Some clients are astonished when they find out that the Fair Work Act 2009 makes no mention of probationary periods. That’s right – nowhere at all amongst the hundreds of pages. And whilst there are some common misunderstandings around probationary periods, the situation is usually very straightforward.

What is a probationary period?
Typically, a probationary period is the initial period of an ongoing employee’s employment during which either party may end the employment pursuant to a short notice period – typically one week. Once the probationary period expires, a longer notice period applies.

Depending on how an employment contract is drafted, a probationary period may result in the employment effectively being for an initial maximum term, subject to the employee satisfactorily completing that initial term (sometimes referred to as a trial period) and the employer ‘confirming’ them in their role – at which point their employment converts to permanent employment.

Why have a probationary period?
1. To provide an employer with the ability to terminate a new hire’s employment with minimum notice (or where payment is made in lieu of notice, minimum cost).
2. To make it clear that the employer is assessing the employee’s suitability for the role and organisation during the probationary period – like a trial – this helps to manage an employee’s expectations with respect to employment beyond the probationary period and thereby discourage litigation.

How long can a probationary period be?
A probationary period can be as long as an employer desires provided that the arrangement complies with the minimum notice periods for termination in the Fair Work Act 2009 (or, where an industrial instrument such as a Modern Award or enterprise agreement applies, the relevant instrument).

The Fair Work Act 2009 stipulates a minimum notice period of one week during an employee’s first year of employment – so for example, if an employer wanted to, it could stipulate a one year probationary period with a notice period of one week during probation.

How long should a probationary period be?
We recommend having a probationary period of six months. This is because, whilst the Fair Work Act 2009 does not refer to probationary periods, it does stipulate a “minimum employment period” (i.e. qualifying period) for the purposes of unfair dismissal claims. An employee is not eligible to bring an unfair dismissal claim unless they have completed the qualifying period – 6 months, or 12 months if the employer employs fewer than 15 employees (as defined in the Act – refer to sections 23 and 383).

This means that if an employee is not a suitable fit for the role or the employer’s organisation, it is typically advantageous to dismiss them prior to the qualifying period elapsing – as they cannot bring an unfair dismissal claim to challenge the termination. Given that a probationary period is usually intended to give the employer an opportunity to assess suitability for the role, it makes sense to align the probationary period in the employment contract with the qualifying period under the Fair Work Act 2009. That said, there are other claims that an aggrieved employee can bring to challenge their dismissal prior to having completed the qualifying period and consequently, such a termination is never without legal risk and specific legal advice should always be obtained.

This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation. © 2019 Toop Workplace Law Pty Ltd