AAT HR Advice Corner powered by AB Phillips – Probation periods

You have interviewed a number of applicants for your job vacancy and you have made a choice. You are confident you have selected the right person and your ability to make the right decisions has been very reliable in the past. You are now preparing an offer of employment for the preferred candidate. 

But what if this person does not work out? If that happens, what do I do? Maybe I should include a probation period in their employment letter? Will that change how they feel about coming to my organisation?

These are all issues facing managers and owners when they want to engage someone new. Our advice is to always include a probation period in an offer of employment. In this newsletter, we provide important information about probation periods.

What is a probation period?

A probation period serves several purposes – as an employer, a probation period allows assessment of the employee's aptitude and suitability for the position. It is also a period of training, coaching, ongoing assessment and possibly at times, time for correction.

For the employee, it is a time they can assess whether the position is really what was expected and, if not, they have the option to resign.

For both parties, there are advantages in having a probation period within the letter of offer for those first few months of a new employment relationship.

There is no necessity either to wait until the end of the probation period to act if the employer or the employee want to “call it quits”; this can take place at any time during the probation period.

When should I let the employee know there is a probation period?

Probation period should be advised before an employee commences work with you. The most effective way to notify this is within the letter of offer.

A common probation period is three months, although longer periods are increasingly becoming more common. Key to the length is the complexity of the role and the seniority of the role.  It is generally accepted that six months is the longest a probation should be.

A probation period can be often called 'trial period', 'orientation period', or 'qualifying period'. The last of these, the 'qualifying period', is actually a term from the unfair dismissal laws in the Fair Work Act. The 'qualifying period' is the minimum period a person must have worked with an employer prior to being able to make an unfair dismissal claim if they are terminated. It is best to refer to the initial period of employment as a probation period and we recommend that you also identify the period of notice that will apply during the notice period. In most cases, it is a week of notice from either party.

Can there be another probation period when the employee moves to another role or gets a promotion?

An employer may set a new probation period for an employee being hired as a permanent employee who was previously employed by the same employer as a casual employee.This is also more effective if the new permanent employee is going to be working in a quite different role to what was their casual work.

The probation period in this case is permitted because the type of employment is substantially different – a permanent employee (a full time or part time employee who has the employer’s commitment to ongoing work) is very different to an employee engaged on a casual basis (casuals are engaged as contingent labour to supplement rises and falls in labour needs within an enterprise).

However, when an employee receives a promotion or is transferred to another permanent role, a probation period cannot be set. The purpose of a probation period is to assess an employee’s suitability at the very commencement of permanent work. 

In the event that a newly promoted or transferred employment does not work out satisfactorily, a proper disciplinary process needs to be followed. 

The various courts and tribunals have made this quite clear in many decisions; a probation period only applies once in an employment relationship and this is at the start.

Is it possible to have a probation period for a casual employee?

The nature of casual work is that it is contingent labour and hence, should have limited certainty of ongoing engagements.

For this reason, casual team members are exempt from a probation period. Legally, a casual employee is deemed terminated at the end of their last shift and cannot reasonably foresee an ongoing employment relationship.

An important caution, however, relates to a casual team member who has been employed for more than six months, and who has been engaged on a regular and systematic, is eligible to lodge a claim for unfair dismissal. This means that you should assess the suitability of a casual team member for continued employment and make a decision about their continued engagement in the first six months of their employment. 

Am I able to extend a probation period?

A probation period is determined at the start of employment. For this reason, it cannot be extended once employment has commenced.

Sometimes, issues emerge during the probation period such as extended sick leave by the new employee, with an employer wanting to extend a probation period. Australian courts and tribunals have determined that the option for extending the probation period must also be established in advance of the employee commencing employment.

In cases where the option of extending a probation period at the commencement of employment is agreed and recorded in the letter of offer, it is possible to extend a probation period. In these circumstances, it is best to prescribe the overall maximum period. A useful example, is having the letter of offer setting a three month probation period with an ability to extend it to a maximum of four months. 

Summary

Recruitment processes usually contain a job interview or practical assessment to help make the right selection for a new employee. Sadly, these processes are not perfect. Even if you have a really thorough recruitment process, you might still end up with someone who underperforms or doesn’t fit your organisation.

Probation periods give you the opportunity to assess new recruits “on the job”. They allow you to manage the relationship more flexibly and address problems before committing to an ongoing employment arrangement.

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Please note that the above information is provided as comment and should not be relied on as a substitute for detailed professional advice from AB Phillips or professional legal advice on any particular matter. Where you would like additional information and support about the content in this document please contact AB Phillips.