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A probation period is a stretch of time where a new employee trials their job. This provides an opportunity for 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 normal employment laws. This is a common misconception and many employers get into trouble by thinking that they are immune to any legal consequences for actions taken in a probation period. This article will answer some of the common questions on probation, including:

  • extension of probation; and
  • termination while on probation.

What is a Probation Period and How Long Is It?

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 three to six months of the contract. The purpose of probation is to give both 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 relationship. 

Keep in mind that the law mandates minimum notice periods for permanent employees. This means that 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 legislative entitlements. However, this safeguard will not apply if you are terminating the employee for serious misconduct. This could include actions like:

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

How Do I Implement a Probation Period?

You must clearly 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.

Who Can Get a Probation Period?

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

Can I Terminate an Employee on Probation for Any Reason?

Starting a new employee on probation does not mean that you can terminate them for any reason. This is one of the most common myths surrounding probation, which 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: 

  • six months if the employer has 15 or more permanent employees; or
  • twelve months if the employer has fewer than 15 permanent employees.

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

Importantly, 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, if you have more than 15 employees and your employee has a nine-month probation, you could still face an unfair dismissal claim for a termination made 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 an 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 it can be brought by employees who have worked for your business for any length of time. They can even be brought by prospective employees.

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

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 document in writing that both 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.

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. It must be established under your employment contract and can only be extended by the written consent of both parties. An employee can only bring an unfair dismissal claim against you after: 

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

However, there are no minimum time requirements for an employee to bring a general protections claim. If you would like assistance establishing a probation period in your employee contracts or terminating an employee on probation, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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