Probation Periods: What They Do, What They Don't, and the Clock That Actually Matters

Almost every employment contract in the country carries a probation clause. Far fewer owners could say exactly what it does. The common assumption is that probation is a legal grace period, a window in which a new employee can be let go without much consequence. It is not, and the distance between what owners think probation does and what it actually does is where most of the trouble starts.

This is the third piece in our onboarding set, alongside the importance of employee onboarding and the new employee paperwork checklist. Those two cover the first days. This one covers the first six months.

Probation is your rule, not the law's

There is no legislated probation period in Australia. The Fair Work Ombudsman describes probation as something the employer sets, usually running between three and six months from the employee's start date. That is common practice, not a legal minimum or maximum. You decide whether to have one, and how long it runs.

What a probation clause cannot do is switch off the National Employment Standards. During probation an employee still accrues leave, still has to be paid correctly, and still holds every other NES entitlement. Probation shapes the conversation you have about performance and fit. It changes nothing about what the employee is owed.

The clock that actually matters

What owners are usually reaching for when they say "they are still on probation" is a different thing entirely: the minimum employment period. That is the length of continuous service an employee needs before they can bring an unfair dismissal claim, and it is set by law rather than by your contract.

It is six months of continuous service for most employers. For a small business employer, meaning fewer than 15 employees, it is twelve months.

The important part is that this clock runs on its own, from the employee's start date, and your probation clause has no effect on it. Write a three-month probation into the contract and part ways in month five, and the employee is still inside the minimum employment period. Write a twelve-month probation at a business of forty people and the employee is protected from month six regardless of what the contract says. The two periods are simply unrelated, and treating them as the same thing is the single most common mistake we see in this area.

The 15-employee line moves

If you are growing, this one is worth diarising. The small business threshold is a headcount, so a business sitting at thirteen or fourteen employees can cross the line with a couple of hires. The day you take on your fifteenth, the twelve-month assumption you have been working to expires and six months applies instead.

Nothing announces it. It is worth checking your headcount before you make a decision about someone's employment, not after.

Ending employment during probation still has rules

Because probation does not suspend the National Employment Standards, minimum notice of termination still applies during it. Under the NES, notice scales with length of service: one week for up to a year of service, rising to four weeks for more than five years, with an extra week for an employee over 45 who has at least two years of continuous service.

So "we are still within probation" is not, on its own, a reason to skip a process. If the fit is not working, say so early and plainly, put the concerns in writing, give the person a fair chance to respond and to improve, and give the notice that is owed. That approach is better for the business whichever way the decision goes, and it is a great deal easier to explain later.

What good practice looks like

1. Say in the contract how long probation runs and what happens at the end of it.
2. Put the review dates in the diary the day the person is hired, not the week they fall due. A probation period that quietly lapses is worth nothing.
3. Hold real check-ins along the way, not one nervous conversation at the end. Most probation problems are visible in week three.
4. Know your headcount, and know which minimum employment period applies to your business today.
5. Give the notice the standards require, and document the conversations as you go.

This guide is general information, not legal advice. Requirements change and the detail of your situation matters, so check the current guidance at fairwork.gov.au or get advice before acting on a specific case.

If your contracts, probation reviews and onboarding process could do with being turned into something repeatable that your managers can actually follow, that is exactly the kind of thing People Management Partners sets up for small and medium businesses.