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A new employment position is both exciting and anxious for both the new employee and the employer. While both parties tend to hope for success, sometimes the fit is off and the employee and the employer find themselves in the midst of a dilemma.

It is typical for employment contracts contain a clause regarding the probationary period of the new employee. These probationary periods can range from 3 months to 6 months in some cases. These clauses are put into place should either the employer or employee no longer wish to terminate employment with the expectation of no legal ramifications.  

Currently an employer can terminate a new employee within the probationary period without concern for liability generated from an unfair dismissal claim. This is due to the Fair Work Act 2009 prohibiting anyone employed with a company of less than 15 employees from filing a claim for unfair dismissal within the first 12 months of employment. For employers with greater than 15 employees, the time frame prohibiting a claim of unfair dismissal is 6 months.

The length of the probationary period is always within the discretion of the employer. Most employers use a 3-6 month period of probation to see if the employee works well within the companies structure and with the other employees. This is perfectly acceptable and still allows the employer the right to terminate an employee without concern for an unfair dismissal claim. During this time period the employee is still entitled to basic benefits and has certain protections.

For example, an employee is entitled to the following during their probationary period:

  • Payment of wages during the probationary period
  • One weeks’ notice prior to termination
  • To accrue and access their sick leave and vacation time which
  • Any unused accrued annual leave must be paid out upon termination.

To ensure the fairest opportunity for both the employer and employee to assess the new employment situation, it is best for employer to take some very simple precautionary steps to document the employees’ success or failure during the early phase of employment.

As the employer it is important that expectations for the position are clearly defined and communicated. Also, ask the employee to define their expectations for the situation. This will create common ground for the new work circumstances to develop into a solid employment relationship.

It is important to foster ongoing communication between yourself and your new employee. Be sure to give immediate positive feedback. In the instance where the employees work falls short of expectations, or errors are made, give immediate constructive criticism with a plan for improvement. The plan can include scheduling a meeting 1-3 times per week to help train the employee or assigning a particular mentor to assist the employee on a daily basis.

Employers will need to be aware of the fact that they will have to make a decision to permanently hire or fire the probationary employee. During this time it is important to assess carefully and keep the new employee informed of the direction with regard to offering permanent employment. However, prior to confirming to full time employment it is important to remain non-committal in statements regarding ongoing employment. Do not make promises of continued employment unless you are certain on following through. Do not take any action that could be construed as discriminatory in your consideration of letting a probationary employee go. Any hint of a promise made, or a breach of contract, or a discriminatory action, could give rise to a legal claim.

Employers should give their new employee accurate work that is reflective of what the position requires. Giving an employee less responsibilities, or work that is not consistent with that which they will be expected to perform on a daily basis, will not give either parties a chance to ascertain if the position is a good fit.

Finally, if an employer is unsure about permanently hiring a probationary employee, keep in mind that you can extend their probationary period. However, if you do, and the time runs beyond the 12 month or 6-month statutory Fair Work Act period, the employee then will have the right to file an unfair dismissal claim. In the event that you do decide to let a probationary employee go, rather than hire them permanently, it is always in your best interests to craft a letter to the employee informing them of your decision. This letter is required as written notice of termination and must be given to the employee one week before the expected termination date.

In the event that you have additional questions or concerns regarding an employee and their probationary period, please contact the offices of Owen Hodge. We are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.