Probation periods are important to employers. The probation
period allows employers to gauge an employee's competence and
character, before it gets tricky terminating them. There is,
however, confusion around this status. As an employment lawyer, I
am often asked whether an employer is able to extend the probation
period of an employee who is not performing well – but
perhaps not so abysmally as to warrant being terminated.
LENGTH OF PROBATION
The first point that needs to be made is that probation periods
are often mistaken as being for a three month period. This is no
longer the case. The Fair Work Act says that for
less than fifteen staff (across a group) the
probation period under the legislation is twelve months. So, at
any time during that first year, you can terminate
that employee without reason being given and without a process of
warnings. There are a number of good reasons why you may
choose to both give a reason and also have a process of appraisal
– but the legislation does not require it. For more
than fourteen staff, the probation period is six
LENGTH OF PROBATION
The answer is – in normal circumstances – no. Even
where an employee has been unwell for much of the probation period
and the employer – understandably – asks for their
absence not to be included in the probation, the period of
probation is fixed.
HOW CAN I ENGAGE A STAFF MEMBER TO GET A LONGER PERIOD OF
One option employers often adopt is to put employees on as
casuals. Unfortunately, this is no help if the
employee's engagement is regular and systematic, in
these circumstances, they will enjoy the same probation
periods and can access unfair dismissal in the same way as a
There is another exemption under the Fair Work Act for
contracts of a specified period. A contract for a
specified period cannot have an earlier termination clause.
–If you wanted to terminate an employee during the term of
this type of the contract, you would have to pay out the balance of
the period. That could be expensive.
A more useful option is an "outer limit"
contract. These contracts are similar to contracts for a specified
period, except that they also give employers the capacity to
terminate employees earlier. For example, the employer may be a
larger organisation that engages people on 12 month contracts with
an outer limit provision. This means the employer can terminate the
If the employer terminates outside the probation period (i.e.
beyond six months) but before the end of that period (ie. 12
months), then (absent serious misconduct) the employer would have
to go through the process of warnings. If the contract simply
reaches the end date, then there is no termination by the
employer and, therefore, no right for unfair dismissal. These
contracts can be very useful.
An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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