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Are You Allowed To Fire Someone During Their Probation Period? Or Are They Protected?

Are you allowed to terminate an employee during their probationary period?

Let’s say that you’ve hired a new employee, and have been assessing them over the course of the previous months to determine how capable they actually are. This is what can be known as a probationary period, which can assist you in determining the employee’s suitability for the role.
If the employee isn’t suited to the role, there are fewer obstacles to terminating the employee during this probationary period.

It can also help to prevent unlawful dismissal claims. Under the Fair Work Act 2009 (the Act), there is no such thing as a probationary period – rather, there must be a minimum employment period, determined by the amount of time the employee has worked in the business and the size of the business. For a small business (less than 15 employees) this is 12 months, otherwise, it is six months.

During the minimum engagement period, an employee may be terminated subject to written notice in accordance with the relevant provisions of the NES, the applicable industrial instrument or their employment contract.

For best practice in terminating employees, employers should:

-Have a policy in place in respect of managing and possibly terminating employees during their probationary period
-Have a drafted employment contract in place prior to the employee commencing work that clearly states the length of the probationary period, including the start and end dates and specified in what circumstances the probation may be extended, and how long for.
-Ensure that the employees engaging in the probationary period are aware of the expectations that they may need to fulfil in terms of skills, tasks, deadlines and conduct.

Before the probationary period ends, employers should let employees know whether or not they have passed their probation. If they are unsuccessful, you can either extend their probationary period or end their employment with your business.

In the event that you do choose to terminate the employee, you will need to provide them with written notice to end their employment, with the period of notice given (or payment in lieu of notice) and the date the employment will end.

Valid reasons for terminating employment can be varied, but to minimise the risk of a subsequent unfair dismissal claim, these are the four key areas under which you may be able to terminate employment:

Capacity – if the employee lacks the ability or is incapable of completing the inherent requirements of their role.
Performance – if the employee’s skill level or quality of work is below the required level for the job, or if they are not meeting the standards outlined in their employment contract due to a lack of care or diligence.
Misconduct – inappropriate behaviour that is out of line with company policy, goes against the terms of an employment agreement or is unlawful.
Redundancy – when an employer decides that they either no longer need an employee’s job to be done by anyone or the employer becomes insolvent or bankrupt.

If you are concerned about unlawful dismissal complaints from terminated employees, you should consult with Fair Work to ensure that all of your bases are covered.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier