‘A new job is like a blank book and you are the author.’

— Unknown

Some employers believe that they can terminate an employee while they are on probation without providing any reason for the dismissal and that the employee would be unable to pursue a legal claim against them.

The decision of Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd (No. 2) [2019] FCCA 1295 has shown this is demonstrably false.

What is probation?

Probation is a period of time set by the employer at the commencement of an employee’s employment so that they can assess whether is employee is suitable for the business and the role they were employed for. A probation period can vary in length but usually ranges from three to six months depending on the role and the size of your company.

Can an employee on probation bring an unfair dismissal claim?

Under the Fair Work Act 2009 (Cth), an employee must be employed for a minimum of six months, or 12 months if the employer is a small business (fewer than 15 employees) to make an unfair dismissal claim.

While an employee on their probation period is unlikely to have worked the minimum period to qualify for unfair dismissal, there are other general protections and discrimination concerns when dismissing a probationary employee.

Further, length of tenure ought to be considered when looking at extending the probationary period. A probationary period of more than 6 months ought to be considered carefully before implementation.

General Protections Claim for an employee on probation

A general protections claim does not have a length of tenure requirement attached to it. If the employee alleges that the employer took adverse action against them for one of the prohibited reasons, the employee may bring a general protections claim.

Prohibited reasons include an employee’s sex; race; age; pregnancy; exercising of a workplace right to make a complaint or inquiry; and or engaging in industrial activity.

The case

In Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd (No. 2) [2019] FCCA 1295, the employer was ordered to pay the employee (a supervisor who was five months into her probation period) a sum of $20,000 compensation for terminating her employment after she made a number of complaints about her employment, including a bullying complaint and working tasks outside her job description.

Justice Manousaridis found that the employer had failed to provide a reason for termination, either in the face to face meeting or in the termination letter, and had informed the employee that they were not required to give a reason for termination.

General protections claims reverse the onus of proof, meaning that once lodged, it is the employer who must demonstrate that they did not terminate the employee for a prohibited reason. In this case, the employer argued the employee was terminated because ‘she was not the right fit for the business.’

The Federal Circuit Court rejected that assertion and found failure to provide reasons to the employee left it open for her to allege that her termination was prohibited or unlawful. Further, the employer has failed to discharge the onus placed upon them to prove that it was not for a prohibited reason.

This case is warning for employers to provide the reasons for termination for all employees, including those in their probation period.

Further to the general protections claims, an employee may also be able to make a discrimination claim to the Equal Opportunity Commission or the Australia Human Rights Commission, regardless of their length of employment as tenure does not form part of the eligibility criteria in those forums.

Takeaways on General Protection Claims and the above case

Employers should have a process for managing employees on a probation period.

Firstly, the employer should be clear when the probationary period is to end by including the length of the probationary period in the employee’s employment contract and by having a process to review the employee’s performance during the probation period.

If the employee is not performing as expected, the employer should meet with the employee to set out any performance issues and to implement a performance improvement plan.

Should the employee ultimately be found to be unsuitable for the business, the employer should meet with the employee prior to the end of the probation period and:

  • inform the employee that they have been unsuccessful in their probation period and that their employment will be terminated;
  • provide clear and specific reason(s) for termination;
  • outline any outstanding salary/wages to be paid including accrued annual leave, and any contractual notice periods or payment in lieu of notice;
  • deliver to the employee a letter of termination, detailing the above.

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