Organisations often hire new employees subject to satisfactory completion of a probationary period but this is often misunderstood.

A probationary period provides both the employer and the employee with an opportunity to assess the suitability of the employment relationship and to decide whether the employee’s ongoing employment will be confirmed beyond the end of the required probationary period.

But what protection does a probationary period really provide to employers? What is the benefit of including such a clause in an employee’s contract of employment and what are the pitfalls?

Common myths

A common myth among employers is that probationary periods are a ‘free pass’ to terminate an employee’s employment without consequence.

In reality, a probationary period does not prevent an employee from bringing an unfair dismissal or other type of claim in respect of the termination of employment.

Whether employees can lodge unfair dismissal claims in respect to the termination of their employment is governed by the Fair Work Act 2009, and depends upon (among other things) whether they have completed the minimum employment period – being six months for an employer with 15 or more employees or 12 months for an employer with fewer than 15 employees.

Therefore, the presence or absence of a probationary period in an employee’s contract will have no bearing on the employee’s ability to bring an unfair dismissal claim against the employer.

Additionally, the presence of a probationary period doesn’t preclude an employee from bringing other types of claims (such as discrimination claims under the applicable state or federal anti-discrimination legislation, general protections claims under the Fair Work Act or breach-of-contract claims) at any stage of the employment relationship, even after, say, one week.

Why include a probationary period at all?

Probationary periods are still an extremely useful HR tool, and it is worthwhile to include a probationary period in an employee’s contract of employment, as the clause:

• Will put employees on notice that their performance will be continually monitored and assessed during the first three or six months of their employment.
• Can provide for a lesser period of notice of termination (generally one week) to apply during the probationary period.

The truth about probationary periods

While employers often don’t provide explanations for termination where it occurs during the probationary period, it’s always advisable to do so, stating reasons relating to performance or conduct in writing.

This way you are well placed to defend any claim that may arise in respect of the termination and to establish that the reasons were not unlawful.

There is no set limit on how long a probationary period can last, although it should not be for longer than is reasonably necessary for the parties to assess the suitability of the employment relationship. Probationary periods are typically of three or six months in duration.

A probationary period can only be extended beyond the initial period if the contract provides for an extension, or the employee subsequently agrees to an extension.