18
Jan
2017
article

Firing an employee on probation – what you need to know

As an employer, taking on a new employee can be a source of both excitement and nerves. If all goes well, you add a capable member to your team and increase the list of things you can accomplish collectively. However, there is the possibility that this new employee may not be suitable for your workplace, and you may need to let them go during their probation period.

When the proverbial cookie crumbles, it’s worth knowing your rights and obligations, and those of your new employee, so that if you are required to terminate the employment, you can be sure it’s both lawful and respectful.

Probation defined

Put plainly, the probation period is a period during which an employee and an employer can consider each other’s suitability for the role and determine whether the employment relationship should continue. Employees on probation are permitted to receive the same minimum entitlements as those who are not on probation. This includes entitlements like wages and notice. Employees will also accrue annual leave and sick leave during this period because probation periods are normal periods of employment. The Fair Work Act of 2009 makes no distinction between periods of probation and non-probation.

An employer may, however, choose to offer only the basic statutory or legal entitlements to employees during the probation period and then add more generous, non-statutory entitlements once this period has been completed.

Required length

What some employers may not know is that there is actually no legal requirement to have a probation period.

It is, however, important to understand the difference between a probation period and the statutory minimum period of employment under the Fair Work Act.

The minimum period of employment in Australia is:

  • Employed in a small business for at least 12 months. A small business is defined as any business with fewer than 15 employees, calculated on a headcount of all employees who are employed on a regular and systematic basis; and
  • Employed in a larger business for at least six months.

Unlike the minimum period of employment, an employer and an employee can agree upon the terms of the probation period.  The term of the probation period will be what the parties agree and most commonly this is between three and six months.

It is the minimum period of employment that is enshrined in the Fair Work Act 2009 and determines when and if an employee can make use of the unfair dismissal laws and systems. There are also requirements that employees must fulfil to make use of these laws.

Terminating an employee’s contract

Broadly speaking, the best approach to managing employees on probation is to treat them as you would any other employee. If he/she is not performing as desired or expected, it is best to calmly point out those issues to the employee, as you would to long-term employees not on probation. As a matter of best Human Resources practice, employers should address the behaviour during the employment or during the probation period. If they are performing and you are pleased with their work, offering support and appreciation does not inhibit your ability to lean on the agreements and conditions set out in the contract.

Should you decide that your new employee is not suitable, and you need to terminate their employment, this must always be performed lawfully.

It is also important to note these key points:

  • Probation periods are not an easy way out for employers. It is a normal period of employment, during which employees are entitled to the statutory minimum entitlements of employment; and
  • It is vital for employers to be acutely aware of the probation period and know if the employee is to receive generous entitlements after their probation period expires. The period can also be important from an unfair dismissal perspective, for both employers and employees.

What not to do

Terminating employment before the minimum period of employment is served does not provide “carte blanche” to fire employees for any reason. Employers must not terminate the employment during any period for an unlawful reason, some of which are listed below:

  • A discriminatory reason such as race, colour, sex, age, physical or mental disability, pregnancy, religion, political opinion or nationality;
  • Because the employee has lodged a workplace complaint; or
  • Because the employee has made an enquiry. Termination on this basis would breach the general protections regime.

Whether you’re recruiting for a junior or senior role, offering contract work or a full-time position, in either a small or large business, both employers and employees should seek legal advice in relation to employment. Employment relationships should be recorded in well-drafted contracts if probation periods are being considered, which should be updated regularly as the law develops.

Disclaimer: This post is intended to provide general information in relation to a legal topic from a qualified legal practitioner external to SEEK. It does not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.

 

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About the author

Clayton Utz

Partner

Abraham Ash is a partner at the Sydney office of law firm, Clayton Utz. Abraham has extensive experience advising government and private clients on employment, industrial relations and safety issues.

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