Did you know that an employee who is terminated during probation can still make a claim with Fair Work?
Many of my clients consider the probation period as the safety net where if they have got the hire wrong, that can easily end the employment with no repercussions.
Well, that's only partly true. Let's look at what are the key factors relating to probation:
1. Probation periods only apply to permanent employees (part-time or full-time); casuals have no guarantee of work.
2. The duration of the probation period can be determined by the employer (unless there is an Award or Enterprise Agreement that specifies a period); usually between 3 to 6 months.
3. An employee who is terminated during probation must be paid notice, usually 1 week, as per the Fair Work Act (unless specified otherwise in an Award, Enterprise Agreement or Contract).
4. If you issued them a Letter of Offer (Employment Contract/Agreement, known legally as a common law contract) that provides for 1 month notice (or similar); unless you stipulate that the notice period is less during probation, you will need to pay them one month's pay even if terminated during probation.
5. If an employee is terminated during probation, they must still be paid out any unused annual leave accrued during the period of their employment.
6. While you can extend an employee's probation period by providing notice in writing and gaining their acknowledgment, if the service period extends beyond the "minimum employment period" as defined in the Fair Work Act (6 months for most employers and 12 months for Small Business Employers), they may be able to make an unfair dismissal claim.
7. If the employee's service period is less than the "minimum employment period", and they believe the reason for their dismissal was one protected by law, they can lodge an Adverse Acton (General Protections) claim with Fair Work.
The moral to the story is that if you need to end an employee's engagement during their probation period, you should still follow due process:
1. Provide them with the opportunity to understand and fix their performance/conduct issues before you decide to terminate.
2. Have a valid reason, and document it in the termination letter.
3. Meet with the person to discuss your decision and reason (don't just send them a letter in an email, or terminate them via text message).
4. Provide them with a right of reply (ability to respond to the reason for their termination). Genuinely consider their response. You should record their response somewhere, in case you need it later.
5. Pay them all hours worked up to and including their last day, plus their notice period (at least 1 week), plus any unused accrued annual leave. Pay this as soon as possible (and within 7 days) of their end date.
By following due process and avoiding "snap" decisions, you can protect your organisation from the risk of claims.
If you need assistance managing your employees through probation, we are here to help.