Understanding Probation Periods Under The Fair Work Act

Bringing someone new into your team is exciting - and a little nerve‑racking. A probation period helps you both check that the role, expectations and culture are the right fit early on.

In Australia, probation is a common and lawful practice. While the Fair Work Act 2009 (Cth) doesn’t use the word “probation”, it sets the rules that still apply during this early stage - from minimum pay and leave entitlements (for eligible employees) through to notice of termination and protection from unlawful conduct.

In this guide, we’ll explain how probation works in practice, how it interacts with unfair dismissal rules, what to include in your paperwork, and the practical steps to manage probation legally and fairly. We’ll also clear up common misconceptions (like redundancy and privacy obligations) so you can onboard confidently.

What Is A Probation Period And How Does It Work?

A probation period is an initial period of employment - usually three to six months - where both you and your new hire assess suitability for the role. It should be set out clearly in the contract, including the length, review process and notice requirements if employment ends during this period.

Key Features Of A Fair, Compliant Probation

• Length: Most employers use 3 or 6 months. You can agree to a different period in the contract, and you may extend it by agreement before it expires.
• Entitlements still apply: Permanent employees accrue annual leave and personal/carer’s leave from day one. Casual employees don’t accrue paid leave but receive casual loading (if applicable).
• Minimum notice: The National Employment Standards (NES) set minimum notice periods, even during probation. For employees with less than 12 months’ service, that’s at least 1 week (contracts and awards can provide more, but not less).
• Awards and agreements: Some modern awards or enterprise agreements include probation-related requirements (for example, review steps or different notice clauses). Always check if one applies to your workplace or industry.
• Workplace protections: Employees are protected from unlawful termination, discrimination and adverse action from day one, regardless of probation status.

Your probation clause should sit inside a well-drafted Employment Contract for permanent staff (and an Employment Contract tailored to casuals), so expectations are clear from the start.

Probation Vs The Minimum Employment Period For Unfair Dismissal

This is where employers often get tripped up. “Probation” in a contract and the “minimum employment period” (MEP) for unfair dismissal under the Fair Work Act are separate concepts.

• Probation: A contractual period you set (commonly 3–6 months) to assess suitability.
• Minimum Employment Period (MEP): The time an employee must be employed before they can bring an unfair dismissal claim - generally 6 months, or 12 months for small business employers (fewer than 15 employees).

You can have a probation period that’s shorter or longer than the MEP, but unfair dismissal eligibility is based on the MEP only. Even if a new hire isn’t yet eligible for unfair dismissal, they are still protected from unlawful termination and adverse action, and your process should remain fair and well‑documented. For context on how the Fair Work Commission assesses dismissals, see the factors in section 387.

Your Legal Obligations During Probation

Probation doesn’t switch off employment law. The big ticket items still apply.

Pay And Leave

• Minimum pay and award entitlements: You must pay at or above the applicable award or agreement (or the minimum wage if there’s no award coverage) from day one.
• Leave accruals: Full‑time and part‑time employees accrue annual leave and personal/carer’s leave during probation. Casuals don’t accrue paid leave but may receive a loading instead if covered by an award or agreement.

Notice Of Termination

• NES minimums: Employees with less than 12 months’ service must receive at least 1 week’s notice, or payment in lieu. Contracts can require a longer period.
• Pay in lieu: If you choose to pay notice instead of having the employee work it, consider your obligations around payment in lieu of notice and associated entitlements.

Unfair Dismissal, Unlawful Termination And Adverse Action

• Unfair dismissal: Only available after the MEP (6 months, or 12 months for small businesses), with some eligibility criteria.
• Unlawful termination: It’s always unlawful to dismiss for prohibited reasons (e.g. race, sex, age, disability, temporary absence due to illness/injury, union membership, or because someone exercised a workplace right).
• General protections (adverse action): These protections apply from day one - probation doesn’t shield you from these claims.

Work Health And Safety

Your duty to provide a safe workplace applies from the start of employment. Induction, training and risk management are essential parts of onboarding. For more on this duty, see our guide to an employer’s duty of care.

Redundancy Pay (Common Misconception)

Redundancy pay under the NES does not apply from day one. It generally applies after 12 months of continuous service and does not apply to small business employers (fewer than 15 employees), among other exclusions. If you’re weighing a restructure or role change, it’s worth understanding how redundancy is calculated and whether an exemption applies.

Privacy (And The Key Exemptions)

Privacy can be confusing for small employers. In brief:

• Small business exemption: Many small businesses with an annual turnover under $3 million are exempt from the Australian Privacy Principles (APPs), unless certain exceptions apply.
• Employee records exemption: Private sector employers handling employee records in the context of employment are exempt from the APPs for that activity. However, this exemption doesn’t cover job applicants or all situations.

Even where exemptions apply, it’s good practice to be transparent and secure with personal information (especially for applicants and contractors). If you collect personal information online or at scale, consider a tailored Privacy Policy and appropriate internal processes.

How To Set Up And Run Probation The Right Way

A little structure goes a long way. Here’s a practical framework you can adapt to your workplace.

