What is a probation period?
Let’s start with the basics – what exactly is a probation period? A probation period is a set length of time at the beginning of an employment relationship that allows employers to see whether their new hire is the right fit for the role and business. If you decide to dismiss your employee during this period, you will face fewer hurdles.
The conditions of the probationary period are set out in the employment contract. Generally, you decide how long the period should be, unless your employee is covered by an award or registered agreement, in which case there may be specific requirements. Three months is most common, but some employers opt for six months.
What are the benefits of a probationary period?
The main benefit for you as an employer is that you can reduce the risk of being stuck with an underperforming employee. If it turns out that your new hire isn’t as well suited to the role or organisation as you had expected, it makes it easier for you to terminate their employment. At the same time, your new hire has the opportunity to work out whether they like their new job and the company culture.
It also helps you and your employee get off on the right foot and fix any problems early. You can hold more frequent performance reviews and provide additional training, so you can address any issues and your employee can flag any concerns they may have.
The difference between a probationary period and minimum employment period
Employers and managers often confuse a probationary period with the minimum employment period, so it’s important to understand the difference. The most important thing to understand about these two periods is that there is no law governing a probationary period – it’s based on what’s written in the employment contract. The minimum employment period, on the other hand, is a provision in the Fair Work Act.
Basically, the minimum employment period, also known as qualifying period, is how long an employee must have worked for an employer before they can make an unfair dismissal claim. It is separate to the probationary period. The time periods are as follows:
- 12 months for businesses with fewer than 15 employees (a small business)
- 6 months for businesses with more than 15 employees
This means that even if you decide to let your employee go after the standard three-month trial period, they wouldn’t be able to make an unfair dismissal claim against you if it’s within the time frame shown above.
What are my employee’s rights and entitlements?
It’s extremely important to be aware that you still need to provide your employees on probation with the same entitlements as their part and full-time co-workers. This means they can accrue and access paid leave and sick leave. If you decide not to offer ongoing employment during or after the probationary period, employees are entitled to a payout of their accrued annual leave as part of their final pay.
Although employees cannot bring an unfair dismissal claim during the first six or twelve months of employment, this doesn’t mean they don’t have any recourse to legal action. They can bring claims under the general provisions of the Fair Work Act. These provisions protect employees from various forms of mistreatment by employers. Included under the general provisions are adverse action claims. Employees can claim that an employer took an adverse action against them, such as terminating their employment, for unlawful reasons, including:
- the employee made a complaint or
- attempted to exercise a workplace right (which includes, for example, demanding payment of award rates or submitting a claim for workers’ compensation) or
- any reasons relating to the employee’s sex, race, religion, pregnancy, disability, family responsibilities or any other discriminatory grounds.
Do I need to give a reason for dismissal during the probationary period?
While you’re not obligated to provide a reason for dismissal, best practice is to give the employee feedback in the form of a written letter of termination.
The case of Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd is a warning to employers about what can happen if you don’t give your employee a reason for their termination. The court ruled that the employee, Escarle Pacheco-Hernandez, was dismissed because she exercised her workplace rights, and she was awarded $8,263 in compensation. The employer, Duty Free Stores, gave Pacheco-Hernandez a termination letter, but did not state any reasons for her dismissal, claiming that they were not legally obligated to do so. As the employer did not provide any reason for dismissal, they were not able to provide evidence that the reason was lawful.
The takeaway: make sure that you have a record of a lawful reason for dismissal, even when you let your employee go during the probationary period. If you don’t, it could be difficult to prove that you didn’t terminate the employment for unlawful reasons if your employee decides to pursue legal action. You could state the lawful reason for dismissal in a termination letter or keep a record of the incidents that form the basis of lawful reasons for dismissal.
What about an extension?
Let’s say your new hire’s probation period ends, and you think their performance shows potential, but you still have some doubts about them. In this case, you might want to give yourself some more time to assess them by extending the trial period. You are within your rights to do this, but it’s important to make sure that an extension is set out in the initial employment contract and that you give your employee notice about the extension.
However, a word of caution: extending the probation period has no impact on the minimum employment period. Remember, the two are completely separate.
This means that if your business employs 15 or more people, and you extend the probationary period from six to nine months, your employee could still claim unfair dismissal if the employment relationship is terminated even one day after the six months.
So, an extension won’t have much of an effect legally, but it might have an effect psychologically. It signals to your employee that you see potential in them, but that you have doubts. Combined with adequate feedback and consultation, it could give your employee a motivation to improve their performance.
Are probationary periods only for new employees?
Various courts and tribunals have made it clear that a probationary period should be at the start of the employment relationship. So, if an existing employee transfers to another role or gets a promotion, you shouldn’t ask them to complete a probationary period. If your employee doesn’t perform satisfactorily in their new role, follow the regular disciplinary process.
However, if your employee is starting a permanent role and they were previously a casual employee in your business, you could set a trial period. It is allowed in this situation because the type of employment is considerably different.
How can I ensure the probationary period is a success?
During this period when you’re assessing your new hire’s aptitude for the role, good performance management is essential. Here are some tips to help you get the most out of the trial period:
Create an onboarding program
Taking the time to properly introduce your new team member to your company’s systems, culture and procedures will help them to feel more engaged and be more productive from their first day. As part of their induction, clearly set out the performance and learning goals for their probationary period. It’s important that your new hire has a clear understanding of what they need to achieve to pass the probation period.
Give regular feedback
Give your employee regular feedback on their performance. You can do this informally in the form of regular catch-ups and formally in probation review meetings. But it’s important that you give your employee feedback continuously and don’t wait until the review meetings. Let them know immediately when they do something, either right or wrong. You might want to hold a review meeting at the mid-point of the probation period and again just before the end.
Providing regular feedback allows your employee to know whether they are meeting the expectations of the role and identify the areas where they might need to improve. It will also give you both an opportunity to raise any issues or concerns. Make sure you encourage open dialogue during the review sessions.
Create a record
Consider using a probation review form in the review meetings to track your new hire’s performance and identify areas for improvement. After each meeting, you could send your employee an email with a summary of the main points discussed and a copy of the updated review form.
The review form will help to make the next meeting more focused and encourage your employee to improve in the areas in which they are underperforming. It can also be used to prove that you raised underperformance or conduct issues if you need to discipline, performance-manage or dismiss your employee down the track.
