You invest a massive amount of time, energy and money to recruit a new employee into a vacancy. Naturally, you would want a successful outcome of this investment.
(see also Probation vs Minimum Employment Periods)
On some unfortunate occasions, the match between the person and the job doesn’t work out. That is the time to be honest and make a hard decision to implement a clean cut. The probationary period gives you this opportunity to objectively assess the performance of the new employee and make this vital decision. Moreover, the decision to terminate doesn’t come with the risk of unfair dismissal. You can also avoid unlawful dismissal if you follow the right process. However, many managers let this time slip by and start worrying about non-performance long after this period is over.
Here are five things you must know about probation to take advantage of this period of opportunity.
#1: Understanding the difference between ‘Probationary Period’ and ‘Minimum Employment Period’
By definition, probationary period is a time for assessment whether there is the right ‘fit’ between a new employees and their job. During this period an employer can make a decision whether to continue with the relationship or bring it to an end.
The Fair Work Act doesn’t recognise probationary period as a period of assessment. Instead, it mentions a minimum employment period (MEP), during which an employee is excluded from bringing in an unfair dismissal claim whether or not they have undergone a formal probation. The MEP is 12 months for employers with less than 15 employees and six months for employers with more than 15 employees.
You can still include a three month formal probationary period in the employment contract, but can informally extend your time of assessment up to six months (or 12 for small employers) and make the termination decision within this period. You will be exempt from an unfair dismissal claim.
#2: Extending the Probationary Period
Sometimes the three months is not sufficient to make an objective decision. You may wish to give more time to an employee to demonstrate their ability to do the job at an acceptable standard. You can extend the probationary period only if the employment contract makes the provision and you have the agreement of the employee.
This means, the employment contract should clearly mention that if necessary, the probationary period will be extended in consultation and agreement with the employee.
The important point to note here is that if the probation goes beyond the minimum employment period, the employer is no longer exempt from an unfair dismissal claim. For example, you have an agreement with your employee to extend the probation beyond six months and you decide to dismiss the employee at the end of that period. The employee considers the termination as unfair. They can bring in an unfair dismissal claim, even though the termination was at the end of a probationary period.
#3: Dismissing the employee during the Minimum Employment Period
During the MEP an employer can make and implement a decision to terminate a new employee if they are certain that the relationship will not work out. However, they cannot make an ‘unlawful’ dismissal – one that is based on prohibitive grounds. Some examples of prohibitive grounds would be, temporary absence from work due to illness or injury, bringing in a complaint against the employer for violating laws or regulations, race, sex, colour, sexual preference, age, physical or mental disability, marital status, family responsibilities – among other factors. If an employee believed that they were dismissed on an ‘unlawful’ ground, they can take legal action against you.
#4: Justification of having a Probationary Period in the new regime
A formal probationary period gives you the discipline to properly utilise that crucial first three months in a structured step by step process. As you decide the goals for the employee to achieve during this period, you start to recognise their true strengths and weaknesses, their ability to adapt to the culture of the organisation and potentials to make future contributions in the business. The constructive feedback that you provide to the employee makes a significant difference
The advantage of going through this structured process is that you would always make an objective go/no go decision about the continuation of employment. Moreover, if your decision to terminate is challenged, you can always prove that the decision to terminate was taken purely on the grounds of performance following a clear and transparent process and not based on any ‘unlawful’ or ‘discriminatory’ reasons. You can also prove that the employee was given reasonable time and opportunities to improve their performance in the role.
#5: The process to follow to make use of the Probationary Period
The first step is to include the probation clause in the contract document. Then it should follow a sequence before the business makes a final decision whether or not to continue with the new employee. The new employee should go through a proper induction process. This includes setting up of learning and performance goals to achieve during the probation and a structured process of reviewing the progress every 4 – 6 weeks. The review meetings should be a platform for the manager to provide constructive feedback to the employee of how they are coping with the role and whether they are making the expected progress in their learning and contributions. The manager should keep records of such meetings and send a confirmation email to the employee. If it so happens that a termination looks inevitable, the manager should put that in writing in a final letter with clear reasons.
Next time you have a new employee, make sure that the Probationary Period is completely utilised for you to make a timely decision that is fair, objective and accurate for both parties.
Mahua is the founder and director of consultancy practice Next Gen Teams that provides customised performance improvement solutions to businesses.
*Disclaimer: We are not lawyers. This blog post should not be construed as legal advice by any means. Consult with a legal professional rather than reading a blog post if you are looking for legal advice.