Probation Periods; Getting it Right

Feb 28th, 2018

We are receiving an increasing number of enquiries relating to probationary periods, with employees and employers looking to better understand their rights and responsibilities in the early stages of an employment relationship. This article will look to comprehensively break down the concept of a probationary period, and discuss how it works in relation to the Fair Work Act 2009 and the Australian employment landscape as a whole. 

A snapshot.

When every new employee begins working for an employer, both parties have the right to test their suitability for the employment relationship in a trial or probationary period. Generally, these periods can be anywhere from one to six months depending on the seniority of the role. During this period, the employer will naturally look to monitor the employee with a higher level of scrutiny to see if they are suitable for the business in terms of both performance and workplace culture. At the same time, the employee will use a probationary period to gauge whether or not the role, and the team they are working within, is right for them. While a probationary period is essentially “less regulated” in terms of dismissal rights and obligations, there are still some pitfalls employers (and employees) need to consider before ending the arrangement in its infancy. 

The Need to Provide Notice. 

This is arguably the most common misconception regarding probationary periods. Many employers and employees alike appear to be under the impression that no notice is required to be given to the other party in the event of a termination because they are in a probationary period. As a probationary period is generally between one to six months, there is a mandatory requirement to provide the other party with one week's notice in the event of a termination*. This goes for both resignation and dismissal. Most Modern Awards contain a provision that allows the employer to withhold monies if the employee fails to provide the correct amount of notice. Similarly, an employee can make a claim to the Fair Work Ombudsman for underpayment if they were not provided the right amount of notice when they were dismissed. 

*Some modern awards may contain a longer notice period.

The Need to Stipulate the Probationary Period Clearly. 

Before commencing employment, it should be made abundantly clear to the employee that the first period (of between one and six months, whatever is decided by the employer) will be a probationary period. This should be confirmed in writing within an employment contract. 

Terminating for a genuine reason. 

Termination in a probationary period is no different to any other instance of termination in the fact that employers can only terminate for a genuine reason. In a probation period, this could include performance, conduct, or the employee not being compatible with the culture of the organisation.

Even in a probationary period, it is strongly recommended (where possible) to keep a record of any necessary documentation to prove that the termination was effected due to one of those reasons. If employers fail to properly document the employee’s poor performance (e.g. evidence performance meetings, warnings etc.) or conduct, they may still be left open to a discrimination claim if the employee feels they were dismissed because of a protected feature such as race, gender, pregnancy or a medical condition. Remember, it is best practice to notify an employee that there is an issue with their performance or conduct, and give them a chance to improve before dismissal is decided. One method of achieving this could be to introduce a “mid probation review” meeting, where the employee is notified as to how they are tracking and areas in which they can improve. 

Relationship between probationary periods and Unfair Dismissal. 

Under the Fair Work Act 2009, there is no longer a reference to the term “probationary period” for the purposes of dismissal. Instead, an employee is unable to make a claim for unfair dismissal until they have worked for at least 12 months in a small business (less than 15 employees), or 6 months in a medium to large size business. Despite this, as mentioned previously, employers should still ensure they are correctly documenting all relevant information that will act as evidence to prove that the termination occurred for a genuine reason. While the employee is unable to make a claim for unfair dismissal, they can still make a claim of unlawful dismissal or adverse action if they were dismissed for a discriminatory reason.

Extending a probationary period. 

While technically an employer can extend a probationary period right up to the minimum qualifying period for unfair dismissal (i.e. 12 months for small businesses, 6 months for medium to large size businesses), it is recommended to have a provision in the original contract of employment that states that probationary period may be extended. In any circumstance where a probationary period is extended, the employee should be notified (and agree) in writing.

In summary. 

While every employer has the right to implement a probationary period at the start of the employment relationship, they must ensure they are avoiding some of the common pitfalls that are listed above. When determining an appropriate probation period, the employer should look at the specific role, as well as the performance of previous staff in a similar capacity to ensure the period of probation is reasonable in the circumstances. While technically an employer of a small business can implement a probationary period of 12 months, an employee is unlikely to feel valued if they are “on trial” for the first year of their employment. For both employers and employees, don’t lose sight of what a probationary period is for: to give both parties the opportunity to test whether the relationship is right for them.

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