Its crucial the minimum employment period is clearly defined, read below.

Does unpaid leave extend the minimum employment period (probation period) in relation to unfair dismissal claims?

Most employers now conveniently align the probation period under their contracts of employment to the minimum employment period under the Fair Work Act 2009 (the Act).   

The reason for this is because if an employee is dismissed during the minimum employment period the employee cannot claim unfair dismissal under the Act.  This is a period of 6 months for a business with 15 or more employees, and for a business with less than 15 employees it is a 12-month period.  Whilst a probation period of 3-6 months is common for most employers, regardless of the probation period set down it is the minimum employment period under Act that is the crucial consideration. 

ER Strategies is often asked the question whether the probation period (the minimum employment period under the Act) can be extended for any absence due to unpaid sick leave, an injury, workers compensation and the like? 

The case of John Webster v Toni and Guy Port Melbourne was determined some time ago now but it is worth reminding employers about what it determined because it looked at this issue. 

In that case, the Applicant was absent from work as a result of a motor cycle accident for approximately one month, and he was not paid by the employer as he was not yet entitled to personal leave, but he was paid by the Transport Accident Commission.  The employer authorised the absence but did not pay the Applicant during this period. 

In that case, if the period of authorised absence due to the motorcycle accident was counted, then the Applicant had the required 12 months service applicable to a small business and could pursue his claim for unfair dismissal. 

The Fair Work Commission (FWC) looked at s.384 of the Act as to what is meant by period of employment. Under s.384, the period of absence in this case had to be considered “continuous service” to be counted. 

The FWC looked at the s.22 meaning of service and continuous service and determined that the absence had to be paid leave by the employer to be included as continuous service.  The Commission decided that continuous service importantly excludes unpaid leave, including authorised unpaid leave.  

Therefore, any period of unpaid leave will extend the minimum employment period so that the employee has to either work out the period, or be on paid leave, during the 6 or 12-month minimum employment period, depending on the size of the business. 

However, there is one important exception under s22(2)(b)(ii) of the Act and that is a period of stand down of employees. Many businesses have had to stand down employees due to the COVID-19 pandemic and this type of absence is treated as continuous service and has to be taken into account.   

So, if your business is not happy with the performance of work of a new employee that has been stood down (including as a part of the Jobkeeper scheme) and want to dismiss the employee, your business will need to take action within the minimum employment period.   

Care needs to be taken so that there is clear evidence of the reason for the dismissal relating to performance of work, so as to avoid a General Protections claim that the dismissal is a breach of the employees workplace rights e.g. Jobkeeper entitlements. 

Lessons to learn 

The minimum employment period before an employee can claim unfair dismissal is extended by any unpaid leave that occurs during the period of employment. 

Unpaid leave includes: 

  • unpaid sick or carer’s leave;  
  • unpaid leave due to a personal injury or accident; 
  • workers compensation absence; 
  • authorised unpaid leave such as leave without pay by agreement with the employer. 

A stand down period under the Fair Work Act 2009 and under the JobKeeper scheme is however deemed continuous service and treated as if it was paid leave. 

Dismissal of an employee during the minimum employment period, especially at this time when employees have been stood down due to COVID-19, needs to include a process to ensure there is evidence of the reason for the termination. 

The letter of termination also needs to include the reasons for dismissal. 

 

Need help with employee termination or other employee relations issues? 

Contact us on 1300 55 66 37 

 

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Need to let an employee go? Use our letter of termination template to ensure you are using the correct format. 

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