Myths about probationary periods

Sacked for looking too young

In a recent case that received widespread media coverage, a real estate agency, Buxton (Sandringham) Pty Ltd, was taken to task by the Fair Work Ombudsman (FWO) for sacking a worker who had been employed for just 2 weeks.

The employee was told that the reason for her dismissal was because she was too short and because of her “overall young look”.  The agency was concerned that this would be a disadvantage at auctions because she would not have the “presence” to effectively negotiate with interested parties.  The agency confirmed this in an email.

Not surprisingly, the employee was aggrieved by the agency’s actions and complained to the Fair Work Ombudsman, who in turn investigated the agency.

In order to avoid prosecution for terminating the worker for a discriminatory reason (her age), the agency agreed with FWO to:

  • apologise to the worker
  • pay the worker compensation for lost wages
  • undertake workplace relations compliance training by an accredited workplace trainer.

This case highlights a persistent myth believed in by many employers – that when it comes to dismissing probationary or newly employed workers, “anything goes”, and is also an indication that many employers are unaware of changes made by the Fair Work Act (the Act) in 2009.

So, what can and can’t an employer do when terminating new workers?

Unfair dismissal

Under the current Act, probationary periods contained in employment contracts are now completely irrelevant to the question of whether an employee has unfair dismissal rights.

Instead, the issue is determined solely by the Act.  Under the Act, a worker will only have unfair dismissal rights if they have served the “minimum employment period”.  This period depends on whether an employer is a “small business employer” (a business that has 14 or fewer employees).  The minimum employment periods set out in the Act are:

  • for small business employers:  1 year
  • for larger employers:  6 months

Care needs to be taken in working out whether an employer is a “small business employer”, as there are several traps for the unwary:

  • the dismissed employee is counted towards the total number.
  • whilst genuine casual employees are not counted, casual employees are counted if they are employed on a “regular and systematic basis”.  In our experience, most workers who are called (and paid as) casuals are in fact employed on a regular and systematic basis and so would be counted toward the total number of employees.
  • all employees of all “associated entities” of the employer are counted as being employees of the employer.  These provisions are highly technical, but generally businesses that have common ownership or control will be associated entities (e.g. companies within a Company Group).

If an employee has not served the minimum employment period (whether that turns out to be 6 months or 1 year), they can be dismissed without the need to accord procedural fairness (e.g. give warnings etc) and without fear of unfair dismissal proceedings, even if the dismissal would otherwise be considered harsh or unreasonable.

However, even where the employee is not protected from unfair dismissal, that is not the end of the matter, as the case of the real estate agency above shows.  In that case, the employee had only served 2 weeks and was not protected from unfair dismissal, and yet the employer was found to have breached the law and was subject to penalties.

So, what are the other matters to consider?

Adverse action

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