Probationary period.

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What is a Probationary Period?

A probationary period gives you the opportunity to assess whether your new employee is capable, reliable and suitable for the job. The standard period is usually three to six months and is written into the contract of employment. A probationary period is not a separate period of employment and new recruits receive the same entitlements as other employees.

During this time, you may hold regular probationary period reviews so you can give your employee necessary support and opportunities to fix any problems or concerns on either side. This gives them the best chance of passing probation successfully.

As soon as the probationary period is over, let your employee know whether they have passed. If they are unsuccessful, you can extend their probationary period or end their employment. Always have a written record of this discussion.

Employee Entitlements on Probation

It is extremely important to remember that probationary employees still have the same rights as other employees for notice periods and dismissal and are entitled to have their unused leave paid out.

Even if an employee does not pass their probation, they are still entitled to receive notice when their employment ends and be paid out for any accrued unused annual leave hours.

If the employee does pass their probation, you can change the salary or rate of pay to a higher amount than what it was during the probation period. Keep in mind you can only change an employee’s rate of pay with their written consent and at all times, the rate of pay must comply with the minimum rates provided in relevant legislation and any applicable industrial instruments eg a modern award.

Extending the Probationary Period

If you are unsure whether a new employee is suitable for the job, but you are not ready to dismiss them yet, then you may want to extend their probation period.

Technically speaking, you are allowed to do this if the terms of the employment agreement give you permission. However, you can only extend the probationary period by whatever set amount of time is stated in the contract.

For example, if you put an employee on probation for six months and the agreement let you extend the period by an extra three months, then you would be allowed to do so under those conditions.

Minimum Period of Employment

Be careful if you choose to dismiss an employee on an extended probation period. If that employee has worked long enough to surpass the ‘minimum employment period’ of six or 12 months, they will be entitled to make an unfair dismissal claim against your business.

The size of your business dictates how long an employee has to work before they can make an unfair dismissal claim against you. If the business has less than 15 employees, the employee has to work at least 12 months. If the business has 15 or more employees, the employee only has to work at least six months.

So in some cases, choosing to extend the probationary period of an employee may not even be necessary. As they will have earned the right to make an unfair dismissal claim against the business anyway.

Resigning While on Probation

There may come a time where an employee on probation decides to resign early. This may occur if they decide the job is not for them, they are unhappy with the workplace environment, or they have been given a better job offer elsewhere.

Whatever the reason, the departing employee should give notice of their intention to leave if they are a full-time or part-time employee. The length of the notice period will depend on the terms of their employment agreement.

However, if the employee is casual they are not legally required to give any notice at all.

How to Terminate an Employee During Probation

Under the Fair Work Act 2009 you can legally terminate an employee on probation without concern of an unfair dismissal claim, granted the employee is within the minimum employment period.

The amount of notice you must give before you terminate an employee on probation depends on their employment agreement terms.

Keep in mind the dismissal procedure must be fair and you must give a valid reason for the dismissal. Generally speaking, the best way to dismiss an employee on probation is to give them a termination of employment letter, which clearly sets out:

  • The reason for the termination
  • The period of notice (if any)
  • The date of the employee’s last day of work
  • A fixed amount of payments and entitlements owed to the employee

Employsure will advise you how to approach probationary periods. Organise a suitable time to speak with an Employsure Workplace Specialist on 1300 207 182.

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