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Probation vs Minimum Employment Periods

Probation vs Minimum Employment Periods

We ran an article a couple of years ago on Probation Periods and every month we get questions that indicate there is some confusion about probation periods and how they relate to the Minimum Employment Period (MEP).

Probation Periods

Do you even need to have a probation period?

Historically, the Probation Period was a must-have clause in every contract to protect the employer from unfair dismissal. If that’s your only reason to have a probation period, you may as well delete it as the Minimum Employment Period takes care of that risk (see below).

Today, Probation Periods are an opportunity for both the employer and the employee to evaluate if there is a good fit for the role and the company culture. If used in this manner, there are some strong benefits in having a Probation Period:

  • It is a commitment by the employer to a provide structured program for feedback, guidance and training in those critical early months, and assess competency and fit.
  • Documenting the structured program makes the final decision clearer and provides evidence of fairness if a subsequent claim is made.
  • It provides some latitude for the employee while they are learning the ropes and, at the same time, imposes a deadline to reach full competency.

The Probation Period does not exempt employers from contractual obligations, unlawful discrimination, or adverse action claims.

There is no set time period for probation but it needs to be reasonable in the circumstances. Usually it is three months for experienced recruits and internal promotions, and six months or more where there is a steep learning curve.

Minimum Employment Period (MEP)

The Fair Work Act (2009) introduced the MEP as six months for larger employers or 12 months for employers with fewer than fifteen employees. The Unfair Dismissal provisions of the Act cannot be accessed until the MEP has been completed.

Some important aspects to consider:

  • The MEP is measured from day one and is independent of any probation period
  • Even if the employee is still on probation, once the MEP is achieved they will have access to Unfair Dismissal remedies.
  • The MEP does not exempt employers from contractual obligations, unlawful discrimination, or adverse action claims.

Extending the Probation Period

We get asked about this on a regular basis so thought we should mention some points to consider.

  • You are obliged to abide by the terms agreed in the employment contract
  • If it specifies a fixed term probation period, that is your commitment
  • If it provides for an extension, you will still need the agreement of the employee
  • If the probation period exceeds the MEP, you are exposed to Unfair Dismissal claims

As an alternative, a documented performance management program can be implemented at any time, probably with better results, and will give you a strong defence against any claims.