair Work Ombudsman. Together, these agencies administer, govern, and cooperate in fair work within Australia. To be more specific about what the two bodies work to achieve: The Fair Work Commission administers the provisions of the Act, making, reviewing, and updating the legislation, awards, or registered agreements including award entitlements, and national minimum wages. It also operates as a tribunal to hear disputes and make rulings for employee claims regarding unfair dismissal and unlawful terminations or bullying and harassment.The FWC is responsible for enforcement of the FWA. The Fair Work Ombudsman provides information, advice, and guidance on the Act, ensures compliance and investigates allegations of breaches of the Act in the workplace. Modern awards While the National Employment Standards provide a base level of provisions that apply to all employees in the national workplace system, most minimum entitlements for wages and employment conditions are found in Modern Awards or registered agreements. The Fair Work Act 2009 also contains provisions for Modern Awards and registered agreements which provide an additional set of minimum entitlements and conditions for employees, within which employers must operate employment agreements for certain industries, occupations or, in cases of a registered agreement, group of employees within a business or group of businesses. These awards and registered agreements also provide additional enforceable minimum employment standards for specific job roles within both the industries and occupations that they cover. In short, employers must provide their employees with at least their minimum entitlements under the relevant award or agreement. If an industry or occupation is not covered by a Modern Award, there is a Miscellaneous Award which generally covers employees who are not covered by any other Modern Award, or else the employee is Award-free, in which case the NES will still apply. The conditions of Modern Awards and registered agreements are administered by the Fair Work Commission. Modern Awards and registered agreements such as Enterprise Agreements typically contain terms and entitlements relating to minimum wages, penalty rates, types of employment, flexible working arrangements, hours of work, rest breaks, classifications, allowances, leave and leave loading, superannuation, and procedures for consultation, representation, and dispute settlement. Modern Awards, and agreements may also cover terms about industry-specific redundancy entitlements – that is, additional provisions regarding what employees being made redundant are entitled to within a certain industry. National minimum wage As the name suggests, a minimum wage is the base rate an employee is entitled to be paid for their ordinary hours of work. The minimum wage can be based on a Modern Award, Enterprise Agreement, or National Minimum Wage order. Minimum wages under modern awards may differ depending on the employee’s employment type, age, or work capacity, and can include: Wage rates for adults, in some cases, at different rates according to experience and qualifications. Wage rates for juniors, employees with a disability, and employees to whom training arrangements apply. Casual loadings. Regardless of which industrial instrument the employee is working under, they cannot be paid less than the national minimum rate of pay or the minimum award rate of pay for the specific job they do. Even if a lower amount is agreed upon by the employee. The national minimum wage and pay rates under Modern Awards are reviewed by the Fair Work Commission (FWC) every year. This is to determine if an increase is justified based on national living standards. Any changes to the national minimum wage or pay rates under Modern Awards need to be in effect well in advance of the next financial year. Employers must remain vigilant in being aware of any changes to their relevant Modern Awards or national minimum wage to ensure they are not underpaying their employees. Fair Work Act and your responsibilities As a business owner or employer in Australia, you are generally bound by the Fair Work Act 2009. You are responsible for treating all your employees fairly and issuing them correct entitlements. Under the Act, employee entitlements such as the NES, Modern Awards, and Enterprise Agreements set the minimum pay rates and conditions and contracts. You cannot take away the minimum entitlements found in the NES or appropriate Modern Award. So, it is important to be well informed of your obligations under the Act. Like most legislation, the Fair Work Act 2009 can be complex.   Understandably, business owners and employers may find themselves confused by the technical language or legal terminology. For clear guidance on managing these complex obligations, you can access dedicated Fair Work employer support to keep your business protected, or call our team for initial expert advice 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.

Guide

What is the Probationary Employment Period?

