Terminating Employment During Probation: Employer’s Legal Guide (Australia)

Hiring a new team member is a big step for any small business. Probation makes that first phase more flexible, but it doesn’t remove your legal obligations when you decide things aren’t the right fit.

Ending employment during a probationary period can feel uncomfortable. You may be weighing up performance concerns, cultural fit and the risk of a claim - all while trying to move quickly and fairly.

This guide explains what probation means in Australia, when and how you can terminate during probation, what notice you must give (including the serious misconduct exception), the key risks to watch, and a simple process to follow so you can act confidently and lawfully.

What Is A Probationary Period?

A probationary period is a defined period at the start of employment - commonly 3 to 6 months - where you assess whether the employee suits the role and your workplace.

Probation isn’t mandated by law, but it’s widely used. It gives both sides a chance to test expectations before committing long-term.

Importantly, employees on probation still receive the same minimum entitlements under the National Employment Standards (NES), such as minimum pay, leave entitlements and a safe workplace. Probation affects access to unfair dismissal, which depends on length of service (more on that below), not the label “probation.”

To avoid confusion, include a clear probation clause in the Employment Contract. That clause should set the length of probation, review timing, performance expectations, and how termination during probation will work (including notice).

Can You Terminate Employment During Probation?

Yes. As an employer, you can end employment during probation if the employee is not meeting reasonable expectations or is otherwise unsuitable. You should still act fairly, follow your contract and policies, and meet your legal obligations.

Minimum Notice You Must Give

Under the NES, if the employee has less than 1 year of continuous service, you must provide at least 1 week’s notice (or pay in lieu of notice). Longer service increases the NES minimum notice, and some contracts or awards require longer notice even during probation.

Instead of having the employee work out the notice, many employers use payment in lieu of notice. This is lawful - just ensure the payment covers the correct notice period and any applicable loadings or allowances under an award.

The Serious Misconduct Exception

There is one important exception to notice. If an employee engages in serious misconduct (for example, theft, fraud, violence, or a serious breach of safety), you can dismiss without notice. You still need to pay all outstanding entitlements (such as earned wages and accrued annual leave), but no notice is required. If you are considering this path, gather evidence and seek advice before acting.

Employee Resignation During Probation

Employees can resign during probation. The NES doesn’t set minimum notice for employee resignations - notice from the employee will come from the contract or any applicable award. If the contract is silent, check the relevant award; many require at least one week’s notice in the first year.

Check Your Contract And Policies First

Your contract and workplace policies govern the process you must follow. It’s common for contracts to specify a longer probationary notice period (e.g. two weeks), to require a review meeting, or to allow a short extension of probation. You must follow whatever you’ve agreed in writing.

If your templates need a refresh, consider updating your core documents now - for example, a well-drafted Staff Handbook and Workplace Policy suite helps ensure consistent, fair processes.

Legal Risks To Watch (Even During Probation)

Probation reduces some risk, but it doesn’t remove it. These are the big legal issues to keep in mind when terminating during a probationary period.

Unfair Dismissal Access Depends On Service, Not “Probation”

Access to unfair dismissal under the Fair Work Act turns on the minimum employment period:

• 6 months for most employers; or
• 12 months for a small business (fewer than 15 employees).

If you terminate before the employee reaches that minimum period, they generally can’t make an unfair dismissal claim. If they pass the minimum period, they can access unfair dismissal - even if your contract says they’re still “on probation” or you’ve extended probation. Extending probation does not reset the minimum employment period.

Where unfair dismissal could apply, ensure the dismissal is not harsh, unjust or unreasonable. Factors that the Fair Work Commission considers are set out in section 387 of the Fair Work Act.

General Protections (Adverse Action) Still Apply

All employees - including those within the minimum employment period - are protected from termination for prohibited reasons. You cannot dismiss someone because of protected attributes (like race, sex, age, disability, religion), because they exercised a workplace right (e.g. made a complaint, requested leave, queried pay), or because of industrial activity (e.g. union membership).

General protections claims carry serious financial and reputational risks and can be made regardless of service length. Keep decisions anchored in documented performance or conduct concerns unrelated to any protected reason.

Contractual Breach And Process Risks

In Australia, we don’t usually talk about “wrongful termination” as a standalone claim. Instead, the risk is a breach of contract if you don’t follow your agreed termination procedure or notice requirements. Review the contract, meet the notice obligations, and follow any stated steps (like a review meeting) before you act.

Discrimination, Health And Safety, And Other Compliance

Dismissal decisions that intersect with protected attributes, injury or illness, or work health and safety matters need extra care. For example, dismissing someone who recently raised a safety concern or requested parental leave could create risk. Where in doubt, get advice before proceeding with termination.

