There is a common misconception that probationary periods allow an employer to dismiss an employee for any reason (or for no reason at all) prior to the confirmation of their employment. This is not necessarily the case and, in fact, there is no statutory basis that entitles an employer and an employee to a probationary period.
The concept of a probationary period is largely derived from the provisions of the Fair Work Act 2009 (Cth) (FW Act) relating to minimum employment periods. Under the FW Act, an employee is only protected from unfair dismissal if, amongst other things, they have completed the minimum employment period.
The minimum employment period depends on the size of the employer’s business – it is twelve months for small business employers (i.e. employers who had less than 15 employees at the time of the dismissal) and six months for all other employers.
The minimum employment period applies to an employee’s employment irrespective of any contractual provisions setting out a probationary period. This can become an issue when an employee’s probationary period extends beyond the minimum employment period, as was the case in Werner v St Michael’s Association [2020] FWC 2896.
The employee in this matter was a chef and food safety trainer who commenced employment with the employer in March 2018. That employment was subject to a probation period for six months. During this period, the employee underwent three performance reviews where issues with her performance were raised.
At the end of the six-month probation period in September 2018, the employer extended the probation period for a further three months, and placed the employee on Performance Improvement Plans. At the commencement of the PIPs, the employee was only meeting expectations in one out of ten criteria. By November 2018, the employee was meeting expectations in seven of the criteria, and partially meeting expectations in the remaining three criteria.
At the end of the extended probation period, the employer extended it again for a further two weeks. At the conclusion of this further extended probation period, the employer held a Probation Review Committee meeting. During that meeting, it was determined that it was more probable than not that the employee would be unable to demonstrate appropriate levels of efficiency or responsibility in her role, and accordingly her employment was terminated.
The employee commenced unfair dismissal proceedings in the Fair Work Commission (FWC) alleging that her dismissal was unfair because she was satisfactorily fulfilling the requirements of her position and there was no valid reason to terminate her employment.
The employer argued that the employee had not demonstrated an ability to fulfil the requirements of her position and it was appropriate to terminate her employment while she was still in probation.
The FWC found that it appeared the employer had relied on incorrect advice it had received, which was that the employee was not protected from unfair dismissal during her probation period. The FWC noted:
“It can be seen that the Respondent though (sic) it had an unfettered right to terminate the Applicant’s employment if she had not satisfactorily (in the Respondents (sic) eyes) completed probation. As indicated that was wrong.” [at (19)]
The FWC further found on the evidence that the employee had made significant improvements in her role and was meeting expectations in respect of most areas by the time of her dismissal. It also noted that two of the employee’s managers believed that she had made sufficient improvement to warrant the continuation of her employment, but that they changed their minds at the final meeting to support their managers. Accordingly, there was no valid reason for the employee’s dismissal.
Finally, the FWC found that the employee was denied procedural fairness because she was not notified of the reason for her dismissal, was not provided an opportunity to respond, or given any prior warning about her performance and that it could lead to the termination of her employment.
The FWC therefore found that the employee was unfairly dismissed and awarded compensation to the employee in the amount of $8,788.64.
Lessons for employers
The minimum employment period set out in the FW Act will apply to an employee and employer irrespective of any contractual provisions relating to probationary periods. This becomes particularly important if an employer wishes to extend an employee’s probation beyond the minimum employment period.
Employers should also be mindful that employees who are dismissed prior to the completion of the minimum employment period are still able to make claims (other than unfair dismissal) in relation to their employment.
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