Dismissal During Probation

What is probation?

When an employee commences a new job, it is common for their employment to be subject to a probation period. The probation period allows an employer to assess the employee’s suitability for the role and for the employee to assess if the position and workplace is right for them.

Probation periods are typically between three to six months in duration. Terms of the probationary period are normally included in the worker’s Contract of Employment.

Probationary periods are generally not applicable to casual employees. The primary reason for this exclusion is because casual employment does not have a notice period.

Quick answer: Can an employer dismiss an employee during probation?

Yes: provided the employer follows a fair and reasonable process, and the termination is not due to an unlawful or discriminatory reason.

Key takeaways

• A probation period allows an employer to assess the employee’s suitability for the role and for the employee to assess if the position and workplace is right for them.
• Probation applies only to permanent (full-time and part-time) employees.
• The minimum employment period of the Fair Work Act applies, irrespective of whether or not a probationary term is included in the Contract of Employment.
• Regular feedback on progress should be provided to the employee throughout the probation period
• A probationary period can only be extended by mutual agreement between the employer and employee of if the employee’s Contract of Employment permits this.
• If the decision to terminate the worker’s employment is made, the employer should provide the employee with a valid, non-discriminatory reason (or reasons) for their dismissal.
• Upon termination of employment, the employee is entitled to written notice or payment in lieu of notice, payment for hours worked (including penalty rates or loadings) and payment of accumulated and untaken annual leave.

Probation: it’s a thing, but it’s not in the Fair Work Act

Some employers are surprised to learn there is actually no legal requirement to have a probation period. In fact, there is no mention of the word “probation” in the Fair Work Act. What the Fair Work Act does reference is a “minimum employment period”: the period of employment after which an employee may claim unfair dismissal.

For employers with fewer than 15 employees, the minimum employment period is 12 months’ continuous service. For employers with 15 or more employees, the minimum employment period is 6 months’ continuous service.

If an employee continues to be engaged after their minimum qualifying period, they are considered to have completed their minimum qualifying period and are entitled to full rights to an unfair dismissal action.

Protection from unlawful action

Irrespective of length of service, all employees (even those within their probation period) still have access to the general protections provisions of the Fair Work Act. The general protections terms are designed to shield employees, contractors, and prospective employees from unfair treatment or “adverse action” in relation to their employment.

These provisions prevent employers from taking adverse action against workers for prohibited reasons such as exercising their workplace rights, engaging in industrial activities, or being discriminated against based on specific attributes.

If an employer dismisses an employee for accessing or attempting to access a workplace right, the employee may be able to make a general protections dismissal application to the Fair Work Commission (the Commission). Unlike unfair dismissals, there is no minimum period of employment in order to make a general protections claim and, unlike the financial limit of compensation that can be awarded to an employee for unfair dismissal (capped at 26 weeks’ pay), there is no limit to how much compensation an employee can claim under general protections.

An workers making an application under general protections is also able to claim for non-economic loss such as pain and suffering due to the loss of employment.

Lesson? Get your termination of employment process right, even for dismissal during probation.

Employee entitlements during probation

While on probation, employees are entitled to receive the same entitlements as a worker who isn’t in their probation period. This includes the entitlements in the National Employment Standards.

If hired on a full-time or part-time basis, an employee on probation is entitled to accrue and access their paid leave entitlements, such as annual leave and personal (sick) leave.

Casual employees are not entitled to paid annual leave or paid personal leave.

Best practice: managing employees during probation

At the start of employment, it’s key to communicate to a new team member the conduct and performance standards expected of them in their role.

Throughout the probation period, employers should regularly review the employee’s progress against defined conduct and performance standards. These reviews should include timely feedback to the new employee on progress made and flag areas for improvement, with additional support, training and resources made available when appropriate.

Should the employee not meet these defined performance standards, holding records of such discussions, reviews and remedial actions will limit risk if the employment relationship is eventually terminated. 

Termination of employment during probation

At any stage of the agreed probation period, either employer or employee may choose to terminate the employment relationship should things not be progressing as expected. The terms of terminating the employment relationship during the probationary period are usually defined in the employee’s Contract of Employment.

Irrespective of any probationary period defined in the employee’s Contract, the minimum employment period and period of notice provisions of the National Employment Standards (NES) apply. The NES apply to all employees covered by the national workplace relations system, regardless of any award, agreement or contract.

