Published 22 March 2017
When recruiting a new employee, the intention of most employers and managers is that the person will develop into a long-term employee, adding value to the business. However, despite best intentions, this doesn’t always eventuate.
If you decide that your new hire isn’t the right person for the job within the first six months, it is almost always best to take action swiftly. Otherwise, the business could face an unfair dismissal claim or be required to pay the employee a much higher amount in lieu of notice, exponentially increasing the cost of the new hire and distracting the business from achieving its goals.
What are the probationary period and qualifying period?
The initial period of employment of a new hire, gives you a valuable opportunity to assess whether a new employee is likely to work out.
The probationary period is an initial period of employment during which you assess the new employee’s suitability for the role. It is usual for probationary periods to last anywhere between 3 to 6 months, with the ability for either party to terminate the employment by giving (usually) 1 week’s notice, or in the case of the business, by making a payment in lieu of notice. Following the probationary period, the notice period usually increases.
Closely related to the probationary period is the qualifying period which is relevant to unfair dismissal. The risk in terminating an employee increases significantly after the initial 6 months (or 12 months if a small business owner with fewer than 15 employees) as the employee can then make an unfair dismissal claim if terminated. If you face a validly brought unfair dismissal claim you will have to demonstrate, among other things, that you had a valid reason for dismissal and treated the employee fairly during the process.
If you change the length of the probationary period, this does not impact on the qualifying period as this is set by the Fair Work Act 2009 (Cth).
5 key steps you should take during the probationary and qualifying periods
1. Clearly define expectations
You must clearly set out performance and learning goals as soon as the employment commences. By clearly managing the expectations, you will provide certainty to the employee regarding what needs to be achieved to pass the probationary period.
2. Hold regular meetings
You must regularly meet with the new hire. These meetings do not need to be formal or structured but should be substantive enough for you to get a meaningful sense about the progress of the staff member.
Your regular meetings with a probationary employee will have a number of purposes:
- Clarifying expectations: Employees can raise any questions they have about the business and their role.
- Mentoring: You can provide mentoring and coaching in an effort to ensure that the employee is performing to the required standard and if not, do your best to assist them to improve their performance.
- Insight: You can gain an insight into the attitude and personality of the employee and make a judgement about their fit with the other staff members and the organisation’s values.
- Allows early action: You can take action early if the employee is not the right person for the role.3. Make a decision: hire or fire?You must make a decision, prior to the end of the probationary or qualifying period, whether the employee’s employment will continue. You must also communicate this to the employee. I suggest a probation review meeting be scheduled for one month before the end of the probation period when the employee starts so that this is not forgotten in the course of running a business. You should also have a reminder in your own outlook one week before that meeting so you have plenty of time to consider the situation.
Many people will put off a decision in the hope that issues which they have identified will improve over time as it is uncomfortable, frustrating, time consuming and costly to terminate an employee and start over from scratch. It is rarely the case that issues during the probationary period are remedied after its completion. Instead, they are likely to continue and in many cases, deteriorate.
If you have attitudinal concerns about the probationary employee, these are unlikely to change. In my experience, performance can always improve but attitude and personality rarely do and serious consideration needs to be given as to whether their employment should be terminated.
4. Don’t make promises
Terminating an employee during the probationary period is not without any legal risk. Although unfair dismissal provisions do not apply in the first 6 months (or 12 months if a small business employer), employees are still protected from adverse action, discrimination and breach of contract from their first day of employment.
You must not, even during the probationary and qualifying period, make promises or comments that give the employee a view they are likely to continue on in the position. By all means you should encourage the employee, but don’t make promises. If you do, and then legitimately have to terminate the employee, it will be easier for them to argue that the termination was for an unlawful reason such as because they made a workplace complaint.
5. Provide meaningful work
If you don’t give meaningful and challenging work to an employee during the probationary period, you will not be able to properly assess their value to the business. For most businesses, you only have six months to assess an employee without that employee having an access to unfair dismissal. You should try to ensure they are given work and challenges during this period which can be used to properly assess whether they are right for the role on a long-term basis.
The probationary period and the first 6 months of employment are a vital period of time and provide the opportunity to closely monitor the employee for their performance and fit within the organisation in a relatively risk free way. If issues relating to a new employee are identified during the first 6 months of employment, serious consideration should be given to terminating their employment, otherwise the business could be required to defend an unfair dismissal application which could have been avoided.
The content of this publication is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations. PCC Employment Lawyers recommend that specialist legal advice should be sought about specific legal issues.