Hiring on probation can be a smart way to make sure the role, the person and your business are the right fit. But what happens if it’s not working out?
Ending employment during a probation period is lawful in Australia, but there are still rules to follow. Getting the process right protects your business, reduces stress, and minimises the risk of disputes or claims.
In this guide, we’ll explain what probation really means under Australian law, when and how you can terminate during probation, and the practical steps to follow. Whether you’re an employer managing a team or an employee wanting to understand your rights, you’ll find clear answers here.
What Is a Probation Period in Australia?
A probation period is a trial period at the start of employment. Most businesses set probation at three to six months, but it can be shorter or longer if your contract clearly states it.
During probation, you can assess performance, skills and cultural fit. It also gives the employee time to decide whether the role and workplace are right for them.
Probation should be set out in a written Employment Contract. The contract typically confirms how long probation lasts, how performance will be reviewed, and the notice requirements if either party ends the employment during probation.
Important: “Probation” is not a legal loophole. Employees on probation still have workplace rights under Australian law.
Can You Terminate Employment During Probation?
Yes. You can lawfully end employment during a probation period if you follow the contract, the National Employment Standards (NES) under the Fair Work Act 2009 (Cth) and any applicable modern award or enterprise agreement.
Common reasons include underperformance, poor conduct, or the role and employee not being a good fit for the business. However, you cannot dismiss someone for unlawful reasons (for example, because of their race, sex, age, disability, religion or because they exercised a workplace right such as taking personal leave or making a complaint).
Also remember that the label “probation” itself doesn’t control eligibility for unfair dismissal. What matters is the employee’s length of service (the “minimum employment period”), explained below.
Legal Requirements: Notice, Minimum Employment Periods and Protected Rights
Notice Of Termination (And Pay In Lieu)
Even during probation, an employee is generally entitled to notice of termination or pay in lieu. The NES sets minimum notice periods based on length of service. For employees with less than one year of service, the minimum notice is one week.
- The notice in the contract can be more generous than the NES, but it cannot be less. The NES is a floor, not a ceiling.
- It’s common to provide payment in lieu of notice so the termination takes effect immediately. This does not require employee agreement, but make sure your contract allows for it and you calculate it correctly.
- True casual employees are not entitled to notice under the NES. Be careful that their status is genuinely casual, and if you set probation arrangements for casuals, see our guide on probation for casual employees.
Provide notice in writing. Keep the letter clear and factual, and include the final day of employment, the notice (or payment in lieu) and how final pay will be processed.
Minimum Employment Periods And Unfair Dismissal
Eligibility to bring an unfair dismissal claim depends on the employee’s continuous service with you, not whether they were on probation:
- 6 months for employers with 15 or more employees; or
- 12 months for “small business employers” (fewer than 15 employees).
If the employee hasn’t completed the relevant minimum employment period at the time of dismissal, they generally cannot bring an unfair dismissal claim in the Fair Work Commission. This is why many businesses set probation at up to six months.
Time limit: unfair dismissal applications must be lodged within 21 days after dismissal takes effect.
General Protections (Adverse Action) Still Apply
Regardless of service length or probation status, all employees are protected by the “general protections” provisions of the Fair Work Act. You must not take adverse action (including termination) because the employee:
- Has a protected attribute (e.g. race, sex, age, disability, pregnancy, religion or family responsibilities).
- Exercised a workplace right (e.g. took sick leave, requested flexible work, made a complaint, asked about pay or safety, joined a union).
- Engaged in industrial activities or whistleblowing.
These claims are available even during probation. The law also includes a “reverse onus,” meaning you may need to prove the decision was for lawful reasons. Keep good records about your reasons, your process and any feedback provided.
Time limit: dismissal-related general protections applications usually must be lodged within 21 days.
Misconduct And Summary Dismissal
Serious misconduct (e.g. theft, fraud, violence, serious safety breaches) can justify summary dismissal without notice. The definition of “serious misconduct” is narrow, so take care and gather evidence. Where the issue is less serious, follow usual notice requirements. If the situation is sensitive, speak with an employment lawyer before acting.
Redundancy During Probation
If the role itself is no longer required and redeployment isn’t reasonable, the dismissal may be a genuine redundancy. The usual consultation obligations in modern awards still apply.
- Redundancy pay under the NES generally only applies once the employee has at least 12 months of continuous service.
- Small business employers (fewer than 15 employees) are exempt from NES redundancy pay altogether.
If you’re navigating a restructure or job cuts, consider tailored redundancy advice before making changes.
Awards, Enterprise Agreements And Policies
Check any applicable modern award or enterprise agreement for consultation or process requirements, especially around redundancy or performance concerns. Also follow any internal policies you’ve adopted (e.g. performance management or grievance procedures). While strict procedural fairness isn’t required to avoid unfair dismissal if the employee is under the minimum employment period, a fair and consistent process helps manage risk.
