Probation to permanent: the Australian process
Reviewed by Mellow Editorial Team, HR & payroll content team
Moving an employee from probation to permanent employment in Australia is not a single administrative event — it is a defined process with legal implications that begin the moment the probationary period ends.
What probation actually means under Australian law
Probation is not a separate employment category. From day one, a new employee is employed under the same legislative framework as any other worker — the Fair Work Act, the National Employment Standards (NES), and any applicable modern award or enterprise agreement. What probation does is affect the minimum employment period, which determines when an employee can make an unfair dismissal claim.
For employers with 15 or more employees, that minimum employment period is six months. For small businesses (fewer than 15 employees), it is 12 months. During that window, you can end employment without exposure to an unfair dismissal claim — but you remain exposed to general protections claims, so probation is not a free pass to act unlawfully.
Step 1 — Confirm the probationary period end date
Check the employment contract. The probationary period should be explicitly stated — typically three or six months. Mark the end date in your HR calendar well in advance, ideally flagging a review conversation at least two weeks before it lapses.
If you do nothing, the employee simply continues as permanent by default. There is no automatic termination or legal cliff-edge — but failing to communicate clearly creates unnecessary confusion and erodes trust.
Step 2 — Conduct a genuine review
A probation review is more than a tick-box exercise. Document it properly. Assess the employee against the criteria set at hiring: role responsibilities, behavioural expectations, attendance, and any specific targets agreed at induction. Where possible, gather input from direct supervisors or team leads.
If the employee is meeting expectations, confirm this clearly. If there are concerns, now is the time to raise them — not after the period lapses, when your legal exposure changes. If performance is borderline, you have three realistic options: extend the probationary period (only if the contract explicitly allows it or the employee agrees in writing), move to a performance improvement process, or end employment before the minimum employment period expires.
Step 3 — Issue a written confirmation of permanent employment
Once you have decided to retain the employee, put it in writing. This does not need to be a formal new contract, but it should include:
- Confirmation that the probationary period has ended
- Their permanent employment status (full-time or part-time)
- Any changes to role, pay or conditions agreed during the review
- The applicable award or agreement, if relevant
Email is sufficient, but a signed letter or updated contract is better practice — it creates a clear record for both parties.
Step 4 — Review their payroll and entitlements
Becoming permanent rarely triggers dramatic payroll changes, but check a few things:
Superannuation continues as normal. The Superannuation Guarantee sits at 12% of ordinary time earnings, paid to the employee's complying fund. Confirm their fund details are still current and contributions are flowing correctly.
Leave accruals have been accumulating since day one regardless of probationary status. The NES entitles full-time employees to four weeks of annual leave per year, accruing progressively. Confirm your payroll system reflects the correct balance.
PAYG withholding should already be set up correctly from commencement. If the employee has a HECS/HELP debt, repayments are withheld on a banded scale through payroll — confirm their TFN declaration includes that disclosure.
Single Touch Payroll (STP) reporting runs at each pay event automatically. No special event is triggered by moving from probation to permanent — your payroll system simply continues reporting.
Step 5 — Update your records and onboarding documentation
Mark the employee's status in your HR system as permanent. Archive the probation review documentation. If the employee has a probationary clause in their contract that is now spent, note that in the file.
This is also a natural moment to revisit whether the employee has completed any mandatory training, reviewed company policies, or received role-specific inductions that may have been flagged as pending during the first months.
What happens if you want to extend probation instead
Extending a probationary period is only enforceable if the original contract allows for it, or the employee agrees in writing to an extension. A unilateral extension — one you impose without contractual basis or written agreement — has no legal effect on the minimum employment period. The statutory clock runs from the actual commencement date regardless of what the contract says. If you intend to extend, be transparent with the employee about why, what improvement looks like, and set a firm revised review date.
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