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Probation Period FAQ for Employers

A probation period is a stretch of time when a new employee trials their job. This allows the employer and employee to test each other out before committing to a long-term relationship. However, this does not mean that you are exempt from complying with standard employment laws. Unfortunately, this is a common misconception, and many employers get into trouble by thinking they are immune to any legal consequences for actions taken during a probation period. This article will answer some common questions you might have about probation periods.

What is a Probation Period?

A probation period is a set term where either the employer or the employee can terminate the employment relationship with less notice than is generally required under the standard contract term. It usually extends for the first 3, 6 or 12 months of the employee’s contract. The purpose of probation is to give employers and employees flexibility in deciding whether the workplace is a good fit.

For example, many employers will ask employees to give four weeks’ notice of termination. However, during the probation period, they may only seek one week’s notice to end the agreement.

Keep in mind that the law mandates minimum notice periods for permanent employees. Accordingly, even if you terminate an employee during probation, they are entitled to at least one week’s notice. The contract of employment cannot undercut those minimum legal entitlements. However, this safeguard will not apply if you terminate the employee for serious misconduct. This includes serious actions such as:

  • stealing from the workplace;
  • putting the safety of others at risk;
  • acting fraudulently; or
  • being intoxicated at work.

How Do I Implement a Probation Period?

You must set out the conditions of a probation period in your employment contract for the relationship to be subject to the altered terms of probation. Otherwise, the standard contract terms will continue to apply. This is because there is no implied probation period, meaning the employee must agree to it under your contract.

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Who Can Get a Probation Period?

Typically, only permanent full-time and part-time employees will have a probation period in their contract. Casual employees generally do not have a notice period at any point during their casual employment. Accordingly, they can resign or be dismissed without prior warning. This means it is unnecessary to include a probation period in their contract.

Dismissing an Employee During Probation

Starting a new employee on probation does not mean that you can terminate them for any reason. Unfortunately, this is one of the most common myths surrounding probation. Moreover, it could potentially result in a Fair Work claim against your business.

There are two primary Fair Work claims that an employee can bring against an employer, including:

  • unfair dismissal; and
  • general protections

You could be at risk of being the subject of both of these claims if you terminate an employee without cause, even if the employee is on probation.

Unfair Dismissal Claim

You might receive an unfair dismissal claim if you have terminated an employee on performance-related grounds, without giving them sufficient warning and the opportunity to improve their performance. An employee is only entitled to bring an unfair dismissal claim after having worked with an employer for: 

  • 6 months if the employer has 15 or more permanent employees; or
  • 12 months if the employer has fewer than 15 permanent employees.

Typically these periods will align with an employee’s probation period.

Whether a worker can bring an unfair dismissal claim is based on the length of time they have worked for your business, not whether or not they are on probation.

For example, suppose you have more than 15 employees and your employee has a 9-month probation. Accordingly, you may still face an unfair dismissal claim for termination between months six and nine.

General Protections Claim

Your employees could also bring a general protections claim against your business. This is a claim by an employee that you have taken adverse action against an employee because:

  • of a feature of that person (i.e. discrimination);
  • they exercised a workplace right; or
  • they engaged in industrial action.

In this context, adverse action includes terminating their employment. Unlike unfair dismissal claims, there are no restrictions upon who can bring a general protections claim. This means that an employee does not need to meet a certain employment length to qualify. Furthermore, even a prospective employee may bring this claim.

Suppose you think you need to terminate an employee. In that case, it is a good idea to seek advice from a human resources or employment law professional to ensure that you comply with your obligations under the Fair Work Act

What Happens at the End of a Probation Period?

At the end of the probation period, you and your employee can decide whether employment should continue. If an employee does not pass the probation period, they are entitled to receive notice of the end of their employment and will be entitled to receive payment for any unused paid leave. The end of a probation period equally serves the employee, who can decide if they wish to continue their employment.

You must schedule a review meeting before the end of the probation period, as once the probation period ends, the employee will pass by default. You may also provide your employees with written notice that they have passed the probation period and confirm their ongoing employment.

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Can I Extend My Employee’s Probation Period?

You can extend your employee’s probation period if:

  • your employee agrees to the extension; or
  • you have a right to extend it under the employment contract.

You should state in writing that you and your employee have agreed to the extension. This will help to minimise your risk of a successful claim if the relationship between you and the employee breaks down.

However, it is essential to remember that unfair dismissal protections will protect the employee after 6 months regardless (or 12 months for small businesses). Therefore, extending the probation period might be redundant. Suppose you dismiss the employee beyond this initial 6 or 12-month period. In that case, you will still need to provide reasons for the termination as you would with terminating the employment of any other employee.

Key Takeaways

Probation is a set period where both an employer and an employee can terminate the employment relationship with less notice than usually required, typically spanning three to six months. You must specify this in your employment contract. Furthermore, you may only extend it with the written consent of both parties. An employee can only bring an unfair dismissal claim against you after: 

  • 6 months if you have over 15 permanent staff; or 
  • 12 months if you have less than 15 permanent staff.

If you need assistance establishing a probation period in your workplace, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

What is a probation period? 

A probation period is a set term where either the employer or the employee can terminate the employment relationship with less notice than is generally required under the standard contract term. It usually extends for the first 3, 6 or 12 months of the employee’s contract. 

Can I extend my employee’s probation period?

You can extend your employee’s probation period if your employee agrees to the extension, or you have a right to extend it under the employment contract. You should state in writing that you and your employee have agreed to the extension. However, unfair dismissal protections will protect the employee after 6 months (or 12 months for small businesses), which might make extending the probation period redundant.

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Emily Young

Emily Young

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