Can you extend probation?

In brief

Pro­ba­tion peri­ods are impor­tant to employ­ers. The pro­ba­tion peri­od allows employ­ers to gauge an employ­ee’s com­pe­tence and char­ac­ter, before it gets tricky ter­mi­nat­ing them. There is, how­ev­er, con­fu­sion around this sta­tus. As an employ­ment lawyer, I am often asked whether an employ­er is able to extend the pro­ba­tion peri­od of an employ­ee who is not per­form­ing well – but per­haps not so abysmal­ly as to war­rant being terminated. 

Length of probation

The first point that needs to be made is that pro­ba­tion peri­ods are often mis­tak­en as being for a three month peri­od. This is no longer the case. The Fair Work Act says that for organ­i­sa­tions with:

  • less than fif­teen staff (across a group) the pro­ba­tion peri­od under the leg­is­la­tion is twelve months. So, at any time dur­ing that first year, you can ter­mi­nate that employ­ee with­out rea­son being giv­en and with­out a process of warn­ings. There are a num­ber of good rea­sons why you may choose to both give a rea­son and also have a process of appraisal – but the leg­is­la­tion does not require it.

  • For more than four­teen staff, the pro­ba­tion peri­od is six months.

The answer is – in nor­mal cir­cum­stances – no. Even where an employ­ee has been unwell for much of the pro­ba­tion peri­od and the employ­er – under­stand­ably – asks for their absence not to be includ­ed in the pro­ba­tion, the peri­od of pro­ba­tion is fixed.

How can I engage a staff mem­ber to get a longer peri­od of consideration?

One option employ­ers often adopt is to put employ­ees on as casu­als. Unfor­tu­nate­ly, this is no help if the employ­ee’s engage­ment is reg­u­lar and sys­tem­at­ic, in these cir­cum­stances, they will enjoy the same pro­ba­tion peri­ods and can access unfair dis­missal in the same way as a per­ma­nent employee.

There is anoth­er exemp­tion under the Fair Work Act for con­tracts of a spec­i­fied peri­od. A con­tract for a spec­i­fied peri­od can­not have an ear­li­er ter­mi­na­tion clause. –If you want­ed to ter­mi­nate an employ­ee dur­ing the term of this type of the con­tract, you would have to pay out the bal­ance of the peri­od. That could be expensive.

A more use­ful option is an outer lim­it con­tract. These con­tracts are sim­i­lar to con­tracts for a spec­i­fied peri­od, except that they also give employ­ers the capac­i­ty to ter­mi­nate employ­ees ear­li­er. For exam­ple, the employ­er may be a larg­er organ­i­sa­tion that engages peo­ple on 12 month con­tracts with an out­er lim­it pro­vi­sion. This means the employ­er can ter­mi­nate the employ­ee sooner.

If the employ­er ter­mi­nates out­side the pro­ba­tion peri­od (i.e. beyond six months) but before the end of that peri­od (ie. 12 months), then (absent seri­ous mis­con­duct) the employ­er would have to go through the process of warn­ings. If the con­tract sim­ply reach­es the end date, then there is no ter­mi­na­tion by the employ­er and, there­fore, no right for unfair dis­missal. These con­tracts can be very useful.