Probationary period vs Qualifying period
You may have heard the term ‘probationary period’ and ‘qualifying period’ being mentioned when it comes to a new employee and thought “what is the difference?”. You may have also thought you could dismiss an employee during their probationary period with 'no risk'.
This is an area that businesses need to be very careful about as getting it wrong could leave you exposed to an unfair dismissal claim and can be a very costly mistake.
This aim of this article is to help businesses understand the difference between the two and how to go about dismissing a probationary employee with minimal risk.
What is the probationary period?
The aim of a probationary period is to allow the employer and the employee to assess each other and the position for ongoing employment. If the employee is not suited to the position or the business (or vice versa), either party can end employment within the probationary period.
What is a qualifying period?
Under the Fair Work Act 2009 (Cth), there is a requirement that in order to make an unfair dismissal claim, the dismissed employee must have served a minimum employment period of 6 months, or 12 months if the employer employs less than 15 employees (small businesses). That is the case regardless of whether the employment contract includes a probationary or trial period. If an employee continues to be engaged after their minimum qualifying period they are considered to have completed their minimum qualifying period and enjoy full rights to an unfair dismissal action. The qualifying period is set in stone and cannot be changed.
Can I extend an employee's probationary period beyond 6 months (or 12 months for small businesses)?
This is a very common question that employers ask themselves after having employed a new employee who may not be suitable for their business, and the answer is yes. However, there would be little point in doing so, because even if you extended the period beyond what is set under the Fair Work Act 2009 (Cth) qualifying period, and then you dismissed the employee within this extended period, the employee would still be eligible to make an unfair dismissal claim. An employment agreement cannot override the Fair Work Act 2009 (Cth) on this point.
6 Ways to Reduce the Risk of an Unfair Dismissal Claim
- Match the probationary period with the minimum qualifying period of 6 months (or 12 months for small businesses). This will lessen the legal exposure for your business if you dismiss a probationary employee before the expiration of the minimum qualifying period without a valid reason or warnings.
- It is important to know that the dismissed employee can still challenge the dismissal on grounds that it is in breach of anti-discrimination or general protection laws or a breach of employment contract, even if they have not served the qualifying period. Prior to dismissing a probationary employee, make sure you are in a position to defend the reason for dismissal and show that is a lawful reason.
- Unfair dismissal is just one avenue an employee can take for remedy around their dismissal. Other reasons include if they believe they are being unlawfully discriminated against. To avoid this, provide clear performance measures, specific and regular feedback, relevant and effective training and development and make difficult decisions early after giving the employee reasonable chances to improve. Best practice is to give at least one warning during the qualifying period. Remember, if you have properly performance managed your probationary employee and if you dismiss them under their probationary period, this should come as no surprise to them.
- Dismissal does not take effect until communication of dismissal has been made to the employee. Therefore if a dismissal notice is posted to an employee before the minimum employment period expires, but is received by the employee after the minimum employment period has expired, the dismissal will not have taken place within the minimum employment period. Some ways to overcome this is to call the employee directly, follow up with an email of the letter and send the letter by registered post with proof of delivery.
- Ensure that if you are going to dismiss an employee within the 6 month qualifying period (or 12 months for small businesses), that you do it prior to the end of the qualifying period. One day past this period will mean that an employee will be entitled to lodge an unfair dismissal claim.
- The minimum employment period includes any period of casual employment that was on a regular and systematic basis, during which the employee had a reasonable expectation of continuing employment.
For advice on probation and qualifying periods or any other HR Consulting advice please contact Harrison Human Resources on 1300 544 803.
Article written by: Rebecca Stoodley, Human Resources Consultant with Harrison Human Resources.