Can they be extended in Australia?
A probation period is a trial phase at the beginning of employment, typically lasting between three and six months. It gives you time to assess their performance and conduct, and determine whether they are the right fit for your team. In Australia, you can extend the probation period if extra time is needed to make a fair and considered decision about an employee’s ongoing role. However, there are considerations and laws you need to be aware of.
Purpose of a Probation Period
A probation period gives you and your employee space to review skills, work ethic, and how well they’re settling into the role and culture. The terms should be clearly outlined in the employment contract from the outset. While on probation, employees usually receive the same entitlements to pay and leave, but may not yet be covered by unfair dismissal laws.
How Probation Periods Affect Dismissal Laws
During a probation period, employment can usually be terminated with shorter notice than would be required after the probation period ends. While many contracts specify probation periods of three to six months, under the Fair Work Act, new employees generally cannot make an unfair dismissal claim unless they have completed:
- 12 months of service with a business that employs fewer than 15 people
- 6 months of service with a business that employs 15 or more people
Understanding these rules is essential for managing your legal risk and making informed employment decisions.
Can You Extend Probation Periods?
In some cases, a standard probation period may not provide enough time to make a confident decision about an employee’s ongoing role. If performance is still developing or there have been absences, extending the probation period can help. However, both parties must consent, and the reasons should be clearly explained with written confirmation to reduce legal risk.
Keep in mind that extending a probation period does not override the Fair Work Act. If the extension causes the employee to pass the minimum employment period, they may still be eligible to claim unfair dismissal, even if they are technically still on probation.
The Risk of Extending Probation Periods
Under the Fair Work Act, employees may become eligible to claim unfair dismissal once they reach the minimum employment period. This is six months for businesses with 15 or more employees, or twelve months for those with fewer than 15. Even if an employee is still on probation, these protections may apply. Failing to follow the correct process can lead to legal risks, including costly claims and potential damage to your business reputation.
Consult with a DreamStoneHR adviser before extending a probation period.
The Importance of Communication
Clear communication is essential when extending a probation period. The employee should understand why the extension is happening, what they need to improve, and how their performance will be reviewed. Being upfront helps avoid confusion, sets expectations, and keeps everyone on the same page.
The Ethical Considerations
While protecting your business interests is essential, fairness and transparency should always guide how you handle probation extensions. Employees should clearly understand why an extension is being considered, and consistent standards should be applied across your team. Being open and fair in your approach builds trust and reduces the risk of disputes.
Need Help Extending a Probation Period?
To protect your business, always seek advice before extending a probation period and ensure the employee agrees to the extension in writing. The team at DreamStoneHR can guide you through the process.
Tips for Managing Probation Periods
- Clearly Define Probation Terms: Ensure the employment contract explicitly outlines the probation period’s duration, expectations, and any provisions for extension.
- Use Probation to Assess Suitability: Utilise the probation period to evaluate the employee’s skills, work ethic, and cultural fit within your organisation.
- Understand Legal Implications: Be aware that extending a probation period could lead to the employee reaching the minimum employment period under the Fair Work Act (6 months for businesses with 15 or more employees; 12 months for those with fewer than 15), making them eligible for unfair dismissal claims.
- Conditions for Extending Probation: You can extend a probation period if:
- The employment contract allows for an extension.
- The employee agrees to the extension.
- Obtain Written Consent: Always get the employee’s written agreement when extending the probation period to minimise legal risks.
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- Communicate Effectively: Maintain clear communication with the employee about the reasons for the extension, performance expectations, and goals moving forward.
- Ethical Considerations: Treat all employees fairly by applying consistent probationary terms and being transparent about any extensions.
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