It’s common to include a probation clause in employment agreements. You know, the sort that says employment can be terminated without reason in the first 3 months by either employer or employee on a weeks (or sometimes a days) notice.  Historically, termination during probation meant that an unfair dismissal claim could not be made and therefore employers did not have to observe procedural fairness requirements before termination.

What most people don’t realise is this sort of contractual provision has had little legal relevance (at least in the private sector) for over 10 years now. The law was changed to include a statutory “deemed” probation period, called a “minimum employment period”. Under the Fair Work Act, an employee can’t bring a statutory unfair dismissal claim if terminated in the first 6 months of their employment. This is extended to 12 months for small businesses employing less than 15 people by headcount (ie including casuals). This statutory exclusion exists independently of contractual probationary clauses and does not have to be put in a contract.

This does not prevent an employee bringing a claim (either under the Fair Work Act or discrimination legislation) that their employment was terminated in breach of their general protections rights, or for unlawful or discriminatory reasons. But this was already largely the case anyway and not prevented by a probation clause.

So are contractual probationary clauses still of use? Well, they may still be relevant in a breach of contract claim if a lesser period of notice is payable during the probationary period. They are also of some symbolic value in conveying to employees that their employment is not automatically permanent and is subject to a confirmation period.

If probation is to be included in a contract, then there is no reason why it should not reflect the statutory deemed period of 6 or 12 months, rather than say 3 months. Employers should also keep in mind that at least some procedural fairness is desirable before termination. In particular, employees should be given some explanation about the reasons for termination. Otherwise, the employee is likely to speculate on the reasons and an unlawful termination or similar type of claim might result.  Please contact us if you would like help in this area.