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A recent Federal Court judgment has raised interest around probationary periods, as an employee who was dismissed just seven hours before his probation had concluded established a prima facie case against his former employer.
Question marks around probationary periods are beginning to arise after a recent Federal Court judgment of Justice John Nicholas resulted in a reinstatement.
Michael Byrnes, employment law partner from the Sydney-based firm Swaab, reviewed the case and the effect it could have on dismissals occurring close to the conclusion of the probationary period moving forward.
“The employer in the case did what many employers have done – terminated employment just before the employee would have had the right to bring unfair dismissal proceedings, usually at the end of a contractual probationary period.
“In this case, the employee was seven hours short of serving the minimum employment period of 12 months required as the employee of a small-business employer to bring such a claim. (For employees of non-small business employers, the applicable minimum employment period is six months).
“The employee sought interlocutory orders pursuant to the Fair Work Act 2009 (Cth) (FW Act) that he be reinstated, citing breaches of the general protections provisions,” said Byrnes.
Byrnes explained that Justice Nicholas, who oversaw the case, established that the employee was pursuing a prima facie (on face value) case, claiming that the timing of his dismissal was motivated by the fact that his probationary period was nearly concluded; therefore, the employer could avoid an unfair dismissal case from arising.
“Justice Nicholas held that the employee established a prima facie case that the timing of his dismissal had been influenced by a desire on the part of the employer to ensure he could not make a claim for unfair dismissal and that this was also a substantial and operative reason for his dismissal.
“His Honour made an interim order for the reinstatement of the employee and an order the employer be restrained from terminating his employment (without the leave of the court),” said Byrnes.
In the conclusion of the judgment, Justice Nicholas said: “It may be assumed for present purposes that [the employer’s] investigation and findings provided AFIC with reasonable grounds for summarily terminating [the employee’s] employment and that her conclusion that the various allegations made against him were substantiated was the principal reason for the dismissal.
“However, in my view, [the employee] has established a prima facie case that the timing of his dismissal was influenced by a desire to ensure that he could not make a claim for unfair dismissal and that this was also a substantial and operative reason for his dismissal on 3 September 2024. I am, therefore, persuaded that he has established a prima facie case for relief in respect of AFIC’s contravention of s 340(1) of the FW Act.”
Byrnes explained that a recent High Court authority in a Qantas case played a significant role in the case and in the decision of Justice Nicholas to reinstate the employee.
“The recent seminal High Court authority in Qantas Airways Limited v Transport Workers Union of Australia (2023) had a significant role to play, as the relevant workplace right, which was the right to bring an unfair dismissal claim, had not yet crystallised (as the minimum period had not been served),” said Brynes.
Byrnes went on to explain the flow-on effect that decisions like this could have on probationary periods. He believes that the case has given rise “to some interesting considerations in the interaction between the general protections and unfair dismissal proceedings of the FW Act”.
He did note, however, that this was an interlocutory decision with the case yet to be finalised before the courts.
“While caution needs to be taken in extrapolating broader consequences from one decision (particularly an interlocutory decision), the notion that the general protections provisions of the FW Act might be breached by dismissing an employee just before the minimum employment period (whether it be six or 12 months) ends would come as a disconcerting surprise to many employers,” said Byrnes.
“Dismissal commonly occurs at the expiration of contractual probationary periods which often coincide with the minimum period of employment under the FW Act.”
On this basis, Byrnes said that it is “inevitable” that some employees will no doubt rely on the Qantas decision – which was heavily involved in this decision – to argue that their termination before the probationary period concludes is, in fact, a breach of general protections.
“It is inevitable some employees will seek to rely upon the Qantas decision as applied in this case to argue that a termination of employment made just before the six (or 12 month) service period in employment (i.e. when the employee can bring unfair dismissal proceedings) is a breach of the general protections provisions of the FW Act,” said Byrnes.
“The minimum period of employment in the FW Act for an employee to be able to bring unfair dismissal proceedings must have work to do. Will a termination the day before eligibility invite suspicion? A week before? Where is the temporal line drawn?
“On a superficial level, it seems paradoxical for the general protections provisions of the FW Act to seemingly undermine the operation of the minimum period requirement. This is particularly so given the immutability of the minimum period – it cannot be removed or varied in an award or enterprise agreement or contracted out of or varied by contract.”
This invited suspicion that Byrnes alludes to makes the satisfactory performance and conduct aspect of dismissals crucial in these cases moving forward.
“Of course, termination during minimum employment period has never been a free-for-all; employees have always been able to bring general protections claims if dismissed for a prohibited reason, irrespective of period of service. This case, emerging after the Qantas decision in relation to future workplace rights, is merely another example of this,” said Byrnes.
“It is for this reason that a contractual probationary period, which states that ongoing employment will be subject to satisfactory performance and conduct of the employee during that period, may now have a more important role to play.”
Overall, Byrnes strongly believes that future cases in this space should be looked upon with great interest as the area of probationary periods pertaining to employees and unfair dismissals is becoming increasingly blurred after decisions like this case and the Qantas example.
“A termination of employment that occurs near the end of such a probationary period can be argued to have been executed pursuant to this process agreed at the commencement of employment, rather than to prevent the employee bringing unfair dismissal proceedings (even thought it would have this effect).
“Further to this, there is a strengthening of the argument that a reason for a decision to terminate employment during a probationary period should be given, specifically whether dismissal was for performance or conduct reasons (or both). This offers further protection against a finding a dismissal was motivated by any prohibited reason (including, but not limited to, denial of an opportunity to bring unfair dismissal proceedings),” said Byrnes.
“Any final judgment in this decision, as well as any other cases advancing the same argument, will be worth keeping an eye on.”
RELATED TERMS
Probation is a time frame at the beginning of an employee's employment that enables the company to evaluate their performance and skills in the workplace. The firm can often terminate the employment relationship without the employee resigning or having to be legally terminated if the employee fails to satisfy the conditions.
When a company terminates an employee's job for improper or illegitimate reasons, it is known as an unfair dismissal.
Kace O'Neill
Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.