1) Lock In Clear Contract Terms

Your contract should set the length of probation, any review process, and the notice requirements if employment ends during probation. Make sure the clause aligns with any applicable award or enterprise agreement. For permanent staff, use a comprehensive Employment Contract - and for casuals, use a contract designed for casual employment.

2) Onboard, Train And Set Expectations Early

Provide a proper induction, clear performance expectations and access to the tools they need. Early clarity reduces the risk of mismatched expectations later.

3) Schedule Check‑Ins And Document Feedback

Set regular touchpoints during probation (e.g. weeks 2, 6 and 10). Provide practical feedback, record what was discussed, and note any support or training offered. Good file notes can be crucial if you later need to justify a decision.

4) Address Issues Promptly (Not At The Last Minute)

If performance or conduct concerns arise, don’t wait until the end of probation. Meet with the employee, outline the concerns, provide clear action points, and set a time to review progress. Where needed, use a structured performance management process.

5) Make And Communicate The Outcome

Before the probation end date, decide whether to confirm, extend (by agreement), or end employment. Provide the decision in writing and, if ending employment, ensure you meet notice requirements or provide payment in lieu of notice where applicable. Return company property and finalise accrued entitlements in the final pay.

Ending Employment During Probation (Lawfully And Respectfully)

Sometimes a role isn’t the right fit. If you decide to end employment during probation, follow a fair, consistent process.

Steps To Reduce Risk When Ending Employment

• Check coverage: Confirm whether an award or agreement applies and if it sets any specific probation processes or notice periods.
• Ensure lawful reasons: Your decision must not be for a prohibited or discriminatory reason, or because the employee exercised a workplace right. Keep contemporaneous notes of performance or conduct concerns.
• Give required notice: Provide the correct notice (or pay in lieu) and confirm the effective date of termination in writing.
• Be consistent: Treat similar situations similarly to reduce the risk of claims.
• Communicate professionally: Hold a meeting, explain the decision, and follow with a written letter.

For a deeper dive into risks and process, see our guide to terminating employment during probation.

What About Final Pay And Records?

• Final pay: Include accrued but untaken annual leave for permanent staff, any additional amounts required by an award or agreement, and payment in lieu of notice if applicable.
• Record keeping: Keep copies of the contract, induction records, performance notes and the termination letter. These records can be important if a dispute arises later.

Policies And Documents To Support Probation

Good documentation keeps your process consistent and defensible - and helps new hires understand what “good” looks like in your business.

• Employment Contracts: Set out the probation clause, duties, hours, remuneration, leave, confidentiality and termination process. Choose the right template for the engagement type (permanent or casual).
• Workplace Policies: A clear code of conduct, performance and leave framework help guide behaviour and decision‑making. Consider formalising these in a workplace policy pack.
• Performance Review Templates: Structured forms for check‑ins and end‑of‑probation reviews drive consistency and make documentation easier.
• Termination Letter: A concise letter confirming the termination date, notice (or payment in lieu), and details of final pay.
• Privacy Practices: If you collect applicant data or operate online, have a fit‑for‑purpose Privacy Policy and secure processes, noting the small business and employee records exemptions above.

These documents don’t need to be complicated - but they do need to be accurate and tailored to the way your business actually works.

Practical FAQs About Probation

Can I Extend Probation?

Generally yes, if your contract allows it and the employee agrees in writing before the original probation period ends. If an award or agreement applies, check for any rules about extensions.

Do I Have To Give Reasons If I End Employment During Probation?

There’s no legal requirement to provide a detailed written reason in every case, but you should be able to show a lawful, non‑discriminatory reason supported by your notes. A short explanation is best practice and can reduce disputes.

What If The Employee Is Absent On Sick Leave?

Temporary absence due to illness or injury is protected. Don’t make decisions that could be seen as punishing someone for taking a protected absence. If performance issues persist beyond the absence, you can still take reasonable management action - just make sure it’s fair, timely and well‑documented.

Should We Use A Probation Review Meeting?

Yes. A short, structured meeting (and written confirmation of the outcome) provides closure and clarity. If confirming employment, set goals for the next phase. If ending employment, ensure you meet notice obligations or arrange payment in lieu of notice.

Do We Need Policies From Day One?

You’re not legally required to have every policy under the sun, but core policies help new hires navigate your standards and protect your business if issues arise. Many employers roll these into a staff handbook or a workplace policy suite during onboarding.

Key Takeaways

• Probation is a contractual tool to assess suitability, but the Fair Work rules on pay, leave (for permanent staff), minimum notice and workplace protections still apply from day one.
• Unfair dismissal eligibility depends on the minimum employment period (6 months, or 12 months for small businesses), not the length of your probation.
• Redundancy pay is not a day‑one entitlement - it generally applies after 12 months and doesn’t apply to small business employers, subject to other exclusions.
• Set probation up clearly in your Employment Contract, schedule check‑ins, document feedback, and decide the outcome before the probation end date.
• If you end employment during probation, follow a fair process, meet notice obligations or arrange pay in lieu, and document your lawful reasons. See our guide on termination during probation for more detail.
• Support your process with practical documents and policies - including a performance framework and, where appropriate, a Privacy Policy - and keep accurate records.

If you’d like a consultation on managing probation periods under the Fair Work Act, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.