When it comes to probationary periods, it is not always as simple as it seems. While it can appear to be a safety net for employers during the onboarding process, it is critical to know the legal obligations and requirements when it comes to probationary periods.

Misunderstanding the legal framework can lead to unfair dismissal claims, breach of contract disputes and costly legal headaches. Employers who fail to grasp the nuances of these legal principles can end up in disputes that could have been easily avoided.

Myth # 1 – I can extend a probationary period without legal consideration

It is essential that employers understand that an employee gains unfair dismissal protection once the minimum employment period is reached, regardless of any probation extension.

The Fair Work Commission has ruled against employers who extended probation to delay unfair dismissal protections. In many cases, employees were awarded significant compensation. Such cases highlight the importance of ensuring that any probation extensions are properly documented and justified.

Important considerations

Employers must carefully assess whether an extension genuinely serves a business need or if it is merely delaying an inevitable decision. If an extension is necessary, ensure there is a clear and well-documented, mutual agreement with the employee.

Employers should also document the reasons for the extension and provide specific feedback to justify the decision.

Myth # 2 – A probationary period gives me a free pass to terminate employment

A probationary period is not a free pass to terminate employment without due process. Even if an employee is within their probationary period, employers must comply with contractual notice periods, anti-discrimination laws and general protections under the Fair Work Act.

For example, an employee could claim their dismissal was due to unlawful reasons, such as pregnancy, disability, or union activity – all of which are protected under general protections. Unlike unfair dismissal claims, general protections claims can be lodged from day one of employment.

Employees dismissed during probation can also bring claims under other workplace laws, including:

  • Workplace health and safety laws
  • Workplace bullying claims
  • Breach of contract claims

Important considerations

Employers should keep records of performance concerns or behavioural issues to justify any decision made should a claim arise. If terminating employment, it is crucial to ensure the contractual notice is met; the decision is not discriminatory; and there is a clear, lawful reason for terminating.

By aligning probation with the minimum employment period, following a fair termination process and ensuring contracts are fit-for-purpose, businesses can reduce risk while supporting fair and effective employment decisions.

Myth # 3 – I can terminate an employee in their probationary period without risk of an unfair dismissal claim

Contrary to popular belief, an employee’s probationary period does not override unfair dismissal laws. Simply put, an employer cannot terminate an employee in their probation period without risk.

Under the Fair Work Act, employers should be aware of the minimum employment period, and not just the probationary period in an employment contract. This distinction is crucial in understanding an employee’s rights and an employer’s obligations.

The key legal distinction is:

  • Employers with 15+ employees have a 6-month minimum employment period.
  • Employers with fewer than 15 employees have a 12-month minimum employment period.

What this means is that during this period, employees cannot bring an unfair dismissal claim. However, once this threshold is passed, the employee gains protection, regardless of whether they are still on probation.

Important considerations

Employers can align probationary periods with the minimum employment period to avoid confusion. For example, if an employer sets a 3-month probationary period but dismisses an employee at five months, the employee is still within the minimum employment period. However, the employee is outside their contractual probation. This could lead to a breach of contract claim if the termination does not comply with the contract terms.

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