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Second probation period rules employee out of unfair dismissal claim

Excerpts from this article first published in ‘Human Resources’ Magazine, Issue 76, 22 March 2005

In Lorimer and Bajo Investments Pty Limited t/as Subway Windsor, the AIRC has held that an employee serving a period of probation with the purchaser of the Subway store at Windsor could not proceed with her application for unfair dismissal after being dismissed during the probation period.

The employee, Lorimer, had been employed by the previous owner of the Subway store for two and a half years and had already served a period of probation with that owner.

The Subway store was sold to Bajo Investments Pty Limited in August 2004. Prior to taking over the Subway store, Bajo sent a letter to Lorimer which said that she would be subject to a 3 month probation period.

In finding that Lorimer was subject to the probation period with the new owner, SDP Hamburger noted that the previous owner told Lorimer that she was being terminated and she was being offered employment with the new owner. Lorimer accepted that offer when she continued working at the Subway store after Bajo took over ownership of it. Lorimer had a new contract of employment with Bajo. Bajo was entitled to offer employment conditional on a 3 month probation period.

HR Tips

• New owners of businesses should be careful about establishing probation periods for employees who were employed by the previous owner of the business. This is especially so if the employees continue working at the business during the period of change of ownership.

• Generally, a probation period must be established in advance of the employment, that is, before the person becomes an employee of the employer.

• In the above case, the previous owner of the Subway store had terminated Lorimer’s contract and paid her accumulated annual leave. Because she was employed under an Australian Workplace Agreement with the previous owner that did not entitle her to it, Lorimer, was not paid redundancy pay.
  
  

Gordon Jervis

Senior Associate

Australian Business Lawyers