Quick Summary
Quick Summary
- Probation is contractual, not legal — you cannot dismiss without reason despite employment immunity from unfair dismissal claims.
- Unfair dismissal immunity applies only until 6 months’ service (12 months for small businesses <15 staff), not from day one.
- Discrimination, adverse action, wage theft, and breach of contract claims CAN be brought during probation — immunity doesn’t cover these.
- Dismissing without fair process, documentation, or proper notice costs employers $20,000–$60,000+ in settlements and legal fees.
Probation Period Dismissal: When You’re Protected (And When You’re Not)
Many Australian employers believe probation is a legal shield — dismiss freely, no questions asked. That’s false. While probation does protect you from unfair dismissal claims before 6 months’ service, you’re still exposed to wrongful dismissal, discrimination, adverse action, and wage theft claims. This guide explains exactly what probation covers, what it doesn’t, and the $20k–$60k mistakes that cost employers settlements and reputational damage.
The Probation Myth: What It Actually Protects
Probation is a contractual arrangement, not a legal status under the Fair Work Act 2009. There’s no “probation period” definition in the National Employment Standards. It’s simply an agreement — typically 3–6 months — where both employer and employee assess fit, capability, and cultural alignment.
What probation DOES protect:
- Unfair dismissal claims cannot be brought before 6 months’ service (12 months for small businesses with fewer than 15 employees).
- If an employee is dismissed during probation, they cannot claim “unfair dismissal” at the FWC until they’ve reached the minimum employment period (MEP).
What probation DOES NOT protect:
- Breach of contract — if your contract specifies notice or fair process during probation, you must follow it.
- Discrimination — protected attributes include sex, gender identity, age, pregnancy, disability, religious belief, sexual orientation, family/carer responsibilities, race, colour, national extraction, and political opinion.
- Adverse action — retaliation for exercising a protected right (union membership, flexible work request, unfair dismissal complaint, safety complaint).
- Wage theft — failure to pay minimum wage, superannuation, or agreed entitlements.
- General protections — unlawful conduct under the Fair Work Act.
Real case: FWC 2024 decision — employer dismissed employee at month 4 of probation, citing “performance concerns.” Employee alleged sex discrimination, noting she’d requested a pregnancy adjustment weeks earlier. FWC investigation revealed the dismissal coincided directly with that request. The court found the termination was discriminatory retaliation, not performance-based. Settlement: $45,000 + legal costs. The probation threshold was irrelevant — discrimination law overrides it.
The 6-Month & 12-Month Thresholds Explained
Minimum employment period (MEP) is the legal term. Here’s the breakdown:
6-month MEP (employers with 15+ staff):
- Applies to the vast majority of Australian employers.
- Unfair dismissal claims cannot be brought before 6 months’ service.
- This is a HARD threshold — immunity ends on day 180 of employment.
12-month MEP (small businesses with fewer than 15 staff):
- Applies to small business employers with fewer than 15 employees.
- Unfair dismissal claims cannot be brought before 12 months’ service.
- Headcount includes all on-payroll employees: full-time, part-time, and casual staff.
Critical point: Small business status is determined AT THE DATE OF DISMISSAL, not at the date of hire. If your business grows from 14 to 15 employees mid-probation, the 6-month threshold applies to that employee. You cannot manipulate this by timing terminations around headcount fluctuations — FWC scrutinizes such patterns.
What You MUST Do During Probation (Legal Requirements)
(a) Follow your employment contract
If your contract specifies probation procedures or dismissal conditions, you must follow them. Breach of contract = wrongful dismissal claim.
Example: Your contract states: “During probation, the employer must provide 1 week written notice of dismissal.” You dismiss at month 3 with zero notice. The employee sues for wrongful dismissal. You owe them 1 week’s pay + legal costs + any additional losses.
(b) Pay minimum wage & entitlements
Probationary employees are fully entitled to:
- Minimum wage under relevant award or agreement (no “probation discount”).
- Superannuation (10.5% or the relevant rate for their award).
- Annual leave (1/52.18 of full-time weekly wage per week worked).
- Sick & carer’s leave (2 days per year, typically).
- Parental leave, long service leave (where applicable).
Wage theft during probation = criminal offense under state laws + Fair Work Act penalties ($10k–$50k). The fact that the employee is on probation does NOT exempt you from paying lawful entitlements.
(c) Don’t discriminate
Probation does NOT exempt you from discrimination law. Dismissing because of a protected attribute = illegal.
Example: You dismiss a young employee “because they lack experience.” The real reason is age discrimination — you prefer experienced workers. If the employee can show the true reason is age (via emails, comparison to older hires, etc.), you’re liable even though they were on probation.
(d) Provide fair process
Fair dismissal process includes:
- Clear, documented notification of performance concerns (if dismissal is capability-based).
- Opportunity to respond or improve (unless dismissal is for serious misconduct).
- Documentation of issues (email, meeting notes, written warnings).
- Clear reason for dismissal communicated at the time.
Dismissing without any of these invites claims of unfair treatment, discrimination, or adverse action. FWC views procedural fairness as important even during probation.