Best-Practice Process For Ending Employment During Probation

A simple, consistent process supports fairness and reduces the chance of disputes. Here’s a practical approach you can use.

1) Review The Contract, Award And Policies

Confirm the probation length, any review steps, required notice, and whether an award applies. If an award adds obligations (like consultation or longer notice), build that into your plan.

2) Document The Issues And Support Provided

Keep dated notes of specific performance or conduct concerns, the expectations set, and any coaching or support offered. If you set probation objectives, record whether they were met and why.

3) Hold A Fair Meeting (Optional But Sensible)

Even when the employee hasn’t reached the minimum employment period, a short meeting often helps. Explain your concerns, consider their response, and outline your decision. This shows procedural fairness and can diffuse disputes.

4) Confirm Termination In Writing

Issue a letter that confirms the termination, the last day of employment, and whether notice will be worked or paid. If you’re using payment in lieu, make sure the letter is clear on amounts and timing. You can streamline this step with an Employee Termination Documents Suite tailored to your business.

5) Calculate Final Pay And Entitlements

Final pay must include all earned wages, untaken annual leave, and any payment in lieu of notice (unless it’s serious misconduct). Double-check any award entitlements and your usual payroll cycle. If you need a refresher on what to include, see this guide to calculating final pay.

6) Collect Property, Revoke Access And Close Out Cleanly

Arrange return of equipment, remove system access, and update rosters. Keep the exit conversation respectful - it helps protect your brand and team culture.

What Documents Should You Have In Place?

Clear, tailored documents make probation smoother and reduce risk if you need to part ways.

• Employment Contract: Sets the probation length, expectations, notice, and termination process. Using a current, compliant template - for example, Sprintlaw’s Employment Contract (FT/PT) - helps ensure you’re covering the essentials.
• Workplace Policies: Provide clarity on conduct, performance, leave, safety and complaints. A consistent Workplace Policy framework supports fair, repeatable decisions.
• Performance Management Process: A documented pathway for setting expectations and addressing issues, such as a practical performance management process you can apply during probation and beyond.
• Termination Letters And Checklists: Templates for notice, payment in lieu and serious misconduct help you act quickly and lawfully. These are included in an Employee Termination Documents Suite.
• Staff Handbook: Brings your key policies together in one place so expectations are clear from day one. A structured Staff Handbook can reduce confusion and disputes.

You won’t always need every document at once, but getting the contract and core policies right from the start pays off if you need to make a tough call during probation.

What Happens At (Or Near) The End Of Probation?

As the probation date approaches, review performance against expectations and decide whether to confirm employment, extend the probation (if allowed by the contract), or end employment.

Confirming Employment

When things are going well, send a short confirmation email or letter so the employee knows probation has been completed successfully. No new contract is usually required.

Extending Probation

If you want more time to assess suitability (for example, if the employee took extended leave during probation), you can often extend probation if the contract allows and the employee agrees in writing. Keep in mind that an extension does not affect access to unfair dismissal once the employee reaches the minimum employment period of service. If they cross the 6 or 12 month threshold, unfair dismissal protections can apply even if you still consider them “on probation.”

Ending Employment

If the role isn’t the right fit, follow the best-practice steps above. Give the correct notice (or pay in lieu), calculate final pay accurately, and keep your documentation in order. A short, respectful conversation goes a long way.

Pay In Lieu vs Working The Notice

There’s no single right answer here. Payment in lieu helps you move quickly and avoid an awkward final week. Having the employee work the notice can assist with handover and continuity. If you choose payment in lieu, align with this payment in lieu guidance and your contract terms.

How Much Notice Applies?

Start with the contract. If it’s silent, the NES sets minimum employer notice based on service length (for under 1 year of service, that’s at least 1 week). Some awards increase notice or set other requirements. For a quick refresher, see this overview on calculating employee notice periods.

Key Takeaways

• Probation gives you a practical window (often 3–6 months) to assess performance and fit, but it doesn’t remove minimum entitlements under the NES.
• You can terminate during probation, but you must give the correct notice (or pay in lieu). The serious misconduct exception allows dismissal without notice - use it carefully and with evidence.
• Access to unfair dismissal depends on length of service (6 months, or 12 months for small businesses), not the label “probation.” Extending probation won’t reset that clock.
• General protections (adverse action) apply from day one. Never dismiss for a prohibited reason, and keep your decision grounded in documented performance or conduct concerns.
• Follow a simple, fair process: review the contract and award, document issues, meet with the employee, confirm in writing, and pay final entitlements correctly.
• Strong documents make the process smoother - a current Employment Contract, clear Workplace Policies, a practical performance process, and a reliable termination pack help you act confidently and consistently.

If you would like a consultation on managing termination during a probationary period - or help reviewing your contracts and policies - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.