Probation periods

Do probation periods matter?

Have you ever stopped to ask yourself why contracts have a probation period in them? [1]

You might think it’s to *protect* a business from unfair dismissals and to remove reasons for explaining termination (a.k.a ‘why it’s just not working out’)’.

But what if I told you blindly relying on a probation period in your contract to guarantee both of these reasons can actually lead to problems?

Before you skip ahead to the 4 simple steps to better probation periods at the end of this article…. Let me explain why your probation periods might not matter using some FAQ…

FAQ – Probation Periods

What is a probation period?

  • This is a defined and contractual period whereby all parties decide whether there is a suitable fit to a role and, if not, how much notice is required to terminate the relationship during this period.

Can employees claim unfair dismissal while under probation?

  • Depending on your period of probation, no…. but, legislation already says employees cannot claim for unfair dismissal unless they have first met a qualifying period of employment. This is 6 months for large business and 12 months for small business.
  • Interested to read for yourself? Here is the link to s.383 of the Fair Work Act that is a very short and easy read.

Having a probation period means I can extend it.

  • Yes – but regardless of extending the probation period, the qualifying period for claiming unfair dismissal doesn’t change.

I only have to provide 1 weeks’ notice of termination under probation.

  • Because it’s contractual, you can create a period of notice that best suits you. Ideally you want as short as possible which, commonly, is 1 week.
  • However, when creating the period of notice under probation a business cannot provide for less than a minimum legislated period of notice.

And what is the minimum legislated period of notice under the Fair Work Act? Correct, it’s 1 week. [2]

Do I have to have a reason for terminating during probation?

  • Technically no – because why worry when an employee cannot claim for unfair dismissal right? But here’s the but…..

What is the danger of a probation period then?

  • The danger of being ‘cheerfully indifferent’ to a probation period without understanding the legislation that impacts it could encourage an employee into believing the business has acted in less than good faith; especially if you decide not to provide a reason for the termination or fail to demonstrate a process was followed to reach the decision.

From there, an employee can simply Google to research unfair dismissals – and possible access to General Protections.

General protections

General protections offer broad areas for employees to seek recourse against employers who take an action (called an Adverse Action) against them – such as terminating their employment. This includes terminating their employment for protected reasons like exercising a workplace entitlement, freedom of association and protection from workplace discrimination.

The added danger of an adverse action (unlike unfair dismissal) is that the employer holds a reverse onus of proof to prove the adverse action didn’t happen.

So why have a probation period?

When asked, many managers might admit they knew that an employee wasn’t going to work out in the first few weeks (if not days) yet they might also leave the decision to terminate until the literal last day.

In this situation, an under-performing employee is damaging the business, staff morale and getting closer to qualifying for unfair dismissal protections.

Therefore, I believe the single most important reason for a probation period is to provide an exact point by which the employer will have made a decision to manage out poor performance prior to any legal protections taking effect.

And this is why (unless for a very senior or technical role) a business will also benefit from just 3 months’ probation.

Identifying and sticking to as short a time frame as possible to decide on employment will dramatically reduce the possibility of an employee gaining access to unfair dismissal provisions – and more importantly remove the ‘dragging-down’ impact on the business of an employee who is clearly ‘not working out’.

4 steps to improving your probation periods

Understanding that getting to a decision as quickly as possible is best for the business and the employee, the focus of a probation period is therefore about how it is monitored and a decision reached.

To meet this goal, try 4 simple steps:

  1. Monitor performance regularly – use a form if it helps or refer against the position description.
  2. Notify employees if they need to improve as soon as it happens
  3. Issue a letter to confirm passing a probation period – or not (nothing helps focus a decision like putting it in writing).
  4. Keep records of all decisions or conversations

A properly implemented and monitored probation period can add great value but not for the *protections* that employers first think of… given the law does a pretty good job of doing that already!

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[1] This article is primarily written for National System employers

[2] Notice periods do change based on length of service and age. For the purposes of probation periods, it has been assumed this will not be the case. Refer to s.117 of the Act here