Let’s be real, terminating someone during their probationary period might look like a straightforward, low-risk decision on the surface, but it’s not. Too many employers assume that probation is a “get-out-of-jail-free” card for dismissals, only to find themselves facing unexpected legal and reputational risks. Even during probation, employees have rights, and if you handle things poorly, you could be setting yourself up for a costly mistake.

Probationary periods aren’t just for employers to test the waters, they’re also for employees to assess whether your workplace is the right fit for them. Typically lasting six months, probation gives you a chance to evaluate performance, conduct, and suitability for the role. However, for small business employers (those with fewer than 15 employees), the probationary period extends to 12 months.

While employees terminated within their probationary period may not have access to unfair dismissal claims under the Fair Work Act, that doesn’t mean you’re in the clear. Employees can still lodge General Protections Dismissal Claims, and these claims can pose a significant risk.

What Is Adverse Action?

Adverse action occurs when an employer takes action against an employee for an unlawful reason, such as:

  • Discriminating based on a protected attribute (e.g., race, sex, age, or disability).
  • Retaliating against an employee for exercising a workplace right (e.g., making a complaint about their treatment or requesting flexible work arrangements).
  • Terminating employment because the employee is a union member or engaging in lawful industrial activities.

Unlike unfair dismissal claims, damages for adverse action claims are uncapped, which means they can result in significant financial consequences for your business. Even for small businesses, the costs of defending an adverse action claim can be substantial, not to mention the potential reputational damage.

A Recent Example: The Risks Are Real

Recently, an employer dismissed an employee during their probationary period due to legitimate concerns about their performance and conduct. The employer documented their reasons for the dismissal, including detailed notes from performance reviews and feedback sessions. Despite following a fair process and having lawful grounds for the termination, the employee submitted a General Protections Dismissal Claim. The claim didn’t even specify the basis of the alleged breach of workplace rights. However, the matter was still assigned a conciliation date by the Fair Work Commission.

This case demonstrates that even when an employer has a strong, lawful reason for dismissal and thorough documentation to back it up, claims can still progress through the legal process. While the employer may eventually succeed in defending the claim, the time, cost, and stress of responding to the dispute cannot be underestimated.

Another recent case involved a CEO terminated just seven hours before the end of their 12-month probationary period. The CEO argued that the termination was strategically timed to prevent them from lodging an unfair dismissal claim. The Federal Court agreed the CEO had a prima facie case and reinstated them temporarily until the matter could be heard.

This example highlights a key risk: dismissing someone right before their minimum employment period ends could lead to claims that you’re denying them access to their workplace rights. Timing matters, and so does your process.

Procedural Fairness Isn’t Optional

When it comes to terminating during probation, you can’t afford to skip the basics of procedural fairness. Why? Because it’s not just about compliance – it’s about showing respect and making sure your process is solid. Procedural fairness (or natural justice, if you prefer) boils down to three key steps:

  • Provide clear reasons: be upfront about why the decision is being made. Ambiguity leads to confusion and claims of unfair treatment.
  • Allow the employee to respond: everyone deserves the chance to tell their side of the story before decisions are finalised.
  • Be consistent: apply your workplace policies fairly and evenly, whether someone is on probation or not.

Best Practices for Managing Probationary Terminations

Let’s keep it simple. If you’re considering terminating someone during their probationary period, here’s how to do it the right way:

  • Provide Regular Feedback: don’t wait until the last minute to bring up concerns. Schedule check-ins at key points (e.g., 1, 3, and 5 months for standard probationary periods, or at intervals suited to a 12-month probation for small business employers) to discuss performance and areas for improvement. Need help setting this up? HR Gurus has you covered.
  • Don’t leave it too Late: rushing a decision at the eleventh hour is a recipe for disaster. Allow enough time to properly review, communicate, and finalise your decision.
  • Be transparent: explain the reasons for your decision clearly and respectfully. Transparency builds trust, even in tough situations.
  • Seek expert advice: not sure if you’re ticking all the legal boxes? Get advice from a qualified HR or legal professional (like us!) to avoid costly misstep.

Final Thoughts

Terminating an employee during probation isn’t easy but doing it fairly and professionally makes all the difference. It’s about more than just avoiding legal trouble; it’s about showing respect and protecting your reputation. By being upfront, transparent, and proactive, you can handle even the trickiest terminations with confidence.

Remember, while employees in their probationary period may not have access to unfair dismissal claims, General Protections Dismissal Claims are a real risk – and the damages for these are uncapped. Following a fair process isn’t just the right thing to do; it’s the smartest way to protect your business.

To make this process smoother, we’ve created a free checklist that covers everything you need to know. Download it today and get peace of mind knowing you’ve got the right process in place. And if you need extra support, reach out to HR Gurus, we’re here to help you navigate every step.

Written by HR Guru Shelley Martin.

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