Qualifying periods and probationary employment: is there a difference?
by Alan Grinsell-Jones
Recent Australian Industrial Relations Commission (“Commission”) judgments leave it unclear whether a probationary period of employment agreed between the parties is the same as or different to the qualifying period of employment required by the Federal Workplace Relations Act 1996 (“WR Act”).
Introduction of concept of qualifying period
A requirement for an employee to serve a qualifying period of employment prior to being able to make a claim for unfair dismissal was introduced into the unfair dismissal provisions of the WR Act in 2001.
The WR Act now requires an employee to have served a qualifying period of three months, or a shorter or longer period determined by written agreement between the employee and the employer before the commencement of employment. Any longer period must be reasonable having regard to the nature and circumstances of the employment.
Before these changes, employees who were serving a period of probation had no access to the jurisdiction provided that the period of probation was agreed before the commencement of the employment. There was no need for such agreement to be in writing.
A longer period than three months had to be reasonable having regard to the nature and circumstances of the employment.
Despite the introduction of the requirements to serve a qualifying period of employment, the Government retained the provisions dealing with probationary employment.
What does each term mean
The first case on this issue was Conway and Norman G Clark (Australasia) Pty Ltd (PR 917226). Commissioner Grainger was considering an argument as to whether a period of probation of six months, which had been agreed in writing before the commencement of the employment, was reasonable and precluded the employee from bringing an application. The agreement between the parties specifically referred to a six month probationary period and made no reference to an extension of the qualifying period. Commissioner Grainger found, however, that wherever an employer and an employee had negotiated a probationary period shorter or longer than three months in writing before the commencement of employment, that would be a qualifying period of employment for the purposes of the WR Act. He equated the terms as meaning the same thing. He ultimately determined that a period of at least five months probation was reasonable and as the employee had been terminated within that period of five months the Commission did not have the jurisdiction to deal with the application because the employee had not completed the qualifying period of employment required by the WR Act.
The relationship between qualifying periods and periods of probation was next examined by a Full Bench of the Commission in McCarthy and NT Friendship Support Inc (PR 925075).
A Commissioner had rejected an argument that an employee was excluded from the jurisdiction on the basis of being a probationary employee as the probationary period of employment had not been agreed in advance. On appeal, it was argued that as the employee had not served the qualifying period she was excluded from the jurisdiction and that the Commissioner had misunderstood the argument at first instance by determining the matter on the basis of the requirements for probationary employees and not by reference to the qualifying period. The employee argued that both qualifying periods and probation periods are required to be determined in advance and in doing so relied upon the decision in Conway that the terms are interchangeable.
The Full Bench doubted the correctness of the Commissioner’s conclusion in Conway. However, the Full Bench stated that it was unnecessary for it to express a concluded view on the point in the circumstances of this case. As the employee had only been engaged for a period of twenty two days, she had not completed the qualifying period of employment. Accordingly, the appeal was upheld and the application was dismissed for want of jurisdiction.
The next consideration of the matter was in Dunstan and Department of Justice (PRE 926337). The employee was engaged on a period of probation of six months which had been determined in writing prior to the commencement of the employment. Senior Deputy President Kaufman stated that he agreed with the finding of Commissioner Grainger, despite the Full Bench having found tentatively to the contrary. SDP Kaufman therefore determined that the qualifying period of employment in the WR Act had been agreed to be extended to six months. He subsequently determined, however, that the six month period was unreasonable. Nevertheless, the fact that the longer period was not reasonable did not mean that the period of three months specified in the WR Act was still the relevant period.
There may be some difficulty with this reasoning as the WR Act itself provides that the qualifying period of employment is three months or a longer period determined by written agreement, that longer period being a reasonable period having regard to the nature and circumstances of the employment. It could be argued that as the longer period was not reasonable the qualifying period of employment as prescribed by the WR Act had to remain at three months. In any event SDP Kaufman found that, if he was wrong in his decision as to the qualifying period being extended to a period which was not reasonable, the employee had in fact not been terminated within the three month qualifying period as he did not receive notice of termination until the day after that had expired.
Herbert and Murray Neck Homeworld Pty Limited (PR 927391) was a case where a probationary period of employment, which had been determined in writing in advance, was for the same period as the qualifying period of employment. DP Hampton excluded the employee from the jurisdiction on the basis that he was serving a qualifying period of employment as the probationary agreement was not for a shorter or longer period. In deciding that the employee was excluded, DP Hampton relied upon the Full Bench decision in McCarthy. However, DP Hampton did not have to determine whether a qualifying period was different or the same as a probationary period as in this case the periods were identical.
What should employers do?
There are now two decisions of single members of the Commission which have positively found that the terms are interchangeable whilst a Full Bench, subsequently supported by another member of the Commission, has regarded them as different concepts.
Therefore, employers need to give careful consideration to determining periods of probation, particularly where they are shorter or longer than three months. If the period of probation is specified to be shorter than three months, then the three month qualifying period required by the WR Act may not apply. Alternatively, if the period is longer than three months then such a period has to be shown to be reasonable in all of the circumstances and an employee may not be excluded from making an unfair dismissal claim, if the period is found to be unreasonable, even if the employee is dismissed within the first three months of employment.