Publications
The top five mistakes employers make when terminating employment: No.3 Minimum employment periods
For employers with less than 15 employees*, an employee will only be able to make a claim for unfair dismissal where they have a period of continuous service of at least 12 months. For employers with 15 employees or more*, a claim for unfair dismissal is only potentially available where an employee has at least 6 months of continuous service**.
Whilst it is commendable to give employees every chance to succeed in their role, the truth is that due to the unfair dismissal rules, it is usually safer to terminate an employee’s employment during the first 6 months of their employment (or 12 months for employers with less than 15 employees), rather than delaying taking this action to a later date.
Unless there is a specific provision in an employment contract or in an award or enterprise agreement which deals with the process for terminating employment, an employee who has not yet worked for the minimum employment period can be terminated without being given a reason for the termination. There is also no requirement for the employee to have been issued with written warnings, to have been subject to a performance improvement plan or to have been required to attend formal or disciplinary meetings prior to the termination, etc.
It is only once an employee has worked the minimum employment period that warnings, performance improvement plans and formal meetings become relevant (as evidence of a dismissal not being unfair).
For the above reasons, employers often include in employment contracts a probationary period within which the employee’s initial performance is assessed. To be clear: a contractual probationary period does not (and cannot) affect an employee’s ability (or inability) to make a claim for unfair dismissal. However, a probationary period set to expire prior to the employee having worked the minimum employment period for unfair dismissal is a useful tool to remind employers to consider the ongoing suitability of an employee before an employee has a right to bring an unfair dismissal claim.
All this said, remember that – regardless of whether an employee has a right to claim unfair dismissal – there are other legal remedies available to employee which do not depend on the length of service. Claims in general protections and discrimination being the most obvious examples of claims that are available from day one of employment.
Following a disciplinary process and having an audit trail of warnings etc may therefore be advisable in the context of potential general protections or discrimination claims. The accumulation of evidence of poor performance/conduct and disciplinary steps taken, will generally be of assistance to employers in demonstrating that the reason for dismissing an employee was not for a reason prohibited under general protections or discrimination legislation.
* The calculation of the number of employees includes employees of “associated entities”. It includes full time and part time employees and certain casual employees.
** There may be other reasons why an employee is not entitled to bring a claim for unfair dismissal, such as that they earn more than the “high income threshold” (unless they are covered by a modern award or enterprise agreement).