A few months ago I sat down with a business owner who wanted to exit an underperforming employee. The employee had passed their six month probationary period. Like a lot of business owners juggling everything else, there hadn’t been time to build in regular feedback conversations.
By the time we spoke, the business had already identified the impact this person’s underperformance was having day to day. What they hadn’t accounted for was the process now required to exit them to minimise risk. A proper performance management process, with clear expectations, documented feedback, genuine opportunity to improve and time built in for that to happen. When I explained what that process involved and how long it would take, the response was some version of “if only we’d handled this six months ago.”
They were right. Had the same pattern of underperformance been identified and addressed during probation, the business would have had a far simpler, lower risk path to ending the employment. That’s the entire point of a probationary period, and it’s the part most business owners underuse.
Probation period and minimum employment period are not the same thing
Here’s something that catches a lot of business owners out. The Fair Work Act doesn’t actually define or regulate “probationary periods.” There’s no clause you can point to that says a probation period must be three months, or six, or that it gives you special rights to dismiss someone more easily.
What the Act does define is the minimum employment period, the length of service an employee needs before they can bring an unfair dismissal claim. That period is six months for most employers, and twelve months for small business employers, meaning those with fewer than 15 employees.
A probation period is a contractual clause you choose to include in an employment contract. The minimum employment period is a statutory protection that exists regardless of what your contract says, and the Fair Work Commission has been clear about that distinction when employers get it wrong. In Werner v St Michael’s Association [2020] FWC 2896, an employer extended an employee’s probation twice, believing that meant it still had the freedom to dismiss her on performance grounds without the usual unfair dismissal risk. The Commission found that as a matter of law, she had already completed her statutory minimum employment period regardless of what her contract said about probation, and was protected from unfair dismissal the entire time. The employer’s assumption that being “on probation” gave it more room to move was simply wrong.
That case is a useful reminder that a probation clause doesn’t override the Act. My advice to clients is straightforward. Set your probation period to match your minimum employment period. If you’re a small business employer, that means a 12 month probation period. If you’re not, six months. This keeps your contractual language and your legal protection working together instead of creating a false sense of security like the one that tripped up the employer in Werner.
Getting the calculation of that period right also matters more than most business owners expect. Not every day on the payroll counts towards it. Unpaid leave doesn’t break continuous service, it just doesn’t add to the length of it. If you’re relying on a tight calculation to argue an employee hasn’t reached their minimum employment period, it pays to check that calculation properly rather than assume.
Probation is a two way assessment, not a formality
The real value of a probation period isn’t the paperwork. It’s the structure it gives you to genuinely assess whether someone is the right fit, while giving them every reasonable chance to succeed.
I recommend clients build in three check-ins over the course of probation.
- At one month, the conversation is about settling in. Do they have what they need to do the job? Do they have questions? This is also the point to set clear expectations for what success looks like over the following two months, so nobody is guessing.
- At three months, the conversation becomes more formal. What’s working well, what needs improvement, and genuine space for the employee to give feedback of their own. Probation should never be a one way conversation. If someone isn’t hitting the mark, this is often the first point they’re hearing it clearly, and it needs to be specific enough that they know exactly what to change.
- Prior to six months, the final check-in covers the same ground again. What’s working, what still needs attention, and clarity on goals for the year ahead as the employee moves into your regular performance review cycle.
Done properly, this structure means that by the time probation ends, there are no surprises for either party. The employee knows where they stand. And if the business does need to make a decision about ongoing employment, that decision is backed by a genuine, documented process rather than a gut feeling formed too late.
The risk reduction is real, but it isn’t zero
If you’ve provided regular feedback, set clear goals, given proper support, and the evidence still points to someone not being the right fit before their minimum employment period is reached, you can generally end the employment with considerably less risk than you would face later. Because they haven’t reached the minimum employment period, an unfair dismissal claim isn’t available to them.
That’s an important protection, but it isn’t a blank cheque, and it depends on following the right process. If you’re buying an existing business and taking on its staff, service with the previous owner generally carries over by default under the Fair Work Act’s transfer of business provisions, including for minimum employment period purposes. A new employer can, in certain circumstances, elect not to recognise that prior service, but only if they give the employee written notice of this before their new employment starts. Skip that step, assuming a change of ownership gives you a clean slate, and you may find an employee is already protected from unfair dismissal well before you think they are. If you’re taking over a business, it’s worth checking this properly rather than assuming.
General protections claims, sometimes called adverse action claims, are a separate area of risk again, and they apply from day one of employment regardless of length of service. If a dismissal is connected to something like an employee exercising a workplace right, making a complaint, or a protected attribute, timing within probation won’t shield the business. It’s worth being precise here. The lower risk applies to unfair dismissal specifically, nothing more. It doesn’t remove the need to manage the exit properly and for a legitimate, well documented reason.
The bottom line
A probation period done well gives you and your employee clarity, early enough to matter. It’s not about ticking a box at the three month mark or the point just before six. It’s about creating genuine checkpoints where both sides can be honest about how things are going, while you still have the easiest path available to make a change if it’s needed, and about knowing exactly where your business actually stands on the calendar rather than assuming.
If you’d like advice on setting up probationary periods properly, or want your employment contracts reviewed to make sure they align with the Fair Work Act’s minimum employment period, get in touch. It’s a small piece of groundwork that saves a lot of pain later.