The Effective End of Probationary Periods?

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Recent case gave rise to some interesting considerations in the interaction between general protections & unfair dismissal proceedings.
Australia Employment and HR

Background

Even though the recent Federal Court judgment of Justice Nicholas in Dabboussy v Australian Federation of Islamic Councils [2024] FCA 1074 was interlocutory, it has nevertheless attracted much interest. This interest is warranted. The employer in the case did what many employers have done - terminated employment just before the employee would have had the right to bring unfair dismissal proceedings, usually at the end of a contractual probationary period. In this case the employee was 7 hours short of serving the minimum employment period of 12 months required as the employee of a small business employer to bring such a claim. (For employees of non-small business employers the applicable minimum employment period is 6 months.)

The employee sought interlocutory orders pursuant to the Fair Work Act 2009 (Cth) (FW Act) that he be reinstated, citing breaches of the general protections provisions.

Justice Nicholas held that the employee established a prima facie case that the timing of his dismissal had been influenced by a desire on the part of the employer to ensure he could not make a claim for unfair dismissal, and that this was also a substantial and operative reason for his dismissal.

His Honour made an interim order for the reinstatement of the employee and an order the employer be restrained from terminating his employment (without the leave of the court).

The Judgment and Analysis

The relevant parts of the judgment are at paragraphs 26 to 29 inclusive.

After rejecting certain other arguments in support of the proposition the dismissal had been for a prohibited reason under the FW Act, his Honour stated (at 26):

"I take a different view in relation to Mr Dabboussy's contention that one of the reasons for terminating his employment on 3 September 2024 included the fact that he had an entitlement from 4 September 2024 to bring an unfair dismissal claim under the FW Act. The Code provides that "[s]mall business employees cannot make a claim for unfair dismissal in the first 12 months following their engagement": see also s 382 and the definition of "minimum employment period" in s 383(b) of the FW Act"

His Honour reached this view after analysis of the evidence as follows (at 27):

"The evidence before me strongly suggests that the Executive Committee meeting was arranged with great haste at a time when Ms Croker's report had not even been finalised, and after Mr Dabboussy had already been stood down. There is no explanation on the evidence before me as to why it was necessary for the Executive Committee to meet for the purpose of considering what were at that stage said to be "draft findings" or how it was that Dr Jneid (but not Mr Dabboussy) came into possession of Ms Croker's "draft findings". In my view, there is a strong inference available that the Executive Committee was convened by Dr Jneid for the purpose of facilitating termination of Mr Dabboussy's employment before 4 September 2024, so as to deny him the opportunity to make a claim for unfair dismissal under Part 3-2 of the FW Act."

The recent seminal High Court authority in Qantas Airways Limited v Transport Workers Union of Australia (2023) 412 ALR 134 had a significant role to play, as the relevant workplace right, which was the right to bring an unfair dismissal claim, had not yet crystallised (as the minimum period had not been served). In this regard his Honour observed (at paragraph 28):

"In Qantas Airways Limited v Transport Workers Union of Australia (2023) 412 ALR 134 at [6], Kiefel CJ, Gageler, Gleeson and Jagot JJ concluded that:

... a person who takes adverse action against another person for a substantial and operative reason of preventing the exercise of a workplace right by the other person contravenes s 340(1)(b), regardless of whether that other person has the relevant workplace right at the time the adverse action is taken. Qantas did not avoid the operation of s 340(1)(b) in relation to its adverse action by taking the action prior to the existence of the workplace rights the exercise of which Qantas sought to thwart.

In the present case it was submitted by Mr Dabboussy that his dismissal on 3 September 2024 constituted adverse action that was taken for a substantial and operative reason of depriving him of the right to make a claim for unfair dismissal."

In conclusion, his Honour stated (at 29):

"It may be assumed for present purposes that Ms Croker's investigation and findings provided AFIC with reasonable grounds for summarily terminating Mr Dabboussy's employment and that her conclusion that the various allegations made against him were substantiated was the principal reason for the dismissal. However, in my view, Mr Dabboussy has established a prima facie case that the timing of his dismissal was influenced by a desire to ensure that he could not make a claim for unfair dismissal and that this was also a substantial and operative reason for his dismissal on 3 September 2024. I am therefore persuaded that he has established a prima facie case for relief in respect of AFIC's contravention of s 340(1) of the FW Act."

Observations

Some observations:

  1. This is an interlocutory decision with the case yet to be finalised before the courts and, as such, commentary needs to be circumspect and respectful given the matter is ongoing.
  2. The employee in this case had been subject to an ongoing investigation process in relation to allegations of misconduct made against him. The termination of his employment, around 7 hours before the employee would have served the period needed to be eligible to bring any future unfair dismissal proceedings, and before finalisation of the investigation and disciplinary process, seemed to be somewhat abrupt.
  3. While caution needs to be taken in extrapolating broader consequences from one decision (particularly an interlocutory decision), the notion that the general protections provisions of the FW Act might be breached by dismissing an employee just before the minimum employment period (whether it be 6 or 12 months) ends would come as a disconcerting surprise to many employers - dismissal commonly occurs at the expiration of contractual probationary periods which often coincide with the minimum period of employment under the FW Act.
  4. It is inevitable some employees will seek to rely upon the Qantas decision as applied in this case to argue that a termination of employment made just before the 6 (or 12 month) service period in employment (i.e. when the employee can bring unfair dismissal proceedings) is a breach of the general protections provisions of the FW Act.
  5. The minimum period of employment in the FW Act for an employee to be able to bring unfair dismissal proceedings must have work to do. Will a termination the day before eligibility invite suspicion? A week before? Where is the temporal line drawn? On a superficial level, it seems paradoxical for the general protections provisions of the FW Act to seemingly undermine the operation of the minimum period requirement. This is particularly so given the immutability of the minimum period - it cannot be removed or varied in an award or enterprise agreement or contracted out of or varied by contract.
  6. Of course, termination during minimum employment period has never been a free-for-all; employees have always been able to bring general protections claims if dismissed for a prohibited reason, irrespective of period of service. This case, emerging after the Qantas decision in relation to future workplace rights, is merely another example of this.
  7. It is for this reason that a contractual probationary period, which states that ongoing employment will be subject to satisfactory performance and conduct of the employee during that period, may now have a more important role to play. A termination of employment that occurs near the end of such a probationary period can be argued to have been executed pursuant to this process agreed at the commencement of employment, rather than to prevent the employee bringing unfair dismissal proceedings (even thought it would have this effect).
  8. Further to this, there is a strengthening of the argument that a reason for a decision to terminate employment during a probationary period should be given, specifically whether dismissal was for performance or conduct reasons (or both). This offers further protection against a finding a dismissal was motivated by any prohibited reason (including, but not limited to, denial of an opportunity to bring unfair dismissal proceedings).

This case has given rise to some interesting considerations in the interaction between the general protections and unfair dismissal proceedings of the FW Act. Any final judgment in this decision, as well as any other cases advancing the same argument, will be worth keeping an eye on.

For further information please contact:

Michael Byrnes, Partner
Phone: +61 2 9233 5544
Email: mjb@swaab.com.au

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.

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