Are you allowed to terminate an employee during their probationary period?

Let’s say that you’ve hired a new employee, and have been assessing them over the course of the previous months to determine how capable they actually are. This is what can be known as a probationary period, which can assist you in determining the employee’s suitability for the role.

If the employee isn’t suited to the role, there are fewer obstacles to terminating the employee during this probationary period.

It can also help to prevent unlawful dismissal claims. Under the Fair Work Act 2009 (the Act), there is no such thing as a probationary period – rather, there must be a minimum employment period, determined by the amount of time the employee has worked in the business and the size of the business. For a small business (less than 15 employees) this is 12 months, otherwise, it is six months.

During the minimum engagement period, an employee may be terminated subject to written notice in accordance with the relevant provisions of the NES, the applicable industrial instrument or their employment contract.

For best practice in terminating employees, employers should:

  • Have a policy in place in respect of managing and possibly terminating employees during their probationary period
  • Have a drafted employment contract in place prior to the employee commencing work that clearly states the length of the probationary period, including the start and end dates and specified in what circumstances the probation may be extended, and how long for.
  • Ensure that the employees engaging in the probationary period are aware of the expectations that they may need to fulfil in terms of skills, tasks, deadlines and conduct.

Before the probationary period ends, employers should let employees know whether or not they have passed their probation. If they are unsuccessful, you can either extend their probationary period or end their employment with your business.

In the event that you do choose to terminate the employee, you will need to provide them with written notice to end their employment, with the period of notice given (or payment in lieu of notice) and the date the employment will end.

Valid reasons for terminating employment can be varied, but to minimise the risk of a subsequent unfair dismissal claim, these are the four key areas under which you may be able to terminate employment:

  • Capacity – if the employee lacks the ability or is incapable of completing the inherent requirements of their role.
  • Performance – if the employee’s skill level or quality of work is below the required level for the job, or if they are not meeting the standards outlined in their employment contract due to a lack of care or diligence.
  • Misconduct – inappropriate behaviour that is out of line with company policy, goes against the terms of an employment agreement or is unlawful.
  • Redundancy – when an employer decides that they either no longer need an employee’s job to be done by anyone or the employer becomes insolvent or bankrupt.

If you are concerned about unlawful dismissal complaints from terminated employees, you should consult with Fair Work to ensure that all of your bases are covered.