(e) Avoid adverse action triggers
Don’t dismiss because the employee:
- Asked for flexible work or parental leave adjustment.
- Joined a union or attended union meetings.
- Asked a question about wages, superannuation, or leave entitlements.
- Lodged a health & safety complaint or injury claim.
- Requested accommodation for a disability.
- Mentioned intent to take parental or carers’ leave.
These are “protected actions” under the Fair Work Act. Retaliation = potential FWC claim for adverse action, often with compensation of $15k–$40k.
⚠️ Legal Risk: Probation Does NOT Exempt You From Discrimination & Wage Theft Claims
Many employers believe probation immunity covers all dismissals. It doesn’t. Discrimination, adverse action, and wage theft claims can be brought during probation regardless of MEP threshold. Dismissing without fair process costs $20k–$60k+ in settlements.
Key Takeaways
Key Takeaways for Employers
- ✓✓ Probation is contractual, not legal — no ‘free pass’ to dismiss without reason.
- ✓✓ Unfair dismissal immunity ends at 6 months (12 for small firms) — discrimination and adverse action claims still apply.
- ✓✓ Always follow your contract’s probation procedures; breach = wrongful dismissal claim.
- ✓✓ Pay wages, super, and leave correctly — wage theft has no immunity.
- ✓✓ Avoid dismissals based on protected attributes or actions.
- ✓✓ Document everything: feedback, meetings, performance issues, dismissal reason.
- ✓✓ Use fair process even during probation.
- ✓✓ Be cautious with extensions — last-minute attempts look suspicious.
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When Probation Dismissal Legally Fails (Costly Examples)
Scenario 1: Discriminatory dismissal at month 4
Employer dismisses a young female employee “for not being a cultural fit.” Employee alleges age and sex discrimination. Despite unfair dismissal immunity (4 months < 6-month MEP), she can sue under Fair Work Act anti-discrimination provisions. FWC investigates the real reason and finds evidence of age/sex bias. Award: $25k–$50k depending on severity and impact.
Scenario 2: Wage theft during probation
Employer hires at award wage but fails to pay superannuation contributions for the entire 3-month probation (owes ~$3,000). Later dismisses “for performance.” Employee lodges underpayment claim with FWC. FWC calculates arrears + penalty (up to 200% of amount owed) + interest. Employer pays $6k–$9k, plus reputational damage and possible criminal referral to state authorities.
Scenario 3: Dismissal without contractual notice
Contract specifies: “During probation, dismissal requires 2 weeks written notice by either party.” Employer dismisses at month 2 with zero notice. Employee sues for wrongful dismissal. Employer loses and owes 2 weeks’ wages + legal costs + any additional loss (re-employment costs, injury to feelings).
Scenario 4: Adverse action — union involvement
Employee mentions union membership casually at month 3. Employer dismisses at month 4 “for poor attitude.” Employee alleges the dismissal is adverse action (retaliation for union interest). Under Fair Work Act s.340, she doesn’t need to prove discrimination — just that the termination was because of her union interest. FWC can order reinstatement or compensation ($20k+).
Documentation You MUST Keep During Probation
Create a probation file for every probationary employee and update it regularly:
- Signed employment contract and offer letter.
- Clear probation start date and expected end date.
- Key competencies and role requirements (in writing).
- Formal check-ins (emails, completed forms, meeting notes with dates).
- Performance feedback, both positive and constructive (dated).
- Attendance and punctuality records.
- If dismissal occurs: written reason, dismissal date, final pay statement, and any response from the employee.
This documentation protects you if a claim arises. Without records, FWC assumes you didn’t follow fair process and may infer wrongful intent.
Extending Probation: When It Works, When It Fails
There’s no legal limit on probation length. However:
- If you extend to avoid reaching the unfair dismissal threshold, courts scrutinize this as bad faith.
- Extending on the last day of probation (e.g., day 179 for 6-month MEP) looks suspicious and invites discrimination allegations.
- Always communicate extension in writing with clear, documented reasons and a new end date.
Safe approach: Set realistic probation length upfront (3–6 months typical). If extension is needed, notify the employee early (at least 2 weeks before the original end date), not on the final day. Document reasons clearly: “Additional training in [X] needed,” “More time to assess [Y] role fit.” Get written acknowledgment from the employee if possible.
Safe Dismissal Procedure During Probation
Step 1: Document specific, observable issues.
Write down concrete, measurable concerns, not vague impressions. “Bad attitude” is subjective; “Missed 3 deadlines in 2 weeks, no explanation” is concrete.
Step 2: Have a conversation.
Meet with the employee. Explain your concerns clearly. Listen to their perspective. Document what you discussed and any response they offer (health issue, misunderstanding, external pressure).
Step 3: Give reasonable opportunity to improve (if capability-based).
If the issue is performance or capability, give a fair timeframe: “We need to see improvement in X by [specific date, typically 2–4 weeks].” Set clear expectations in writing.
Step 4: Review and decide.
Has the employee improved? Document your conclusion either way. If no improvement and dismissal is warranted, proceed. If there’s reason to continue, document that decision and why.
