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.
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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.