A significant number of decisions by the Australian Industrial Relations Commission (AIRC) still concern whether an employee was excluded from making an unfair dismissal application because they were on probation.1
Why is termination during probation still in issue?
Qualifying period v probation
The answer appears to lie in the fact that the Workplace Relations Act 1996 (the WR Act) distinguishes between a 'qualifying period of employment' and a 'period of probation'.
An employee cannot make an application for relief in relation to termination of employment on the ground that the termination was harsh, unjust or unreasonable (unfair dismissal) if the termination took place within a qualifying period of employment.2
Employees have a qualifying period of employment of:
- six months or
- less than six months if agreed in writing before the commencement of the employment or
- more than six months if agreed in writing before the commencement of the employment and it is reasonable having regard to the nature and circumstances of the employment.3
By contrast, a period of probation only applies to an employee if it is determined in advance of the commencement of employment and is:
- a maximum of three months or less or
- more than three months and is reasonable having regard to the nature and circumstances of the employment.4
Where the employment is terminated during a period of probation, the employee is not only excluded from making an unfair dismissal application, but also from making an application in relation to the following:
- relief in relation to termination of employment on any ground (other than unlawful termination under section 659)
- failure to consult trade unions or notify Centrelink about the termination of 15 or more employees as part of a restructure
- a second application in respect of the termination
- failure to give notice of termination of employment.5
- Where an employee is terminated during either a 'qualifying period of employment' or 'period of probation', he or she cannot make an application alleging unfair dismissal
- The exclusion applies for whichever is the longer period
- There will be no period of probation unless there is an agreement to a period of probation made prior to the commencement of employment
- Conversely, there will be a qualifying period of employment unless there is a written agreement to the contrary.
The longer exclusion period applies
The fact that the exclusion applies for the longer period was recently demonstrated by the AIRC decision in Alieu Phaal v Commonwealth Department of Defence6.
In that case, the AIRC was satisfied that the reference to a 'probationary period of three months' in the letter of offer applied to the period of probation only and did not amount to a written agreement to a shorter qualifying period of employment. As a consequence, the employee was excluded from making an application alleging unfair dismissal for six months (the qualifying period of employment).
A similar finding was made in Alison Christine Hewson v Southern Aboriginal Corporation7. However, in that case the remaining parts of the application in relation to unlawful termination and the failure to pay notice were not excluded.
As it would be rare to see a letter of offer or employment contract referring to a 'qualifying period of employment' (or seeking to vary it), the practical result is that an unfair dismissal application will be excluded for at least six months in most cases.
Of course, this begs the question as to why the distinction between qualifying period of employment and period of probation is maintained.
The AIRC has repeatedly stated that the terms are distinct as a period of probation is to allow the assessment of an employee's suitability for the position while a qualifying period of employment is simply a statutory bar to an unfair dismissal application.8
However, both periods have the practical effect of allowing the employer to determine the suitability of a new employee unfettered by the risk of an unfair dismissal application if the assessment is negative.
To the extent that the period of probation also excludes other applications, the purpose of that exclusion has little to do with assessing the suitability of the employee and more to do with having an exclusion period for those specific applications.
As a consequence, it is arguable that the distinction between the two periods serves little practical purpose and continues to result in unsuccessful applications to the AIRC at the expense of both employers and employees.9
It is interesting to note that one of the proposals currently being considered by the Federal Government is to extend the qualifying period of employment for unfair dismissal applications to 12 months where the employer has less than 15 employees. As a consequence the issues raised by the distinction between the two periods may continue for some time to come.
1 For example, in the period from 1 to 20 February 2008, 21% of the written decisions by the AIRC concerned this issue.
2 Section 643(6) of the WR Act.
3 Section 643(7) of the WR Act.
4 Section 638(1)(c) of the WR Act.
5 Section 638(1) of the WR Act.
6 PR980654 (18 February 2008).
7 PR980601 (6 February 2008).
8 For example, see R McCarthy v NT Friendship & Support Inc (PR925075); A Omondi v Flinders University (PR969599). The distinction has its origins in the ILO Convention Concerning Termination of Employment at the Initiative of the Employer 1982 which allows 'workers serving a period of probation or a qualifying period of employment' to be excluded from provisions in the Convention; see consideration in Omondi.
9 The NSW Industrial Relations Act 1996 also has the distinction but as the default duration is 3 months for both periods, the potential for argument over the distinction between the two periods is reduced.
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