Anyone who has had to recruit, select, and onboard new employees knows the time and effort it takes, and the last thing any employer wants is to go through the recruitment process only to find your new hire is a poor fit for the role or for the business. But there are times when it does happen.
Employing new workers with a probation (or probationary) period in place can provide valuable structure for employers to assess the new hire within a specified timeframe. Probationary periods give the employer and employee some flexibility, and if things don’t work out, to end the employment relationship.
Probationary periods can be a useful tool, but they need to be set up properly and conducted with the right attention to fairness and proper process. Plenty of employers have been on the wrong side of court ruling for mistakenly believing probation periods void employees’ rights and they can dismiss them without risk.
In this article, we look at how probation periods work, how your business can set up and run robust probation periods, and what to do if you need to terminate someone’s employment during probation.
A probationary period in Australia is a trial period at the start of employment during which both the employer and employee assess whether the role is a good fit.
Probation periods aren’t set out in employment legislation - there is no legal provision for, or definition of, probation periods in the Fair Work Act 2009, However, the act does define the minimum employment period, which sets out when an employee becomes eligible to bring a claim of unfair dismissal against their employer.
The length of the minimum period depends on the size of the business:
6 months for workers employed by businesses with 15 or more employees.
12 months for workers employed by small businesses (fewer than 15 employees).
So a probation period is a contractual arrangement included in the employment contract, giving the employer time (usually within the minimum employment period) to assess an employee as they settle into a new role. It also provides an employee with the opportunity to see if the role meets their expectations.
An employer usually decides on the length of the probation period, but the employee must agree to it.
There is no standard length for a probation period, but it should be no less than 3 months to give the employee an opportunity to learn and perform in the role. Most are for 6 months, which is when the protection from unfair dismissals under the minimum employment period ends for many employers.
The duration of the period should be part of the probation clause in the employment contract.
While on probation, employees perform work like any other worker. It isn’t a separate period of employment so workers receive the same rights and entitlements as any employee, including entitlements in the National Employment Standards (NES) and any applicable modern award or enterprise agreement.
Full-time or part-time employees are entitled to accrue and access their paid leave entitlements, e.g. annual leave and sick leave. Employees have the right to fair treatment and fair work conditions, and a safe and healthy workplace under Work Health and Safety regulations. All new employees must be given the Fair Work Information Statement (and Casual Employment Information Statement if they are casual employees).
Employers have the right to assess the employee’s performance and can terminate employment if they find the employee doesn't have the necessary skills or aptitude. You must give appropriate notice, as required by the employment contract, award or agreement.
Probationary periods must be used fairly and reasonably. That means you need to:
Make sure the clause is clearly worded, stating there is a probationary period, how long it will last, and other provisions (including the process for ending employment), so the employee knows exactly what they are signing up for. Get some expert advice on getting this right.
You have a legal obligation to be proactive in your communication with the employee, which means giving them “reasonable time” to review their employment contract, seek advice about the terms, and ask questions and/or negotiate the offer. This should occur before they start work.
Failing to give them reasonable time won’t void any probation provision, but you can get into other trouble if you ask them to sign a document which they haven’t read, or force them to sign it under duress.
In our view, a best practice timeline is 7 days between issuing the employment contract and the employee’s start date. For fast-paced industries, 2 working days (not weekend days) can be considered reasonable, but if the employee asks for more time we strongly recommend giving it to them.
You can’t use a probationary period to get a person to work for free. Employees on a probationary period have the same minimum rights and entitlements as any other worker and must be treated in the same way.
The probationary period does not give an employer licence to behave badly. You need to make sure you give your new people every chance at success, follow fair work practices, and meet any commitments you make.
Open, honest, and transparent communication is required. Be prepared to listen, treat the employee fairly and reasonably at all times.
If you have any concerns about the person during the probation period, you need to raise them with them, give them the opportunity and support to improve (this includes appropriate training and guidance), and advise them that if you don’t see improvement this may mean their employment is set to end. Put your concerns and expectations in writing and allow the employee time to respond. Consider what needs to be done to improve.
