Bringing a new employee into your business is a significant investment of time, money, and energy. That’s why the probation period is such an important tool. It gives you a clear window to assess whether a new hire is performing well and fitting into your workplace culture.

Probation isn’t just about protecting the business. When managed well, it also creates fairness and clarity for the employee, reducing stress and supporting their psychological wellbeing. It provides a fair opportunity for the employee to settle in, understand expectations, and demonstrate they can succeed.

The goal should always be twofold: to give the employee every reasonable chance to succeed, while giving the business confidence in its hiring decisions. Done properly, probation protects the business and supports the worker, before long-term employment protections make it harder to move someone on.

The Legal Framework

The minimum employment period under the Fair Work Act 2009 (Cth) applies to permanent employees (full-time and part-time):

• Small businesses (fewer than 15 employees): 12 months
• Larger businesses (15 or more employees): 6 months

This means that during this period, permanent employees cannot make an unfair dismissal claim. However, they still have all their other rights under the National Employment Standards (NES), including paid leave, public holidays, superannuation, correct notice of termination, and protection from unlawful dismissal.

When working out whether you are a small business employer under Fair Work, headcount matters. Permanent full-time and part-time staff are always included. Regular and systematic casuals count too, while irregular casuals and independent contractors do not.

Myth Busters: Clearing Up Common Misunderstandings

There are some common misconcepts that it’s important to clear up before we outline our recommended process for you to follow:

Myth: Probation is always 3 months
Not true. Probation length is set in the employment contract; it could be 3 months, 6 months, or even longer, depending on what you decide. But here’s the catch: the Fair Work minimum employment period is what really matters legally (rmember, that’s 6 months for larger businesses and 12 months for small businesses). Once that period is up, an employee may be eligible to bring an unfair dismissal claim, even if you’ve set a longer probation in the contract.

Myth: Employees have no rights during probation, so you can dismiss them without process
Incorrect. Even during probation, employees are entitled to all their rights under the National Employment Standards (NES), such as paid leave, superannuation, and correct notice of termination. They’re also protected from unlawful dismissal (for example, being dismissed for discriminatory reasons).

While unfair dismissal claims don’t apply until after the minimum employment period, you should still follow a fair and reasonable process. That means giving feedback, documenting issues, and paying the correct entitlements. Doing so is not only good practice for the business, it also safeguards the employee’s dignity and psychological wellbeing.

Real-World Scenarios: Why Active Management Matters

Too often, employers treat probation as a “set and forget” arrangement, only checking in when the probation period is almost over. This approach creates unnecessary stress for both sides and leaves you with limited options. Here are some practical scenarios we’ve seen too often that show why proactive management is essential:

The late panic
A manager realises a week before the 6-month mark that a new hire isn’t performing. With no feedback given earlier, the employee hasn’t had a chance to improve.

• Business risk: A rushed decision to terminate or retain the wrong person, without proper process or evidence.
• Worker impact: Feeling blindsided and unfairly treated, which undermines trust and psychological safety.

The cultural misfit
A technically skilled employee struggles to gel with the team, but the issue isn’t addressed. At 6 months, it’s too late to make a clean decision.

• Business risk: A difficult dismissal process with legal risk.
• Worker impact: Feeling isolated and excluded, damaging their sense of belonging and mental health.

The missed opportunity
An employee struggles with a key task, but no coaching is offered. By month 5, their confidence is gone.

• Business risk: Losing someone who could have become a strong contributor.
• Worker impact: Stress and self-doubt that could have been avoided with timely support.

These examples show that probation should be actively managed; not only to protect the business, but also to ensure fairness and consideration for the employee.

Best Practice Employer Action Plan

The way you manage probation will depend on the size of your business. Larger employers need to make decisions sooner, so early and structured reviews at the 3- and 5-month marks are essential. Small businesses have a longer window, but sticking to the same 3- and 5-month review points is still best practice. It gives you clear checkpoints, helps employees know where they stand, and avoids last-minute decisions.

The best outcome in any probation process though is not dismissal, it’s helping the employee succeed. Investing time in clear feedback, training, and support often turns around early performance issues, saving you the cost and disruption of re-recruiting. It also builds a culture of fairness, where employees feel they’ve been given every chance to improve.

At Commencement

• Provide a clear, written Employment Contract that specifies the probation period.
• Outline job responsibilities, KPIs, and cultural expectations using tools such as Position Descriptions and monthly 1:1 meetings with supporting documentation.
• Diarise three key checkpoints: the 3-month and 5-month reviews, and 6-month anniversary for large businesses, and 12-month for small.

At 3 Months

• Hold a structured, documented review.
• Give honest feedback on performance and cultural fit.
• Identify gaps clearly and create an improvement plan.
• Provide support such as coaching, training, and mentoring, to help the employee succeed.

At 5 Months

• Revisit the improvement plan from the 3-month review.
• Assess progress and decide whether the employee is on track.
• If gaps remain, this window allows you to act to dismiss before the 6-month period ends (for large businesses).

At the End of Probation

• If performance and fit are satisfactory, confirm ongoing employment in writing.
• If not, and you decide to end employment, do so before the 6- or 12-month minimum employment period expires. Make sure you provide the correct notice, pay all accrued entitlements, and keep thorough documentation of the process. Small businesses must also comply with the Small Business Fair Dismissal Code. Larger businesses don’t have a code, but they must still follow the general unfair dismissal principles under the Fair Work Act, ensuring there is a valid reason, that the employee is given notice of concerns, a chance to respond, and that the process is fair and reasonable.

The Key Takeaway

Probation isn’t a passive “wait and see” period. It’s a structured management tool. Managed proactively, it:

• Protects the business by ensuring hiring decisions are fair and timely.
• Helps the worker be their best by providing clear feedback, opportunities to improve, and support for their wellbeing.

By committing to reviews at the 3-month and 5-month marks, you’ll give employees a fair chance to succeed while reducing business risk. Done well, probation benefits everyone.

Your Next Step

If you currently have new staff within their minimum employment period:

• Diarise: Check their start date and diarise their 3 and 5 month check-ins.
• Plan and Book: Book a review meeting with a clear agenda so the employee knows what will be covered; ask them to bring information or evidence of their work to support the discussion. Ensure the tone is friendly and upbeat.
• Prepare Data: Prepare a review document to assess their performance; consider their Position Description, KPIs, and any notes relating to 1:1 support, mentoring, and training.
• Meet: During the meeting, provide balanced feedback; acknowledge strengths as well as areas needing improvement.
• Address Gaps: Where gaps exist, agree on a practical action plan with clear goals and timeframes.
• Support: Offer support and resources (training, coaching, mentoring) to give the employee every chance to succeed.
• Document: the meeting and follow up in writing so both you and the employee are clear on expectations.
• Schedule: the next check-in (usually at the 5-month mark) to review progress against the action plan.
• Timeliness: Ensure your plan gives you time to take action within their minimum employment period should you need to terminate their employment.

You can learn more on the Fair Work Ombudsman’s website covering Probation and Unfair Dismissal and the Fair Work Comission’s website covering Minimum Period of Employment, or reach our to your FCHR Consultant.