Step-By-Step: How To End Employment During Probation
1) Re-check The Contract And Coverage
Confirm the probation clause, notice period, and whether a modern award or enterprise agreement applies. Identify any internal policies you need to follow (for example, a performance review policy).
2) Clarify The Reason And Keep Records
List the lawful reason for ending employment (e.g. performance not meeting expectations, conduct concerns, or role fit). Keep brief notes about feedback provided, any training or support given, and your decision. Good documentation helps if your decision is ever questioned.
3) Prepare Your Communication
Plan a short conversation that is respectful and clear. Confirm the decision, the final work day and any next steps. Avoid debating the merits during the meeting-probation is a trial period and sometimes it isn’t the right match.
4) Provide Written Notice Or Pay In Lieu
Issue a letter confirming termination, the notice period or pay in lieu, and any final pay components. Most businesses opt for payment in lieu so the termination takes effect immediately.
5) Calculate And Pay Final Entitlements
Process final pay correctly and on time. This may include wages to the last day, payment in lieu of notice (if applicable), and accrued but untaken annual leave for eligible employees. Use this final pay guide to sense-check what should be included.
6) Wrap Up Access And Property
Collect company property, remove system access, and settle any expense claims. Offer to provide a statement of service on request (this is not mandatory but is often appreciated).
7) Update Your Files
Save your notes, the termination letter and any relevant emails or performance records. Clear, contemporaneous records are invaluable if questions arise later.
Best Practice Tips And Essential Documents
Make Expectations Clear From Day One
Set goals early and provide feedback promptly. Many issues can be resolved a long time before you reach termination. Short, regular check-ins during probation help everyone stay aligned.
Use Tailored Contracts And Policies
Ensure each new starter signs an Employment Contract that includes a clear probation clause, the required notice (meeting or exceeding the NES), and your right to pay in lieu of notice. If you employ casuals, your contract should accurately reflect genuine casual engagement and avoid inconsistencies that suggest ongoing employment.
It’s also useful to issue a staff handbook or policy pack so expectations around conduct, performance, leave and complaints are clear. If you need help with letters and checklists, consider an Employee Termination Documents Suite so your team has compliant templates ready to go.
Be Consistent And Respectful
Apply your process consistently across similar roles and situations. Communicate decisions with empathy. How you handle probationary exits shapes your employer brand and reduces the likelihood of disputes.
Know When To Get Advice
Seek support if there are complicating factors-such as allegations of misconduct, potential discrimination issues, a medical condition, or if an award imposes consultation steps. A short chat with an employment lawyer can save you cost and time later.
Keep An Eye On Timing
Remember the minimum employment period for unfair dismissal eligibility (6 or 12 months, depending on business size). If performance is trending in the wrong direction, take action early-provide feedback and support, and, if needed, make a timely decision. Extending probation doesn’t extend the minimum employment period; these are separate concepts.
Common Pitfalls To Avoid
- Under-noticing: Giving less than the NES minimum notice (or not paying in lieu correctly). The contract can increase notice but can’t reduce the NES minimum.
- Vague reasons: Not recording a genuine, lawful basis for the decision. A short file note is often enough.
- Ignoring awards: Missing consultation requirements around workplace change or redundancy where an award applies.
- Inconsistent casual status: Treating a “casual” like a regular employee in practice. Review your casual engagements and read our guide on probation for casuals if you use them.
- Rushing serious misconduct: Terminating without investigating, or where conduct doesn’t meet the serious misconduct threshold.
Useful Documents To Have On Hand
- Employment Contract: Sets probation terms, notice and other key conditions.
- Termination letters and checklists: Ensures you give proper notice or pay in lieu and capture return-of-property steps.
- Performance and conduct policies: A clear, accessible staff handbook promotes consistent expectations and outcomes.
- Redundancy guidance: Helpful if the decision is due to structural change rather than individual performance or fit.
- Final pay guidance: Helps you calculate wages to the last day, annual leave, and any payment in lieu of notice correctly.
Key Takeaways
- Termination during probation is lawful in Australia when done for genuine, lawful reasons and in line with the contract, the NES and any applicable award or agreement.
- The NES sets minimum notice requirements that cannot be undercut by contract; you can end employment immediately by providing correct pay in lieu of notice.
- Unfair dismissal eligibility depends on service (6 months, or 12 months for small business), not on whether someone is “on probation.” General protections apply at all times.
- Serious misconduct can justify summary dismissal, but the threshold is high-investigate first and get advice if unsure.
- Redundancy during probation follows normal rules: many employees under 12 months won’t be owed redundancy pay, and small businesses are exempt from redundancy pay under the NES.
- Clear contracts, consistent processes and accurate final pay reduce risk. Keep short file notes to show your decision-making was lawful and fair.
If you’d like a consultation on managing probation or termination during probation for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
