Beware the nuances of probationary employment
Probationary periods of employment are nothing new, but employers who fail to grasp the nuances involved can face significant legal consequences. While a probationary term is a long-standing practice acceptable by law, there are many clauses that run the risk of failing to meet the legal standards dictated in the Employment Standards Act, 2000 (ESA), or common law, which could result in litigation by a terminated employee. The law surrounding probation is surprisingly murky. A probationary period is permissible because it is contemplated in legislation. But it does not, by default, make its way into each and every employment agreement.
The biggest assumption made by employers is that they are automatically entitled to end an employment relationship without any notice within the first three months because probation is permissible by operation of the ESA.
However, this is not true in all circumstances. The only time that the employer gets this 90-day get- out-of-jail-free card is when they have included it in a properly constituted, valid and binding contract of employment that specifically contemplates the earlier termination during a probationary period, in accordance with the ESA. Any probationary period must be expressly included in a contract and articulated to the employee. Another mistake employers can make is extending the probationary period beyond 90 days.
The ESA dictates a probationary period is permissible for up to three months. During that time, the employer may terminate employment with no notice or pay in lieu. As a result, it is possible to have a contractually governed, longer probationary period; however, if the employer chooses to terminate during the longer probationary period, the employee will be entitled to some notice or pay in lieu. Probationary and termination provisions that fail to make this express may fail at law, leaving the employer vulnerable to claim of wrongful dismissal.
The 2017 British Columbia Supreme Court decision in Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42 addressed probationary periods in employment contracts and provides some clarity. In this case, the plaintiff argued that the six-month probation clause in his contract was unenforceable because it was longer that the period set out in B.C.’s ESA. The court found the legislation does not require employers to give notice of termination to an employee who has been working for less than three months.
However, if that person was employed for more than 90 days, statutory and common law notice requirements apply.
The court awarded the employee three months’ salary as wrongful dismissal damages. This decision also raises the interesting question about the threshold — if there is even one — for dismissing a probationary employee. The court is in agreement that even if a probation period is contemplated in the contract of employment, it should still hold up to careful scrutiny for both language and action. For example, if there is contradictory language between the probationary period and the termination clause that might vitiate the enforceability of that probationary clause.
During a 90-day probation period, the employer is not necessarily required to give reasons for dismissing a probationary employee as long as the worker is given notice either in accordance with the ESA or with the contract. Still, there is still a good-faith requirement in that decision, and the courts can review the employer’s conduct when someone is terminating a worker during a probationary period. For example, was the employee aware of the criteria by which he or she would be assessed? Was the employee given reasonable opportunity to demonstrate their suitability for employment? Has the employer acted fairly and with reasonable diligence in assessing suitability? If not, the employer’s decision to terminate during the probationary period may be challenged by a wrongful dismissal lawsuit.
The courts clearly do not want to encourage employers taking advantage of a probationary period to get up to three months of work without any obligations on termination. The employer really ought not to be able to benefit from that probationary provision if they have acted in bad faith or in their own self-interest to the object dereliction of an employee’s rights. Keep in mind that absent a probationary clause in an employment contract, an employee can still be terminated pretty much at any time for any reason on the provision of reasonable notice or pay in
lieu.
Employers would be well advised to review their employment contracts to avoid possible litigation. Ellen Low has been working exclusively in employment and human rights for over a decade. She obtained her law degree from the University of Ottawa, articled at Gowlings and practised as a partner with a boutique Toronto employment law firm and founded her own firm, Ellen Low & Co. Employment Law, in 2018.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.