What is the probationary period in Australia? A probationary period is a contractual trial period at the start of employment that allows an employer to assess whether a new employee is suitable for the role. While probation itself is not defined in the Fair Work Act, employees gain access to unfair dismissal protections once they meet the minimum employment period, six months for large businesses and 12 months for small businesses. Generally, an employer decides the length of the probationary period in the employment agreement, but an award or registered agreement may state a specific time period. Employers should also understand how termination in probation period works, as the rules for ending employment during probation differ from standard dismissal processes. How Long Is the Probationary Period? Most probation periods in Australia range from three to six months, depending on the role and the terms of the employment contract. Small businesses often use a six‑month probation period because employees only gain unfair dismissal protections after 12 months of service. Larger employers commonly use three months, as employees gain unfair dismissal protections after six months. Can You Extend the Probationary Period? Employers can extend probation if the employment contract or award allows it. However, extending probation beyond the minimum employment period may not prevent an employee from accessing unfair dismissal protections. Extensions should be communicated in writing and supported by clear performance feedback. Minimum Employment Period and Fair Work Act Requirements The Fair Work Act 2009 (the Act) does not use the term ‘Probation.’ It's a contractual term and there is generally no law covering what is and isn’t a “probation period”. Probation refers to a trial period at the start of full-time or part-time employment that is generally outlined in the employment contract. The Act refers to a Minimum Employment Period, which is determined by how long the employee has worked for the business, and the size of the company. If the employee has met the minimum employment period, they will have access to unfair dismissal protections if their employment ends. How long is a probation period in Australia? For a small business (fewer than 15 employees), this is 12 months. Otherwise it is six months. Peninsula recommends small business employers set a probationary period of 6 months initially - as the employee gains access to unfair dismissal at 12 months. Additionally, Peninsula recommends a 3 month probationary period for large employers, which employees gain access to unfair dismissal at 6 months. If the employer is still unsure, they can extend or edit the length of the probationary period - however it's pointless to set it longer than the minimum employment period that applies to the specific employee. During the minimum engagement period, an employer may decide not to continue the employment relationship, provided they give written notice in line with the National Employment Standards (NES), industrial instrument, or contract. Employee entitlements on probation A probationary period is not a separate period of employment. Employees on probation receive the same entitlements as full-time and part-time employees. An employee may be able to initiate a general protection claim regardless of the length of their employment if the dismissal is due to discrimination based on race, age, gender, and other such attributes, or because the employee exercised a workplace right. For this reason, it's a good idea to seek formal advice from an employment relations professional or legal practitioner before terminating an employee. Performance management during probation During the probation period, you may consider holding regular meetings with the employee to review their performance and conduct. It also provides an opportunity to address any problems or raise concerns on either side. If the employee knows what is expected of them, it gives them the best chance of passing probation successfully. Extending the probationary period If you are unsure whether a new employee is suitable for the job, but you are not ready to dismiss them, you may want to extend their probation period. This can be done by agreement between you and the employee, or if stated in the terms of the employment agreement. However, you can only extend the probationary period by whatever time is stated in the contract, depending on how the clause in the contract is worded, e.g. it may state an ‘initial period of 6 months’ and ‘subject to change’ etc. For example, if you put an employee on probation for six months and the agreement allows you extend the period by an extra three months, then you would be allowed to do so under those conditions. Failing the probationary period If an employee does not pass their probation, they are entitled to receive written notice of their employment ending. They must be paid any accrued unused annual leave hours as part of their final pay. If the probationary period is less than six months, or 12 months if you are a small business with fewer than 15 employees at the time of dismissal, the employee will not be able to succeed in the event of lodging an unfair dismissal claim. Unfair dismissal claims If you choose to dismiss an employee on an extended probation period, and that employee has worked long enough to surpass the minimum employment period of six months (12 months for small businesses) they will be entitled to make an unfair dismissal claim against your business if the circumstances warrant it. A business is classified as a small business, depending on the number of employees employed at the time of the dismissal, which includes: The employee and any other employees being dismissed at that time. Any regular and systematic casual employees employed by the business at the time of the dismissal (so not all casual employees). Any employees of associated entities, including any based overseas. So, in some cases, choosing to extend the probationary period of an employee may serve no purpose, as the employee will have surpassed the minimum employment period and will have access to an unfair dismissal claim. Notice and Resignation During the Probation Period When an employee on probation resigns, they should give notice of their intention to leave, because they have the same responsibilities as a full-time or part-time employee. The length of the notice period will depend on the terms of their employment agreement or the relevant award or registered agreement. The employer should pay out any wages owing, unused annual leave, and notice (if applicable) as part of the employee’s final pay. What happens at the end of the probationary period? Before the probationary period ends, you should meet with the employee and inform them whether they have passed probation. If they are unsuccessful, you can extend their probationary period if the contract, award, or registered agreement allows it, or choose to end their employment.   If you are ending their employment, it is 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 instead of notice), and the date the employment will end. Always confirm the outcome of the meeting in writing to the employee. Whether they are successful or unsuccessful and whether you are extending the probation or terminating their employment. Keep a written record of the discussion during the meeting. Boost your staff management with Peninsula Being an employer in Australia means keeping up with complex legislation, awards, pay rates, and intense recruitment and hiring processes. Peninsula has a team of expert advisors that can handle all your tricky questions, offer support, and provide documentation for everything from hiring, onboarding, and probation, to pay rates, management, and dismissal. 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.

Guide

What is Notice Not Worked?

