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.
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