A probationary period is the start of a permanent full-time or part-time employment relationship, It is not a legal concept or entitlement. It is merely a HR tool that as an employer you may consider implementing to assess if your new employee is suitable for the role before they pass the minimum employment period. This probationary period can also act as a time of settling into the new role for the employee and for them to understand their duties.
Generally, an employer decides the length of the probationary period in the employment agreement, but an award or registered agreement may provide otherwise.
Probation and the Fair Work Act
The Fair Work Act 2009 (the Act) does not use the term ‘Probation.’ It is 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 a full-time or part-time employee’s employment that is generally set out in their employment contract.
The Act refers to a Minimum Employment Period determined by the time the employee has worked in the business and the size of the company. If the employee has met the minimum employment period, the employee will have access to unfair dismissal which is the minimum period that an employee must be engaged for.
Length of the probation
For a small business with less than 15 employees, this is 12 months, otherwise it is six months.
This is the length of the minimum employment period depending on the size of the company. Peninsula recommends small employers to set a probationary period of 6 months initially - as the employee gains access to UD at 12 months. Additionally, Peninsula recommends a 3 month probationary period for large employers, which employees gain access to UD at 6 months. From here, if the employer is still unsure, they can extend or edit the length of the probationary period - however it becomes pointless to set it longer than the minimum employment period that applies to the specific employee.
During the minimum engagement period, an employee may be terminated subject to written notice by the relevant provisions of the NES, industrial instrument, or contact.
Employee entitlements on probation
A probationary period is not a separate period of employment. Recruits on probation receive the same entitlements as permanent 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 may be prudent to seek formal advice from an employment relations professional or legal practitioner before the termination of an employee.
Performance management during probation
During the probation period, you may consider holding regular meetings with the employee to review the employee’s performance. It also provides an opportunity to fix 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 yet, then you may want to extend their probation period.
Technically speaking, you are allowed to do this by agreement or if the terms of the employment agreement give permission. 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. 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 lets 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 and be paid out 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 less than 15 employees at the time of dismissal, the employee will not be able to succeed in the event of 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 (or 12 months if you are a small business) they will be entitled to make an unfair dismissal claim against your business if the circumstances warrant it.
The size of your business dictates how long an employee must work for you before they can make an unfair dismissal claim. If your business has less than 15 employees, the employee must work at least 12 months. If your company has 15 or more employees, the employee only must work for at least six months to access an unfair dismissal claim.
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.
Resigning while on probation
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 end their employment.
If you are ending their employment, it may be 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 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 advisors and experts that can handle all your tricky questions and offer support, and documentation for everything from hiring, onboarding, probation, to pay rates, management, and dismissal.