Dealing with multiple staff members involves dealing with conflicting leave requests, managing performance, and handling resignations and terminations. Sometimes an employee will resign and request to not work out their notice period. They may demand payment in lieu of notice. This can be frustrating if you are an employer and must fill an important position quickly. In this guide, we explain the basics of notice periods, your obligations when an employee doesn’t wish to work out their notice period, and ways Peninsula can help your business. Notice period When an employee resigns, they may have to give written notice via a letter (or email) to their employer. Although award and agreement-free employees don’t have to give notice when they resign, generally the employee’s employment contract, if not the applicable award or registered agreement, will set out the amount of notice an employee has to give when they resign. The notice period: Starts the day after the employee gives notice that they want to end their employment. Ends on the last day of employment. Typically, a notice period can be between one week to one month. Some companies have longer notice periods for senior employees or executive management. Employees who have been hired on a casual basis aren’t required to provide notice. In certain circumstances, casual employees may be required to provide notice, depending on the employment agreement or registered agreement in question. Notice periods and deductions An employee’s award, employment contract, enterprise agreement, or other registered agreement sets out: How much notice (if any) the employee must give when they resign. When an employer can withhold money if the employee does not give the minimum notice period. Taking money out of an employee’s pay before it is paid to them is called a deduction. An employer can only deduct money if: The employee agrees in writing and it’s principally for their benefit. It’s allowed by a law, a court order, or by the Fair Work Commission. It’s allowed under the employee’s award. It’s allowed under the employee’s registered agreement, and the employee agrees to it. It’s important for employers to note deductions outside of these causes run the risk of breaching Wage Theft Provisions which came into effect on 1 January 2025. Many awards say that in certain circumstances an employer can deduct up to one week’s wages from an employee’s pay if they do not provide the minimum amount of notice. Where an award allows this, an employer can only deduct pay from an employee’s wages under the award, not from other entitlements. Even if the deduction is made in accordance with an award, registered agreement, or contract, an employer can’t deduct if: It benefits the employer, not the employee, and the deduction would be unreasonable in the circumstances. The employee is under 18 years of age, and their parent or guardian hasn’t agreed in writing. Generally, the employee will work the notice period. However, sometimes the employer will not require the employee to work the notice period, in which case, the employer and employee may agree the employer can make payment in lieu of notice. If the employee does not work the notice period when the employment ends, this is notice-not-worked. Waiving notice periods If you do think it is in your best interest to waive the notice period, you can discuss this arrangement with your employee. You can end their contract immediately. You can also put the employee on garden leave if they have access to confidential information and resources. Remember that when an employee resigns, they want to leave as soon as possible. By compromising and negotiating, you are creating a comfortable situation for everyone involved. Payment in lieu of notice When an employer terminates an employee, the employer often does not require the employee to work the notice period, but the employee is still entitled to be paid for that period. In this case, the employer pays the employee in lieu as if they had worked the notice period. Besides other obligations, when terminating an employee, an employer is required to give the employee written notice of their last day of work. How far in advance they need to do this will depend on how long the employee has been employed. How much notice should employees give employers of resignation? Under the National Employment Standards (NES) employees are not required to give notice of their employment ending. Typically, a full-time or part-time employee’s award, registered agreement, or employment contract will set out how much notice (if any) an employee must give when they resign. A casual employee is not required to give notice upon resignation. Likewise, the employer does not have to give a casual employee notice when terminating their employment either due its ad hoc nature, though you should tell the employee why you are ending their employment, and there will be a requirement to consult with the employee prior to terminating them under the applicable award or registered agreement. Once you receive notice of resignation from an employee, you can either: Let the employee work out the notice period. Have the employee finish up early and pay them in lieu of notice. A combination of both, where an employee works a portion of their notice and the employer pays the rest of the notice period out. If you pay out any part of the notice period, you must pay the employee the exact same amount they would have received had they worked that notice period. Notice of termination to employee When you end an employee’s employment in most cases you have to give the employee the minimum notice period in writing or pay in lieu of notice. You do not have to give notice to casuals, seasonal workers, fixed-term workers on the expiry of the contract term, daily hire workers in the building construction or meat industries, or employees fired for serious misconduct. The amount of notice you have to give depends on the employee’s number of years of continuous service within the business. Fair work notice periods are listed as: Period of continuous service Minimum notice period 1 year or less 1 week More than 1 year - 3 years 2 weeks More than 3 years - 5 years 3 weeks More than 5 years 4 weeks Employees over 45 years of age with at least two years of continuous service are entitled to an extra week of notice of termination. When you terminate an employee’s employment, you must give the employee an employment termination letter. The letter should clearly state the reason for the termination, the date of the employee’s last day of work, and the fixed amount of entitlements and unpaid wages the employee will receive. Final payment notice When an employee’s employment ends you have to provide a final payment notice – in writing – which sets out the wages and entitlements due to the employee. It is your responsibility to ensure the last pay slip is delivered on time and correctly calculated. To calculate an employee’s final pay, refer to the applicable modern award, registered agreement, or employment contract to find out what entitlements you owe. While each contract is unique, you will most likely need to calculate one or more of the following entitlements: Unpaid wages (including penalty and overtime rates). Expense claims. Accrued annual leave entitlements. Payments in lieu of notice. Allowances. Check the terms of the employee’s modern award, registered agreement, or employment contract to find out the final pay due date. If none of the documents say so, you can process the final pay on their next scheduled payday within seven days of their employment ending. Manage notice periods and resignations Peninsula works with thousands of businesses across Australia and supports them in matters of notice periods, resignations, and dismissals. Call our free initial advice line on 1300 761 935 today. 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.