Qualifying periods vs probationary periods of employment: how different are they?

A qualifying period of employment for new employees is specified under section 383 of the Fair Work Act.¹  A probationary period is routinely specified in employment contracts and is agreed between employer and employee.  However, the distinction between a qualifying period (or minimum employment period) and a probationary period sometimes becomes blurred in practice.

Qualifying periods

Under the Fair Work Act, there is a requirement that in order to make an unfair dismissal claim against an employer, a dismissed employee must have served a “minimum employment period” of 6 months, or 12 months if the employer employs fewer than 15 employees.²  This entitles an employer to terminate the employment of an employee during this period without the potential consequences of an unfair dismissal claim. 

If an employee continues to be engaged after their minimum qualifying period, they are considered to have completed their minimum qualifying period and enjoy full rights to make an unfair dismissal application if their employment is terminated.³  This means that the employee cannot be comfortably dismissed if the dismissal is “harsh, unjust or unreasonable” or not a case of genuine redundancy.⁴  

However, the first six months under the statutory period are not a get-out-of-jail-free card for employers.  This is because even if a dismissed employee has not completed their minimum employment period before being terminated they are not prevented from bringing an “adverse action” claim against an employer under section 340 of the Act. 

Adverse action is taken by an employer against an employee if:

• the employer dismisses the employee;
• injures the employee in his or her employment;
• alters the position of the employee to the employee’s prejudice; or
• discriminates between the employee and other employees of the employer.⁵

Claims are often made when an employee alleges they have been dismissed for a prohibited reason, such as race, sex, sexual orientation, or physical disability,⁶ or they have been denied a workplace right.⁷  An adverse action claim can be brought irrespective of an employee’s length of service.  Hence, if an adverse claim has traction, the protection of the qualifying period is negated.

Probationary periods

Probationary periods are not prescribed by the Act.  They are conditions in employment contracts intended to allow the employer and the employee to assess each other, and the position, for ongoing employment.  If an employee is not suited to a particular position or the business (or vice versa), termination of employment within the probationary period is quite often a quick, suitable and lawful outcome. 

A probationary period that is shorter than the qualifying period runs the risk of a need to extend the period (maybe more than once) if an employer requires more time to assess a new employee.  This can be challenged, especially if it is not provided for in the employment contract and the employee does not agree to an extension.  That is because an employer cannot unilaterally impose a term or condition of employment. 

A probationary period that is longer than the qualifying period affords an employer with minimal advantage in relation to an employee who has ceased to be on probation.

Lavan comment

The terms and conditions of a common law employment contract cannot override the Act.  Accordingly, the minimum employment period stipulated in the Act is the dominant provision, particularly where a prospective adverse action claim can be made.

Hence, a probationary period should ideally be set as the same duration as the qualifying period. 

To reduce their risks when effecting a termination, whether during a qualifying period or probationary period, employers need to ensure that the reason for the termination is not tainted by a prohibited reason which could potentially lead to an adverse action claim.

If you have any questions regarding probationary periods or qualifying periods of employment, please contact Lavan's Employment, Safety & Education Team.