Employ­ment law myth No.5: ​“If they’re not per­form­ing well, I can extend their probation”

Over the next few weeks, we’re dis­pelling some com­mon­ly held employ­ment law mis­con­cep­tions, in a series of short arti­cles. Warn­ing – may con­tain spoilers!

Many employ­ers con­sid­er that start­ing new employ­ees off on an ini­tial pro­ba­tion­ary peri­od is a use­ful way to assess their suit­abil­i­ty for the role, before decid­ing to offer them per­ma­nent employ­ment. Sit­u­a­tions often arise where the employ­er is still unsure at the end of the pro­ba­tion­ary peri­od whether to offer the employ­ee ongo­ing work. In such sit­u­a­tions, many employ­ers will sim­ply extend the pro­ba­tion­ary peri­od for anoth­er few months to see if the employ­ee is able to lift their game. So long as the employ­ee is aware that their pro­ba­tion­ary peri­od is being extend­ed, there’s no risk of a claim if they’re let go before the end of pro­ba­tion, right?

It may come as a sur­prise that pro­ba­tion­ary peri­ods are not con­cepts recog­nised by the unfair dis­missal pro­vi­sions in the Fair Work Act 2009. Once an employ­ee has com­plet­ed 6 months ser­vice (or 12 months ser­vice in the case of a ​“small busi­ness employ­er”) then they will have an abil­i­ty to bring a claim for unfair dis­missal* — regard­less of whether they are still with­in a pro­ba­tion­ary peri­od or not. As a con­se­quence, for dis­missals based on unsat­is­fac­to­ry per­for­mance dur­ing a pro­ba­tion­ary peri­od, there will be a risk of a find­ing against the employ­er if it has not fol­lowed the usu­al steps the Fair Work Com­mis­sion expects to be tak­en for dis­missals of this nature (warn­ings about the need to improve, a for­mal meet­ing with the employ­ee and their sup­port per­son to dis­cuss the employ­ment pri­or to tak­ing the deci­sion to dis­miss, etc).

It is there­fore usu­al­ly advis­able that pro­ba­tion­ary peri­ods are not extend­ed beyond the 6 (or 12) month peri­od. In addi­tion, care should be tak­en to ensure that any ​“end of pro­ba­tion­ary meet­ings” are sched­uled well in advance of the 6 (or 12) month cut off, so as to avoid the pos­si­bil­i­ty of the employ­ee acci­den­tal­ly tip­ping-over into unfair dis­missal territory. 

An alter­na­tive approach – used by some savvy employ­ers – is to ini­tial­ly engage pro­ba­tion­ary employ­ees on a fixed-term con­tract. If an exten­sion to the pro­ba­tion­ary con­tract is required, a fur­ther fixed term employ­ment con­tract is entered into. As an unfair dis­missal claim can­not be brought where the rea­son for ter­mi­na­tion is the expiry of a fixed term con­tract (see sec­tion 386(2)(a) of the Fair Work Act 2009), this pro­vides one way of man­ag­ing risks where extra time is need­ed to assess an employ­ee’s suitability.

(*So long as one or more of the fol­low­ing applies: (a) they are cov­ered by a mod­ern award, (b) an enter­prise agree­ment applies to their employ­ment or (c) they earn less than the high income threshold.) 

For any advice on pro­ba­tion­ary peri­ods and ter­mi­na­tion of employ­ment please con­tact: sro@​swaab.​com.​au or rbo@​swaab.​com.​au