Did you know that the Fair Work Act 2009 (Cth) (Fair Work Act) makes no mention of probationary periods? That’s right – nowhere at all amongst its hundreds of pages. And whilst there are some common misunderstandings around probationary periods, provided your organisation’s employment contract template is appropriately drafted, the situation is usually straightforward.
What is a probationary period?
A probationary period is the initial period of an ongoing employee’s employment during which either party may end the employment pursuant to a short notice period – typically one week. Once the probationary period expires, a longer notice period applies.
Why put a probationary period in place?
- To provide your organisation with the ability to terminate a new hire’s employment with minimum notice (or where payment is made in lieu of notice, minimum cost).
- To make it clear that your organisation is assessing the employee’s suitability for the role during their probationary period – like a trial – this aims to manage an employee’s expectations with respect to employment beyond the probationary period, and discourage litigation should they ‘not pass probation’.
How long can a probationary period be?
A probationary period can be as long as an employer desires provided that the arrangement complies with the minimum notice periods for termination in the Fair Work Act (or where an industrial instrument such as a modern award or enterprise agreement applies, the relevant award/enterprise agreement).
The Fair Work Act stipulates a minimum notice period of one week during an employee’s first year of employment – so for example, if an employer wanted to, it could stipulate a one year probationary period with a notice period of one week during probation (unless – as flagged above – this is contrary to an applicable award/enterprise agreement).
How long should a probationary period be?
We recommend having a probationary period of six months (unless your organisation meets the criteria for a ‘small business employer’ under the Fair Work Act). This is because, whilst the Fair Work Act does not make any mention of probationary periods, it does stipulate a “minimum employment period” (i.e. qualifying period) for the purposes of an unfair dismissal claim. An employee is not eligible to bring an unfair dismissal claim unless they have completed the qualifying period – 6 months (or 12 months if your organisation is a ‘small business employer’ – refer to sections 23 and 383 of the Fair Work Act).
This means that if an employee is not a suitable fit for their role, it is typically advantageous to dismiss them prior to completion of the qualifying period – as this renders them ineligible from bringing an unfair dismissal claim to challenge the termination. Given that a probationary period is usually intended to give the employer an opportunity to assess suitability for the role and the organisation, it makes sense to align the probationary period in the employment contract with the qualifying period under the Fair Work Act. That said, there are other claims that an aggrieved employee can bring to challenge their dismissal prior to having completed their qualifying period and consequently, such a termination is never without legal risk and specific legal advice should always be obtained.
How Justitia can help
The team at Justitia can assist employers to properly understand their minimum legal obligations, as well as the options that may work best for their organisation, with respect to setting and managing probationary periods. Please get in touch with our friendly team if you need a hand to navigate probationary periods.
This is general information only. It is not a substitute for legal advice and it is important that you obtain specific advice.