Probation allows a company to assess an employee’s suitability for a role. When an employee is hired, workplaces are allowed to implement a probationary period. During this time, they can monitor the employee’s work ethic, skills, and abilities.
This system helps both employees and employers, as it is a kind of “testing the waters.” The employee can scope out the position to decide if it is right for them. Furthermore, should the employee prove a bad fit for the position, It is easier to terminate work without the risk of claims of unfair dismissal.
Regardless of the outcome of a probationary period, it’s best if everyone feels as if they have been treated with respect and honesty. If the employee is not the right fit, it’s still in your best interest if they leave the company feeling appreciated. News travels fast in the business world, and a disgruntled ex-employee, even if rightfully so, could make the wrong kind of waves.
Chiefly, you must ensure you follow the correct procedure for probationary periods. Furthermore, remember a little bit of consideration goes a long way, even if the employee is ending their relationship with your business.
Length of probationary periods
Under the Fair Work Act (FWA), the minimum period of employment (MEP), is six months. However, if you are defined as a “small business employer,” employing 15 or less employees, the minimum period is twelve months. After these periods employees are covered by unfair dismissal laws under the FWA.
Beyond these minimum periods, you are within your rights to set the length of probationary period. It could be the full six months required as a minimum period, or even just a few weeks.
If you wish to extend the probationary period, you can do so. But only if the original contract for employment contains such a provision, or the employee agrees to this extension.
However, if the extended probationary period extends past the MEP, the employee may be able to contest a dismissal. As such, it may be best to avoid extending a probationary period.
Warning of dismissal
Do you have to give a warning to an employee if their employment is unlikely to continue after the probationary period? Simply put, if this is not noted in the contract and the MEP has not expired, you will not be the subject of an unfair dismissal claim.
Furthermore, you are required to provide at least a week’s notice of termination of employment if the employee has been working for less than a year. Or, in place of this, week’s pay should you wish to terminate employment immediately. Within an employment contract you are able to give less notice of termination, however it cannot be less beneficial to the employee than the notice required by FW standards.
Redundancy pay does not usually apply for employees within their first year of working.
Reason for dismissal
As mentioned above, if there is no specific section of the employment contract detailing this, and the MEP is still in progress, then there is no need to provide a reason for dismissal. However, if the reason for dismissal is racial or other discrimination, or in deviation with the FW Act general protection provisions, then the status of the MEP does not matter.
While this may not be the case, you may find it more difficult to prove if you had not previously stated a reason for dismissal. As such, you may find it beneficial to provide a reason for dismissal. In addition, having documented evidence of the decision process for the dismissal should be kept on file if at all possible.
West Coast Propellers dismissed a 16-year-old boy after he had worked 4 months. While this was within the MEP, the employer dismissed the employee due to the fact his mother asked questions about his pay. This is against section 340 of the FW act, and as such the employer received a $15,840 penalty, and the director was fined $2,640.
While employees are entitled to paid annual leave, the application may not be approved by the employer within the probationary period.
If an employee is moved to a new role, a period of probation can be enforced. However, the MEP from the previous role is still in place. Hence, if the MEP’s time has run out, unfair dismissal laws will apply.
Any alterations to the notice period required or a possible decision to move the employee back to their original position would have to be discussed and agreed upon with the employee.
However, even if an agreement was reached and written into the contract, there are still occasions in which a dismissal or demotion could be challenged. For example, perhaps the employee was struggling in their new role, and was returned to their original allocation. If the employee also became pregnant at the same time, there could be cause for suspicion that she was reallocated due to pregnancy. This would fall under the anti-discrimination laws or FW act general protections provisions.
As such, this would not be covered by any contract or decisions entered into between the employee and your business.
New business, new staff, new rules?
Say you buy a business. It already has some existing workers that have carried on their employment. You have never worked with them before, and you do not know their skills or aptitudes in the business. Are you allowed to place them on probation?
Simply put, yes. You are allowed to put them on probation, however most likely under the “transfer of business” section of the FW, their MEP will not restart. However, if you specify before employing them that you will recruit them for their original job but it will not be a continuation of service, you may be able to institute a new MEP.