In providing support and assistance to our clients, we commonly find that although employers are familiar with the term ‘probation period’, there is less awareness of the Fair Work Minimum Employment Period, what it is and how the two periods differ.
In this article, we provide clarification regarding the two terms and how they operate in practice,
particularly as the distinction between the two can become blurred.
Fair Work Minimum Employment Period or ‘Qualifying Period’
The Fair Work Act 2009 provides that to be eligible to make an unfair dismissal claim against an
employer, a dismissed employee must have completed a “minimum employment period” of
· 6 months if the employer employs 15 or more employees, or
· 12 months if the employer employs fewer than 15 employees.
The Fair Work minimum employment period will apply to an employee, irrespective of whether it is detailed within an employment contract.
The minimum employment period operates to provide an employer with an opportunity to terminate the employment of an employee during the applicable period without risking the
potential consequences of an unfair dismissal claim. However, once an employee has completed the applicable minimum qualifying period of 6 or 12 months, they will receive full protections and will have the right to make an unfair dismissal claim should their employment be terminated. As
such, once the minimum employment period has been completed, it will be essential that an employer follow a fair and reasonable dismissal process and have a genuine, justifiable reason prior to termination of employment occurring.
Probationary Periods
In comparison, Probationary periods are a contractual provision that are detailed in an employment agreement. Probationary periods are not provided for or prescribed by the Fair Work Act 2009.
A probationary period is intended to allow both the employer and the employee with the opportunity to assess each other, and the role. In circumstances where it is determined that an employee is not suited to a particular position or the business, termination of employment within the probationary period may occur.
Probationary periods are commonly set for a shorter period than the minimum employment period, for example 3 months. Where provided for in the employment contract, the probationary period may be extended for a further period in circumstances where an employer requires more time to assess the suitability of the employee.
However, if the probationary period length was to exceed:
· 6 months if the employer employs 15 or more employees,
· 12 months if the employer employs fewer than 15 employees.
the application of the probationary period would not be enforceable, and no advantage would be provided to the employer as the employee would receive the benefit of unfair dismissal protections.
Probationary periods set out in a common law employment contract cannot override the provisions of the Fair Work Act 2009 and both periods operate independently. As such, the minimum employment period will override the probationary period, for example, if an employee has passed their three-month probation, but are subsequently dismissed after five months employment, they would not qualify for unfair dismissal protections.
To maximise the effectiveness of a probationary period, it is recommended that employers set their probationary periods to be for a shorter period than the applicable minimum employment period. Doing so will enable the employer to ensure that an assessment is undertaken of the employee’s performance and suitability for the role prior to the qualifying period having been completed.
We further recommend that employers:
· Actively take steps to monitor, review and assess an employee’s performance well before the completion of the qualifying period – making decisions about the employee’s suitability should not be left until the last minute.
· Monitor and take notice of potential warning signs during the qualifying period. Early warning signs should not be ignored.
· Ensure that where employment is terminated prior to the completion of the minimum employment period, the employee is provided with the required period of notice (or payment in lieu) and that any accrued annual leave entitlements are paid.
It is important to note that while unfair dismissal provisions will not apply to an employee during the minimum employment period, the employee will still be entitled to general protection provisions. An employee who is dismissed prior to having completed their minimum employment period are not prevented from bringing an “adverse action” claim against an employer under the Fair Work Act 2009 should their termination result from a discriminatory matter. Care must be taken by an employer to ensure that the reason for the termination is not a prohibited or discriminatory reason so as to minimise of such a claim.
Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.
