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08 April 2022

Cutting ties

Employment Law
Federal

Asked

Employment law – Probation period termination

Dear Mentor

1. During the probation period, is the employer's right to terminate without providing any reason an absolute right without exception?

2. After the probation period for a full-time employee, if an employer needs to terminate an employment contract based on underperformance, what is the best way to do so? What are the risks from the employer's perspective?

Thank you

Answered

Thank you for the question.

1. No, the ability of an employer to terminate an employee during a probation period is not unfettered. While employees cannot bring an unfair dismissal claim during the minimum employment period under the Fair Work Act, they still have the right to bring a general protections claim. The minimum employment period is six months, or 12 months if the business has fewer than 15 employees. The general protections are set out in Part 3-1 of the Act.

The conditions of any probation period need to be included in the terms of an employment contract. If an employee fails their probation they are still entitled to receive notice and any accumulated entitlements. The minimum notice period under the National Employment Standards for the first year of employment is one week.

Extending a probation period past six months has no effect on either the minimum employment period or the minimum notice requirement.

2. The By Lawyers Employment Law guide provides:

The majority of employment is for an indefinite period and, subject to the impact of statutory protections such as unfair dismissal and discrimination laws, can be lawfully terminated at any time by providing the minimum notice set out in the written contract of employment, or stipulated by statutory sources such as any applicable industrial award or agreement or the National Employment Standards…

Terminating an employment agreement always requires caution… check the terms of the relevant employment contract and any applicable industrial instruments carefully before terminating any employment relationship.

Section 387 of the Fair Work Act 2009 sets out the matters that the Fair Work Commission must take into account in determining whether a dismissal was harsh, unjust or unreasonable.

The Fair Work Commission’s Small Business Fair Dismissal Code applies to national system employers with fewer than 15 employees, but provides useful guidance for any employer seeking to dismiss an employee fairly.

See the Full Commentary and 101 Employment Law Answers in the By Lawyers Employment Law publication for further information.

Regards

Mentor