4 common myths about probationary periods

Source Workplace Bulletin

We found an interesting article in a recent edition of Workplace Bulletin that we consider important to share...

Employment contracts will often contain provisions for a probationary period – an initial period of service during which time both you and the employee can decide whether you want the employment to continue.

This gives you an opportunity to assess the employee's suitability for the role for which they have been recruited. A probationary employee will know that their work performance will be under review and that they do not have a guarantee of ongoing employment.

However, there are many myths about probationary employment.

MYTH: Probationary employees are exempt from Fair Work Act (FW Act) unfair dismissal laws.

FACT: While under the FW Act's predecessor, the Workplace Relations Act, employees serving a reasonable period of probation were exempt from unfair dismissal laws, that exemption is not provided in the FW Act.

Instead, there is a requirement that in order to make a FW Act unfair dismissal claim, the dismissed employee must have served a minimum employment period of 6 months (or 12 months if the employer employs fewer than 15 employees). That is the case regardless of whether the employment contract includes a probationary or trial period.

MYTH: I don't have to give a probationary employee any notice of termination, or any reasons or warnings.

FACT: Many probationary clauses provide a lesser notice period for termination of employment during the probationary period as opposed to after the expiration of the probationary period. However, the notice period for termination during a probationary period cannot be less than the minimum periods prescribed in the National Employment Standards (NES) contained in the FW Act. The NES provides for 1-week notice for employees with less than 12 months' service.

If a probationary period matches the minimum employment period (i.e. 6 or 12 months), the exclusion of unfair dismissal laws lessens your legal exposure if you dismiss before the expiration of the minimum employment period without a valid reason or warnings.

However, the dismissed employee can still challenge the dismissal on grounds that it is in breach of anti-discrimination or general protection laws, or a breach of employment contract.

Therefore, if you decide to dismiss a probationary employee, you should still ensure you are in a position to prove the reason for dismissal and show that it is a lawful reason.

You should also ensure that any probationary period clauses do not restrict your right to terminate employment during probation. Avoid provisions in the employment contract that might entitle the employee to appropriate support and a reasonable opportunity to demonstrate suitability for ongoing employment.

MYTH: Employees on probation aren't entitled to annual leave or sick leave.

FACT: Probationary employees enjoy the same entitlements to paid annual leave and paid personal/carer's leave as non-probationary employees.

MYTH: You can extend a probationary period if you are still unsure about a probationary employee.

FACT: Generally, a probationary period will be for a period of 3, 6 or 12 months. You can only extend a probationary period if the contract provides for that extension at the outset of employment, or if the employee agrees to the extension at the time it is proposed.

Remember, however, if once the probationary period goes beyond the expiration of the minimum employment period, FW Act unfair dismissal laws will apply.

Here are some important things to remember about the minimum employment period (MEP):

• Dismissal does not take effect until notice of termination has been communicated to the employee. Therefore, if a dismissal notice is posted to an employee before the MEP expires but is received by the employee after the MEP has expired, the dismissal will not have taken place within the MEP.
• MEP includes service by the employee with an earlier employer in a transfer of business situation. However, a new employer in a transfer of business situation which is not an associated entity of the old employer can inform a transferring employee in writing before their employment commences with the new employer that it will not recognise his or her service with the old employer. In that situation, the service with the old employer will not count in working out whether the employee has served the MEP with the new employer.
• MEP includes service with associated entities, e.g. subsidiaries, parent company.
• MEP includes any period of paid leave, which includes any period in which the employee is absent from work receiving workers' compensation.
• MEP includes any period of casual employment that was on a regular and systematic basis, during which the employee had a reasonable expectation of continuing employment.