Below are answers to some of the most frequently asked questions that HR practitioners have regarding probationary periods.

Q. Can I extend probationary periods?

Yes, if employees agree or there is provision in the original employment contract allowing you to extend the probationary period.

However, once the minimum employment period (MEP) expires (being the minimum period of service before employees have access to Fair Work Act unfair dismissal laws) then the employee may be able to challenge any dismissal within the extended probationary period under Fair Work Act unfair dismissal laws.

Q. Do I have to warn employees who are underperforming during their probationary period that they are unlikely to have their employment continued beyond the probationary period?

If (a) there is no such requirement imposed by the employment contract; and (b) the MEP has not expired, then you will not have any exposure to unfair dismissal if you fail to give a warning before dismissal.

Q. Do I have to give employees a reason for not having their employment continued beyond the probationary period?

Again, if (a) there is no such requirement imposed by the employment contracts; and (b) the MEP has not expired, then you will not have any exposure to unfair dismissal if you fail to give a reason.

However, employees could contend that the reason is discriminatory or in contravention of the Fair Work Act general protection provisions.

Therefore, it is usually a good idea to give a reason for dismissal and document the process that led to the dismissal decision.

Case study

In November 2012, the Federal Magistrates Court imposed a $15,840 penalty on West Coast Propellers for dismissing a 16-year-old after four months’ service because the boy’s mother queried his pay. The director was personally fined $2640. The prosecution followed an investigation by the Fair Work Ombudsman.

Although the employee was within the MEP, the fact that the employer dismissed the employee because he (or his parent) queried whether he was being paid correctly resulted in the employer contravening s340 of the Fair Work Act.

Q. Are probationary employees entitled to notice of termination, paid personal leave and paid annual leave?

Yes, although it may be reasonable for the employer not to approve employees taking paid annual leave during a probationary period. Probationary employees are entitled to at least the minimum statutory notice or payment in lieu of notice (one week if employees have less than a year’s service).

Some employment contracts provide for a lesser notice entitlement for probationary employees, however the provision must not be less beneficial than the statutory minimum.

Probationary employees will not usually be entitled to redundancy pay if retrenched within their first year of service.

Q. If I purchase a business and inherit some of the staff from the previous owner, can I place them on probation?

Yes. However, if the circumstances give rise to a ‘transfer of business’ for the purposes of the Fair Work Act, the MEP will not ‘restart’ in relation to the employees transferring to you, unless you recruited them on condition that you would not recognise their service with the previous owner.

Q. Can I put employees on probation after they have finished fixed-term contracts?

Yes. However, if the MEP has expired, any dismissal during the probationary period will be subject to Fair Work Act unfair dismissal laws.