Step 5: Dismiss in writing.
Provide a formal termination letter with: clear reason for dismissal, reference to feedback already given, effective date, final pay details, and confirmation of any separation benefits or references.
Step 6: Calculate final pay correctly.
Include: wages to date + accrued annual leave + pro-rata long service leave + any superannuation arrears. Errors here = wage theft claim.
Step 7: Keep all communications.
File the termination letter, meeting notes, performance feedback, and exit interview records. You may need them if a claim arises.
Key Takeaways
- ✓ Probation is contractual, not legal — you don’t get a “free pass” to dismiss without reason.
- ✓ Unfair dismissal immunity ends at 6 months (12 for small firms) — discrimination, adverse action, and wage theft claims can still be brought.
- ✓ Always follow your contract’s probation procedures; breach = wrongful dismissal liability.
- ✓ Pay minimum wage, super, and leave correctly — wage theft has no immunity at any stage.
- ✓ Avoid dismissals based on protected attributes or protected actions — discrimination and adverse action cases cost $20k–$60k+.
- ✓ Document everything: feedback, meetings, performance issues, and the dismissal reason.
- ✓ Use fair process even during probation — it shows good faith and reduces legal exposure.
- ✓ Be cautious with extensions — last-minute attempts to extend probation look suspicious and invite scrutiny.
Frequently Asked Questions
No. Unfair dismissal immunity only applies AFTER they’ve reached the minimum employment period (6 or 12 months). Until then, you can still be sued for unfair dismissal — the employee must prove the dismissal was harsh, oppressive, or unfair. However, if the dismissal is discriminatory or breaches your contract, they can sue regardless of probation status. Best practice: always give a documented reason and follow fair process, even on day 1.
Employers with 15 or more employees have a 6-month minimum employment period (MEP). Small businesses with fewer than 15 employees have a 12-month MEP. The employee count is taken on the date of dismissal, not the date of hire. If you grow from 14 to 15 employees during someone’s probation, the 6-month threshold applies. The MEP applies across your entire business, including part-time and casual staff.
No. An agreement that removes or reduces statutory rights is unenforceable under the Fair Work Act 2009. You cannot contract out of unfair dismissal, discrimination, or general protections laws. Any clause claiming to do so is void. Similarly, you cannot ask an employee to waive their right to bring a legal claim — they retain this right regardless of what they’ve signed. Any such agreement is void.
It depends on your contract. If your contract doesn’t specify notice during probation, National Employment Standards apply: 1 week notice for employees earning under $160/week, 2 weeks for those earning more. If your contract requires notice during probation (e.g., ‘1 week either way’), you must follow it. Failure to give contractual notice = breach of contract and wrongful dismissal claim. You can offer pay in lieu of notice, but you must pay the full amount or get employee written consent.
There’s no legal requirement to use a performance improvement plan (PIP), even outside probation. However, failing to give feedback or opportunity to improve invites claims of unfair dismissal (after 6 months) or discrimination if poor performance is alleged as cover for discrimination. During probation, you have more flexibility to dismiss for capability — but you still must show fair process: clear feedback, reasonable timeframe to improve, and documented issues. Dismissing without warning looks harsh and increases litigation risk.
Before the MEP (6 or 12 months): No, they cannot bring an unfair dismissal claim. After reaching the MEP: Yes, they can. However, during probation, they CAN still bring other claims: discrimination, adverse action, wage theft, and breach of contract. These are separate from unfair dismissal and the probation immunity does not apply to them. The employer is fully liable for discrimination and wage theft regardless of probation status.
It’s not legally required during probation, but it’s strongly recommended. A brief meeting where you explain the reason clearly and listen to their response reduces claims of unfair treatment and discrimination. If you dismiss without explanation and the employee later claims discrimination (‘You dismissed me because I’m pregnant’), you have no documented reason to defend yourself. A meeting creates a professional record and demonstrates fairness.
Discrimination claims are not affected by probation status. The employee can sue under Fair Work Act anti-discrimination provisions (sections 351–369). FWC will examine the real reason for dismissal. If you cannot show a legitimate, non-discriminatory reason, liability follows. Settlements typically range $15k–$50k depending on severity, impact, and whether the discrimination was intentional. Even if the employee was underperforming, if the dismissal was because of a protected attribute, the employer is liable.
No. Dismissing because an employee joined a union or expressed union interest is adverse action under the Fair Work Act, section 340. The employee can lodge a claim even during probation. The unfair dismissal immunity does not apply to adverse action claims. FWC can order reinstatement, compensation, or both. Damages typically range $20k–$40k depending on circumstances. This applies even if the employee has only been employed for 1 week.
3 to 6 months is standard and legally defensible. There’s no legal maximum, but extending probation beyond 6 months without clear, documented reasons invites scrutiny. If you extend at the last moment (day 179 of a 6-month period) to avoid reaching the unfair dismissal threshold, courts may view this as bad faith. Best practice: set realistic probation upfront, communicate extensions early with documented reasons, and get employee acknowledgment in writing.
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