From a legal perspective, probationary periods may not carry as much weight as both employers and employees believe. While probationary periods are commonly included in employment contracts, their legal significance is limited. Let’s take a closer look at what probationary periods actually mean, and how they compare to the minimum employment period required for unfair dismissal claims.

What is the purpose of a probationary period?

In simple terms, a probationary period primarily serves as a mechanism for setting the notice period should either the employer or employee decide to terminate the employment during that time. However, it doesn’t provide any special legal protections or guidelines for termination beyond the notice requirement.

For example, a contract might specify that if the employment is ended within the first six months, either party must give one week’s notice – essentially giving both parties time to evaluate the working relationship. The primary function of a probationary period is setting this short-term notice requirement, not protecting or limiting the rights of the parties involved.

Minimum employment period and unfair dismissal

What really matters in employment law when it comes to early termination is the minimum employment period required for an employee to bring an unfair dismissal claim. This is separate from the probationary period and has far greater implications for employers and employees.

Under the Work Act, employees can’t validly make an unfair dismissal claim unless they have completed the minimum employment period. The length of this period varies depending on the size of the employer.

• For employers with 15 or more employees, the period is six months.
• For employers with fewer than 15 employees, the period is 12 months.

This period is crucial because once an employee passes this threshold, the legal protections surrounding dismissal change significantly.

Why the minimum employment period matters more

After an employee has completed the minimum employment period, they may be able to bring an unfair dismissal claim if they believe their termination was harsh, unjust or unreasonable. This means that an employer must have a valid reason for dismissing an employee who has worked this period.

Dismissal is more complicated after the minimum employment period. Employers need to be cautious and ensure they have a valid reason for dismissal and give procedural fairness to employees who are protected from unfair dismissal. Even if the employer has a valid reason for dismissal and follows a thorough process, the employee can still lodge a claim, and the employer will have to defend the action.

In practical terms, if an employee isn’t working out, it is within the minimum employment period that decisions on dismissal should be made. It’s much harder to terminate their employment without potentially facing consequences once they’ve passed this period.

Can probationary periods be extended?

A common question of employers is whether they can extend a probationary period to give the employee more time to prove themselves. The answer is yes – but with certain conditions.

A probationary period can be extended by mutual agreement between the employer and employee. In some cases, if the employment contract allows, it may even be extended unilaterally by the employer. However, it’s crucial to understand that extending the probationary period doesn’t affect the minimum employment period for unfair dismissal claims.

For example, if an employee has passed the minimum employment period for unfair dismissal claims, extending their probationary period won’t reset or impact their eligibility to make for unfair dismissal after reaching the threshold. The employer must still consider the minimum employment period and potential for an unfair dismissal claim once that period has passed and the employer is minded to dismiss an employee.

How probationary periods can help managers

While probationary periods may not hold much legal weight, many employers use them effectively from a management standpoint. They can be a valuable tool for setting goals, providing training, and conducting regular reviews of the employee’s performance. By using probationary periods for these purposes, employers can give employees the best possible chance of success.

Employers who take this proactive approach often find they need to worry less about potential unfair dismissal claims. By using the probationary period to ensure that an employee is the right fit for the role, both the employer and employee can have a clearer understanding of whether the working relationship will successfully continue.

The real impact of probationary periods: what to remember

Probationary periods don’t have a significant legal impact when it comes to dismissal. What really matters is the minimum employment period required for an unfair dismissal claim, which plays a far more important role in the event of termination. Employers should keep this in mind, particularly when dealing with employees who may not be performing or behaving well. While probationary periods don’t offer protection against unfair dismissal, they can serve as a valuable tool for management and development, ultimately reducing the risk of conflict in the future.

Reach out to our team to learn more about the role of probationary periods or the implications of minimum employment periods for your organisation.