Probation periods and minimum employment periods – a guide for employees

It is common for an employer to place a new employee on a probation period ranging from a few weeks to a few months. The intention of a probation period is for the employer to assess the employee’s performance and ensure their suitability of the role. In this blog post I detail the legal position of employees on probation and explain how the probation period and unfair dismissal regime interact. Information in this blog post is only relevant to national system employees (see sections 13 and 14 of the Fair Work Act 2009).

Characteristics of probation periods

The length of a probation period can be found in the employment contract and/or letter of engagement. Employees on probation are entitled to accrue and access entitlements provided under the Fair Work Act 2009 (FW Act) including annual leave and sick leave. Probation is not a separate period of employment and any entitlements accrued will carry over after probation has ended.

At the end of a probation period you should receive a letter confirming that your probation period has ended and that your employment will continue. Ideally you will also have a meeting with your employer at this time to receive feedback.

How long can a probation period be?

The length of a probation period is at the discretion of the employer. However, note the information below about the minimum employment period and protection from unfair dismissal. A probation period is a separate concept to a minimum employment period. A probation period is selected by the employer and reflected in the employment contract or letter of engagement, whereas the minimum employment period is a statutory period set under s.383 of the FW Act. While it is logical for an employer to select a probation period the same as a minimum employment period (generally 6 months), this will not be the case in every situation.

An employer can only extend a probation period if the employment contract allows for an extension or if the employee agrees to the extension. In contrast an employer cannot extend the statutory minimum employment period (discussed below).

What if I do not pass a probation period?

An employer does not have to wait until the completion of a probation period to terminate an employee. Employees who do not pass a probation period are still entitled to receive the appropriate notice for the cessation of their employment and be paid out unused annual leave and other accrued entitlements. The minimum notice requirement where an employee has 1 year or less continuous service is 1 week of notice.

While an employee who fails to pass a probation period may not be protected from unfair dismissal, the employee may be able to take action against their employer under general protections laws, anti-discrimination laws, or breach of employment contract. Employees should also familiarise themselves with any additional rights provided in an applicable award or enterprise agreement.

Can I make an unfair dismissal claim?

The unfair dismissal regime in the FW Act is available to employees who earn less than the high income threshold (currently $138,900) and who have completed the minimum employment period (s.382). The minimum employment period is 6 months or 1 year for small business employers (s.383). The probation period and the minimum employment period may overlap, as employers often choose a six month probation period, enabling the employer to terminate the employee’s employment prior to the end of the probation period, meaning the employee is not protected from unfair dismissal. However, it is possible for a probation period to be longer than the minimum employment period. For example where a probation period for an employee working for a large company is 12 months and an employee’s employment is terminated at 11 months, the employee will be protected by the unfair dismissal regime as the six month minimum employment period will be satisfied.  

Remember that an unfair dismissal application must be made within 21 days of the date of dismissal so if you believe you have a claim you should seek legal advice as soon as possible after the date of dismissal (s 366 Fair Work Act 2009).  

Why the confusion?

The difference between a probation period and a minimum employment period appears straight forward. Confusion among practitioners and those working in human resources appears to have arisen from hanging on to old concepts that applied under the old Workplace Relations Act 1996 (WR Act).

Section 643 of the WR Act provided that an employee wishing to make an application relating to their termination of employment must among other criteria have served the qualifying period of employment. The definition of qualifying period of employment differs from the definition of the minimum employment period under the FW Act. Section 643(7) of the WR Act provided:

(7)  For the purposes of subsection (6), the qualifying period of employment is:

(a)  6 months; or

(b)  a shorter period, or no period, determined by written agreement between the employee and employer before the commencement of the employment; or

(c)  a longer period determined by written agreement between the employee and employer before the commencement of the employment, being a reasonable period having regard to the nature and circumstances of the employment.

As you can see from the wording of the section, the WR Act allowed the employee and employer to agree to a shorter or longer qualifying period of employment. It was therefore practical for employers under the old WR Act to make the qualifying period of employment the same as the probation period and the qualifying period of employment was often referred to as the probation period. This flexibility to agree on a shorter or longer qualifying period no longer exists. The FW Act provides a statutory minimum employment period of 6 months (1 year for small business employees) and this is a separate concept to a probation period the employer may include in a contract of employment.