We recommend utilising performance reviews for every employee, especially during a probation period. Performance reviews enable you to set clear objectives, track the employee’s progress, and objectively evaluate achievement. Regular check-ins allow you to share feedback and provide the employee an opportunity to raise concerns or ask for assistance.
Without being able to show that you gave the employee clear feedback about what needed to improve, the chance and support to improve, and connected this to the potential ending of employment, you could struggle to defend a claim for a general protections order (which carry no statutory compensation cap).
Technically, yes. If you reach the end of the assigned period and you’re still not sure about the employee, you can extend the probationary period if the employment contract provides for it and the employee agrees (you should capture this in writing).
However, the minimum employment period provisions of the Fair Work Act still apply so extensions over 6 months could remove protection from unfair dismissal claims. This is why we recommend a maximum 6-month probation period, to allow you time to make any decisions before unfair dismissal provisions apply.
Keeping an employee on an extended probation period could also prove counterproductive, affecting their morale and performance.
If you quickly discover the employee is excellent in the role, you can end the probationary period early (get this in writing, too).
Towards the end of the probation period, you should get together with the employee and let them know whether they have passed or not.
If they are successful, their employment will continue beyond the probation period (typically under the same terms and conditions of their employment contract, award or agreement). If they aren’t successful, you should decide whether to extend the probation period or end their employment.
If you dismiss them, clearly explain why they weren’t successful (see our advice below). Provide written notice - or payment instead of notice - and the date employment will end.
Always confirm the outcome in writing, whether they are successful or unsuccessful and whether you are extending the probation or terminating their employment. It’s also good practice to document what was discussed during the meeting.
At any point during the probationary period you wish to end the person’s employment, you must:
Raise your concerns with the employee promptly and provide them with written details of how their performance is not meeting the required standard - this is where the structure and evidence of a performance review is invaluable.
Give the employee a reasonable opportunity and support to improve.
If the employee still fails to meet the required standard, provided your procedure is fair and reasonable, you can move to terminate their employment.
Like any dismissal, you must follow all the terms set out in legislation, the employment contract, award or agreement, and give one week’s notice (the minimum notice period under the NES for employees with 1 year or less of service) or payment in lieu. You must also pay out any unused accumulated annual leave hours.
Employees are still eligible to raise a general protection claim (regardless of the length of their employment) if the dismissal is due to discrimination based on race, age, gender, and other such attributes, or because they exercised a workplace right.
Lack of documentation: Not including a probation clause in the employment contract or failing to document performance objectives, appraisals or warnings can make it harder to defend a termination decision if the employee challenges it.
Firing employees on the spot: Probation doesn’t mean an employee has no rights and the employer can take shortcuts. You can only legally dismiss someone without notice (summary dismissal) in cases of serious misconduct. Even then, there is a process to follow.
Unlimited protection from unfair dismissal claims: Eligibility to raise unfair dismissal claims is based on the minimum employment period (6 or 12 months’ service) rather than what the probation clause in the employment contract says.
Like all employment situations, fair process and good documentation are essential when employing somebody on a probation period. Treat it as a management tool that allows you to evaluate an employee rather than a failsafe way to dismiss them.
HR Business Partner for MyHR, Patrick Deme, sees plenty of employers confusing probation periods with the legal minimum employment period. “The mistake I see is employers assuming that freedom from unfair dismissal lasts forever. Once someone is past the minimum employment period, you can't lean on something as vague as: 'sorry, you didn't pass probation' to end their employment.”
Patrick says any termination should be backed by a valid reason and procedural fairness. Starting with a structured approach to recruitment will increase your chances of getting the right person for the job and help you avoid panic hiring. Once an employee starts work, a quality onboarding process is critical to making the probation period successful. Staged learning, feedback, and training will help bring your new hire up to speed quickly.
On the rare occasions things go wrong, an effective performance review process will help you identify poor performance quickly, develop solutions, and allow you to exit the employment contract with less risk. Being able to prove the dismissal was based on legitimate performance or operational grounds is key if you are challenged.
If you need help properly setting up probation periods or you're considering terminating an employee on a probation period and want to be sure you've followed all the necessary requirements, get in touch with MyHR. Our powerful software makes hiring and onboarding employees easy and our team of HR experts is here to help with any employment-related issue or process.