How does the Fair Work Act provide for probationary periods?

The reason for a probation period is to be in a position to dismiss without potential recourse under the Fair Work Act ('The Act'), if an employee does not work out to be suitable. Previously the unfair dismissal provisions of employment legislation provided for probationary periods for new employees of up to six months.

Under the Act, there is no longer a reference to a 'period of probation' with respect to unfair dismissal laws. This has been replaced by the requirement of an employee to serve a 'minimum period of employment' before there is any recourse for unfair dismissal under the Act. These periods are:

  • Six months where the employer employs 15 full-time equivalent ('FTE') employees or more
  • 12 months where the employer employs fewer than 15 FTE employees.

Employers often enquire as to whether a probation period may be extended, as an alternative to dismissal.

If the employee commences with a three month probation period, it can be extended for a further three months. If the employee is subsequently dismissed then they have no recourse for example for unfair dismissal.

If the employer has more than 15 employees, and the original probation period is six months, then even where it is extended for a further three or six months, the employee can have recourse under the the Act, if they are otherwise able to establish a case. As such, proper performance management procedure should be adopted in respect of a dismissal. This generally involves (but is not necessarily limited to):

  • Forewarning of a performance management meeting
  • An offer that a support person may attend
  • A discussion of the performance issues where the employee's perspective is taken into account
  • Advice on what is required to rectify performance
  • A follow up formal warning letter.

Ideally this needs to occur three times in respect of the same type of conduct, within a reasonable time period. The employee must also be provided with proper notice, or paid in lieu of notice.

A probation period is still relevant in the context of apprenticeships and traineeships. In that case the period of probation is generally determined by the relevant state or territory law or government authority. While the apprentice / trainee is on probation, the employer or apprentice / trainee can withdraw from the training contract simply by giving the appropriate period of notice. As soon as the probationary period has elapsed, the training contract becomes binding on both parties. It can be cancelled by consent or by application to the relevant training services authority.

Despite that there is no recourse for unfair dismissal for six or 12 months, an employee cannot be terminated during their probation period for an unlawful reason. This includes temporary absence from work due to illness or injury. In the case of Mr Brian Prigge v Manheim Fowles Pty Ltd U2009 / 871 (7 January 2010) the applicant's employment commenced at 9.00am on 26 February 2009 and was terminated by notice at the same time on 25 August 2009. A minimum period of employment of six months applied. The applicant brought an unfair dismissal case and the employer defended it at first instance on the basis that the minimum period of employment had not been completed.

Senior Deputy President Richards applied the reasoning adopted by the Full Bench of the Industrial Relations Commission in Wilkinson v Skippers Aviation Pty Ltd from 30 April 2001. The minimum period of employment must be completed 'immediately before the beginning of the corresponding day of the sixth month following the date on which the Applicant's employment commenced' – or immediately before the beginning of 26 August 2009. As such, the applicant's claim was dismissed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.