Probation Periods

The Importance of Probationary Periods in Australian Workplaces

Get informed about workplace probation periods

Probation Periods

Employment Law

Anderson Legal assists employers, executives and employees in dealing with probation period clauses.

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1. What is an employee probation period?

A probation period allows employers to see if the employee is suitable for their role and the employee to experience the work environment. If the employment contract is terminated during the probation period, it is common for a lesser notice period to apply than is otherwise the case.

There are important reasons why a probation period may be included in an employment contract:

  • Probation periods inform new employees that their suitability and performance will be monitored.
  • Employment contracts with extended notice periods than the statutory minimum may specify lesser notice for termination during the probation period.
  • A probationary period clause may be relevant to disputes and litigation, such as for an employee who commences a breach of contract claim following dismissal during the probation period.

Probationary periods should not be confused with the minimum employment periods under the Fair Work Act 2009 (Cth). Employees dismissed during a ‘minimum employment period’ are not eligible to make an unfair dismissal claim. Two periods are relevant:

  • For a small business, the minimum employment period is 12 months’ continuous service before an employee can bring an unfair dismissal claim.
  • For all other businesses, the minimum employment period is 6 months’ continuous service before an employee is eligible to bring an unfair dismissal claim.

It is common for executives and employees to not seek legal advice about a proposed employment contract, or the terms of a probationary period clause, until after it becomes an issue or the subject of a dispute.

2. Do employees on probation have rights?

One of the myths about probation periods is that people have fewer rights than those employees not on probation.

Full-time and part-time employees who are subject to probation are still protected by the minimum entitlements under the National Employment Standards (NES), provided they are part of the national workplace relations system in Australia. The entitlements for casual workers differ due to the nature of their employment.

One reason employees subject to probation are thought to have fewer rights is the ‘minimum employment period’ (outlined above), which restricts eligibility for unfair dismissal claims. As a probation period will often fall within the minimum employment period in Australia, people tend to conflate the concepts.

3. Can you be dismissed during probation?

An employee can be dismissed on probation, provided it is for a valid reason. Employers may still face discrimination claims under anti-discrimination lawyers or general protections claims under the Fair Work Act 2009 (Cth) for dismissing an employee contrary to those laws, even if the dismissal occurs during probation.

Two common issues affect employees dismissed during probation. First, they may not have completed the ‘minimum employment period’ and therefore are ineligible for unfair dismissal claims. The second is that termination notice periods can be shorter for employees subject to probation, meaning an employee may receive less ‘notice’ than if they had passed their probationary period.

4. Do employees get paid during probation?

An employee on probation should get paid. They are protected by minimum wage laws and National Employment Standards (NES). This means that an employer who fails to pay an employee on probation properly may be in breach of the law and be subject to possible civil and criminal consequences.

It is common for employers to use unpaid trials to screen prospective employees and see them demonstrate they possess the skills required for the job. An unpaid trial is different to a probation period. Unpaid trials can be unlawful if they last longer than necessary or involve work outside the specific skills being demonstrated.

An experienced employment lawyer can advise employers and employees about the rights, responsibilities and options available when dealing with unpaid trials.

5. What is the standard probation period?

In Australia, it is common for employee probation periods to last for three to six months. However, a probation period may be extended beyond that time. Given approximately 20% of Australian workers have been in their jobs for less than one year, probationary periods have real relevance to a significant number of employers and employees:

Duration of Employment - Current Job

Probation periods are standard in employment contracts in Australia. The fact that they are common should not mean that employers or employees should ‘take as a given’ their purpose or consequences. Probation period clauses in employment contracts vary, meaning it is always necessary to review the individual agreement to understand its effect.

While probationary periods are typically considered necessary for an employer, they can also serve a purpose for employees. For employers, the primary purpose of a probation period is to allow them to see if the employee is suitable for their role. For employees, it enables an opportunity to experience the work environment. If the contract is terminated during the probation period, it is common for a lesser notice period to apply than is otherwise the case.

6. Does a probation period end automatically?

Ordinarily, a probation period is for a fixed period and may end automatically, subject to the contract terms. Probationary period clauses can allow for extensions when further supervision is deemed necessary. Any variations to a probation period are generally negotiated between an employer and employee.

It is good practice for employers to provide a letter confirming the successful completion of a probation period (Successful Probation Letters). Alternatively, where issues are encountered, a number of options may need to be considered by an employer:

  • Managing Underperformance
  • Verbal Warnings & Warning Letters
  • Performance Improvement Plan (PIP)
  • Unsuccessful Probation Letters

7. What happens after the probation period ends?

If an employee is unsuccessful in their probationary period, an employer may terminate the employment contract for a valid reason.

When a probation period ends, new conditions under the employment contract may arise, such as increased notice periods for termination. This has implications for both employers and employees.

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