It’s a simple distinction, but the language around “probation” still creates confusion for non-experts. HRM tries to clear it up.

It’s possible to be inside your probation period and simultaneously outside the minimum employment period and so able to claim unfair dismissal. Clear as mud, right? 

For people with no specific training, there is confusion regarding the difference between a probation period – the time in which a new employee is evaluated for long-term suitability – and the Fair Work Act’s minimum employment period. It can be a real problem for organisations that have no HR function.

The trouble seems to be that most laypeople don’t really know the latter one exists, or they believe it’s synonymous with a probation period. And their understanding of a probation period is usually based on very varied, personal experiences. 

For example, if they were told by an employer early in their career that their probationary period was being extended, they assumed such a thing was codified in legislation. It’s not. It is a contractual – or sometimes a psychological – instrument.

Below HRM delves into the differences, and looks at a couple of the outstanding questions even seasoned line managers might have.

The difference

The quick way to clear up the confusion is to say that there is no law covering what is and isn’t a “probation period”. It’s really defined at the organisational level, and almost always in the employment contract.

Think of it this way. Some organisations might have in their contract that new employees will have a three month probation period, another might have it at 12 months. But varying time frames do not expand and contract employees’ legal rights when it comes to dismissal. This remains the same regardless of what the contract says (though there’s nuance here that we’ll get into further in this article).

What we do have is a national provision provided for in the Fair Work Act – the minimum employment period – that limits a worker’s right to claim an unfair dismissal based on tenure.

•  An employee from an organisation with fewer than 15 employees (a small business) cannot make an application for an unfair dismissal remedy if they were employed for less than a year. 
•  All other employees cannot make an application if they have worked less than six months.

Now, that doesn’t mean staff don’t have legal recourse should they be dismissed in this timeframe. Employees can bring general protections/adverse action claims during the minimum employment period, as one employer found out to its chagrin.

To make this completely clear, it’s best to pose a hypothetical. Imagine you were a large employer that for whatever reason had a probation period in the contract that lasted nine months. If the employee was dismissed in the first six months, they would not be able to apply for an unfair dismissal remedy against you. 

If they were dismissed even a day after six months, they could. And it would not matter that their contract said they were still in the probation period.

The point of a probation period

This being said, it’s still a good idea to have a probation period in the contract for at least two reasons:

1. In contracts, probation periods are typically tied to reduced termination notice periods to make it easier for both the employer and employee to quickly move on from the relationship should either feel it’s not working out. A very standard contract would contain six months of probation during which either party can end employment with a week’s notice.
2. As stated before, employees can still bring other types of claims. In the event that they do, having a probation period in the contract can be of benefit.

To the first point, if you decided to have no probation period in the contract, the notice period for a new hire would remain the same regardless of when they were employed – so typically four weeks. Again, probation periods exist in contracts, not legislation. 

“There’s not some inherent right because you’re in the first six months that you can give less than what’s in the contract. If there’s not a probationary period in the contract, and it otherwise says four weeks notice, then even if you’re terminating after a month’s employment you still need to give them four weeks,” says Michael Byrnes, employment law partner at Swaab.

To point two, while the lack of a probation period isn’t “fatal” to the defence of an adverse action claim, it is a good thing to be able to point to, says Byrnes. The employer’s defence that they did nothing wrong – that they were just letting someone go because it didn’t work out – is that bit more difficult to make if there is no evidence of a probation period.

Let’s do another hypothetical. Imagine two employees in two different organisations. Both are fired three months into their employment and both make a claim of adverse action arguing they were dismissed because they raised legitimate complaints about management behaviour. The only difference between them is that the first’s contract contains a probation period and the second’s doesn’t.

It would be that little bit harder for the second person’s employer to argue that the true reason the employee was dismissed was because they were underperforming expectations. The court might reply, “Your company did not feel the need to put a probation period in the contract, which implies you were sure of their abilities and undermines your argument that you let them go due to concerns around performance.”

Now, with appropriate documentation you would have a rebuttal to this point, but it’s reason enough to warrant the presence of a probation period in the contract.

A very long probation

Given the benefits of a probation period, some might be thinking that they should extend it beyond six months. Because then, the argument goes, even if the employee were able to make unfair dismissal claim the employer could make a more solid argument to the Fair Work Commission (FWC). 

This could weigh the employer’s favour. But it might not.

“I would think that the FWC would probably say that a period beyond six months for a larger employer is beginning to get a bit unreasonable,” says Byrnes.

What about an extension?

A relatively common instrument organisations use with new employees is an extension of the probation period. Typically this might be six months of probation with the option to extend probation by three months. This provision is used when, for whatever reason, it’s felt the new employee is a borderline prospect and the employer wants more time to assess them. 

Again, this has no effect on the minimum employment period. Except for extending the time in which someone can be let go (or choose to leave) with shorter notice, its value is mostly psychological. It tells a new employee that the employer has doubts, and paired with the right consultation can give them a sense of where they’re expected to improve. 

But organisations should be careful with extensions. If it’s something they want to make use of, they should have the possibility of an extension outlined in the original contract and give the employee appropriate notice that the extension is being utilised. Byrnes explains.

“If the contract is silent on extension then it’s not open to the employer to just unilaterally extend it. That would be a breach of the contract. What they would have to do then is have an agreement with the employee – in effect, a variation of the contract.”

The source of confusion

Perhaps the biggest reason why people mix up probation with the minimum employment period is that it’s typical, and smart, to align their timing. 

“It does make sense to have them temporally aligned, because it acts as a reminder to employers that this period where an employee can’t bring unfair dismissal proceedings is coming to an end,” says Byrnes.

Because a lot of organisations follow this line of thinking, probation periods and the minimum employment period get conflated even though, as Byrnes says, “they serve different purposes”.

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