For an employee with 1 year or less of continuous service, the minimum period of notice is one week.

Does an employer have to provide an employee on probation a reason for their dismissal?

No, but exercise caution: failing to do so opens the employer to an employee making a claim their dismissal was due to unlawful reasons, such as race, sex, age, disability, religion or temporary absence due to illness or injury, all of which are protected under the general protections provisions of the Fair Work Act.

Best practice? When terminating the employment of a worker during their probationary period, ensure the contractual notice is met; the decision is not discriminatory and there is a clear, lawful and communicated reason for terminating.

What entitlements are paid when an employee on probation is dismissed?

If an employee doesn’t pass their probation, they are still entitled to:

• receive notice when employment ends; and
• have their unused accumulated annual leave hours paid out.

Dismissal during probation: managing your risk

All dismissals carry an element of risk. But that risk is minimised by following a fair and reasonable process when terminating employment.

In my opinion, no dismissal should come as a surprise to an employee. This means that the person should have been provided feedback throughout their probation period of any concerns held by the employer about the worker’s performance or conduct, the employer’s standards, and the opportunity to improve.

While employees still in their probationary period (or minimum employment period) do not have access to the unfair provisions of the Fair Work Act, a failure to follow a fair and reasonable termination of employment process may result in them making an application for a general protections dismissal, something that at the very least, takes time for an employer to respond to.

Common mistakes to avoid during an employee’s probation period

• Not having a probation extension clause in your Contracts of Employment.
• Failure to provide the employee with regular feedback on their progress throughout the probationary period.
• Not providing the employee with a valid, lawful reason for termination of their employment.
• Not recognising the relevance of the Minimum Employment Period when making a termination of employment decision.
• Failure to maintain full HR records: communication of company standards/expectations, reviews during probation, remedial action (if applicable), circumstances of dismissal etc.

Frequently Asked Questions

1. What is a probation period?

A period of time used to assess if a new employee is suitable for the job.  Probationary periods only apply to permanent (full-time and part-time) employees.

Probation periods are often 3-6 months long. Other known term: probationary period.

2. What is the Minimum Employment Period?

The period of time an employee must serve before they are eligible to make an unfair dismissal application should their employment be terminated. The minimum employment period is 6 months, or 12 months if the employer employs less than 15 employees (small businesses).

3. Are probation periods mandatory?

No. Probationary periods offer an employer the opportunity to evaluate whether a new hire is the right person for the role and whether they have the necessary skills and experience. During a probationary period, the employer can bring the employee’s employment to an end with minimal notice (or for minimal cost).

4. Can an employee on probation be dismissed?

Yes. An employer has the right to dismiss an employee during their probation period, provided they follow a fair and reasonable process, and the termination is not due to an unlawful or discriminatory reason.

5. Can a probationary period be extended?

Yes, under certain circumstances.

An employer may wish to extend a probationary period for a number of reasons: further time to assess the employee’s progress in their role, absences due to illness or unexpected time away from work, inconsistent performance or conduct concerns, etc. 

An employer cannot unilaterally make the decision to extend an employee’s probationary period. An employee’s probationary period can only be extended if the employee agrees or if this option to extend the probationary period is defined in the terms of the employee’s Contract of Employment.

6. Can an employee resign while on probation?

Yes. The employee’s right to resign during probation is the same as the employee’s right to resign at any stage of employment.

Whatever the reason for their resignation, the departing employee should provide the employer with notice of their intention to leave. The employees’ responsibility in this regard is the same as any full-time or part-time employee. The length of the notice period will be dependent on the terms contained in the Contract of Employment, the applicable Award or registered agreement.   

Bare Bones Consulting: making HR simple for you

Deciding to dismiss an employee can be tough for many employers, even when it’s a new team member still within their probation period. There’s the general unpleasantness of dealing with emotions (from all sides), the perception of the potential legal hazards and the time investment in getting it right. But managing your risks around termination of employment – even during the employee’s probation period – can be a straightforward process, if you know what you’re doing. 

That’s where Bare Bones Consulting works for you. We provide HR processes, documents and advice tailored to your business and delivered in a language you can understand: a value-for-money solution with no lock-in contracts so you can deal with your HR challenges painlessly and move on. Sound good? Contact us today.