What to Do When a New Hire Isn’t Working Out

Sometimes, it becomes apparent in the first weeks or months of a new starters employment that the employee is not working out in the role.

The employment relationship is between two parties, employer and employee, and the fault or reason for the dysfunction may include:

• flaws or misunderstandings during the recruitment process;
• a failure to give, or take, clear directions in the early weeks of employment; as well as
• the employee not possessing the essential competence and capabilities to perform the role.

Most employment contracts for permanent and ongoing employment contain a clause which makes it a term of the employment agreement that the employee’s ongoing employment will be subject to an initial probationary period of six months. The clause will usually provide that either the employer or employee may terminate the employment for any reason during this initial probationary period by giving one week’s notice to the other party.

Employing an employee on a permanent and ongoing basis will be a significant financial undertaking for a business and the imposition of a new personality into an established team can mean there are risks for the employer if the new recruit is ultimately not a good fit for the role or organisation. The probationary period is a well-established feature of the employment relationship that is designed to mitigate those risks for the employer, while ensuring the employee is fully aware they are on trial at the commencement of their employment.

The Fair Work Act 2009 (Cth) (‘the Fair Work Act), legislation which covers most employees around Australia, provides that only employees who have completed six months’ employment will be eligible to issue an unfair dismissal application in the Fair Work Commission (or twelve months if the employer is a small business employer who employs less than 15 employees)^[1].  The significance of this limitation is that employees who are dismissed during the first six months of their employment (twelve months if employed by a small business) are not ‘protected from unfair dismissal’ (as they cannot issue unfair dismissal proceedings in the Fair Work Commission if dismissed). The six and twelve month qualifying periods were introduced into the Fair Work Act to allow businesses adequate time to assess the performance of their employees and terminate their employment if necessary^[2] (without risk of the employee issuing unfair dismissal proceedings against them).

Since the six and twelve month qualifying periods for unfair dismissal applications came into operation with the introduction of the Fair Work Act in 2010, probationary periods in new employment contracts have generally become six months in duration (whereas previously three month probationary periods were common and considered a reasonable time to assess performance for most roles). While it is recommended that employers continue to include probationary clauses in new employment contracts, the contractual probationary period clauses are rarely these days the cause for disputes or litigation, as the Fair Work Act unfair dismissal qualifying periods have taken on much more significance.

The Fair Work Act provides that the minimum amount of notice an employer must give an employee with less than 1 year of service is one week.^[3] The employer may elect to pay the employee the salary the employee would have earned during the notice period and not require the employee to work out the notice period. If the employee’s employment contract provides for a greater period of notice, then the employer must give or pay the employee the amount of notice set out in the contract.

Litigation:

Managers contemplating dismissing an employee during their probationary period, or in the first six months (twelve months for small businesses) of their employment, should be aware that while the employee will not be able to issue unfair dismissal proceedings, if the employer has dismissed the employee for a prohibited reason under the General Protections provisions of the Fair Work Act such as:

• a discriminatory reason;
• because the employee was absent because of illness or injury; or
• because the employee has a ‘workplace right’;

then it may be open to the employee to make a General Protections – Dismissal application to the Fair Work Commission and the Federal Circuit and Family Court of Australia.

Caring for both employee and Manager

The Fair Work Act provides that notice of termination must be in writing and can be either given to an employee personally, delivered to the employee’s address or posted to the employee (however it will be effective only when received by the employee).

Best practice however, would usually require that notice of termination be delivered to the employee if at all possible:

• in a face-to- face meeting;
• in a confidential setting (a private room away from sight and hearing of work colleagues); and
• while taking the greatest possible care for the health and well-being of the employee.

The employee will ideally be provided access to the services of an Employee Assistance Program (EAP).

It should also be acknowledged that the meeting in which the Manager is required to deliver notice of termination to an employee may be one of the most difficult meetings of the Manager’s career and the Manager will likely benefit from support in preparation for the meeting as well as the opportunity to access EAP afterwards.

If you have concerns regarding probationary periods, dismissal processes or potential General Protections claims (or any other Industrial Relations matters), please contact us here and one of our Industrial Relations consultants will be in touch within 24 hours.

[1] Sections 382 and 383 of the Fair Work Act 2009 (Cth)

[2] Fair Work Bill 2008 Explanatory Memorandum [212] and [216]

[3] Section 117 of the Fair Work Act 2009 (Cth)