By Charles Power
[Ed note: Employment contracts will often contain provisions for a probationary period – an initial period of service during which time both you and the employee can decide whether you want the employment to continue. This gives you an opportunity to assess the employee’s suitability for the role for which they have been recruited. A probationary employee will know that their work performance will be under review and that they do not have a guarantee of ongoing employment. However, there are many myths about probationary employment. This week, Charles Power is going to bust four of them.]
MYTH: Probationary employees are exempt from Fair Work Act (FW Act) unfair dismissal laws.
FACT: While under the FW Act’s predecessor, the Workplace Relations Act, employees serving a reasonable period of probation were exempt from unfair dismissal laws, that exemption is not provided in the FW Act.
Instead, there is a requirement that in order to make a FW Act unfair dismissal claim, the dismissed employee must have served a minimum employment period of 6 months (or 12 months if the employer employs fewer than 15 employees). That is the case regardless of whether the employment contract includes a probationary or trial period.
MYTH: I don’t have to give a probationary employee any notice of termination, or any reasons or warnings.
FACT: Many probationary clauses provide a lesser notice period for termination of employment during the probationary period as opposed to after the expiration of the probationary period. However, the notice period for termination during a probationary period cannot be less than the minimum periods prescribed in the National Employment Standards (NES) contained in the FW Act. The NES provides for 1-week notice for employees with less than 12 months’ service.
If a probationary period matches the minimum employment period (i.e. 6 or 12 months), the exclusion of unfair dismissal laws lessens your legal exposure if you dismiss before the expiration of the minimum employment period without a valid reason or warnings.
However, the dismissed employee can still challenge the dismissal on grounds that it is in breach of anti-discrimination or general protection laws, or a breach of employment contract.
Therefore, if you decide to dismiss a probationary employee, you should still ensure you are in a position to prove the reason for dismissal and show that it is a lawful reason.
You should also ensure that any probationary period clauses do not restrict your right to terminate employment during probation. Avoid provisions in the employment contract that might entitle the employee to appropriate support and a reasonable opportunity to demonstrate suitability for ongoing employment.