Probation is common for new employees. Probationary periods can provide employers the opportunity to assess new hires in the real work environment. If an employee is not suitable, the employer may have the opportunity to end the relationship in the early months of employment with little or no liability. There are a number of potential pitfalls, however. As one recent case cautions, compliance with the BC Employment Standards Act is important.
Employers still have certain obligations towards probationary employees. While employers who dismiss an employee during the probationary period are not required to give reasons, they must act in good faith in assessing the employee’s suitability for permanent employment. General considerations include:
- whether the employer communicated its expectations to the employee before or at the start of employment,
- whether the employer acted fairly and reasonably in assessing suitability,
- whether the employer gave the employee a reasonable opportunity to demonstrate suitability, and
- whether the decision to dismiss was based on an honest, fair and reasonable assessment of the employee’s suitability.
In addition to the above, absent cause, in BC a probationary employee that is dismissed for lack of suitability probably remains entitled to the notice of termination minimums set out in the Employment Standards Act (the “ESA”).
Courts in BC have found that any employment agreement that provides less notice of termination than those legislated minimums will be considered unenforceable and invalid from the beginning. In Shore v. Ladner Downs, 1998 CanLII 5755, the British Columbia Court of Appeal held that terms inconsistent with the ESA will be void from the beginning even where they only potentially provide for a lesser entitlement.
The challenges of successfully limiting liability for termination during a probationary period were recently highlighted in Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42. Mr. Ly was dismissed during his 6 month probation. He alleged that he had been wrongfully dismissed because the employer had not carried out a good faith assessment of his suitability for continued employment before dismissing him.
The employer asserted a termination provision, found in policy documents, providing no notice during the probation period. Mr. Ly argued that had he been terminated after 3 months, he would have been entitled to one weeks’ notice or pay in lieu under the ESA, so the no notice provision was in violation of the ESA and thus void from the beginning.
The Court ultimately found that the policy documents containing the termination provision did not form a part of the employment agreement and therefore did not decide the issue of whether those terms were void. Since there was no contractual limit on liability for notice, the Court awarded Mr. Ly damages for reasonable notice at common law, which amounted to 3 months of his salary. Notwithstanding the decision, the Court took the opportunity to expressly confirm that Shore still remains good law in British Columbia, suggesting that termination provisions during probation periods ought to take the ESA minimums into account.
Ly is a good reminder to BC employers of the statutory and good faith obligations they have towards a probationary employee. In order to fully enjoy the benefits offered by the probationary period, employers who seek to use probationary periods should ensure that the termination provisions are in compliance with statutory minimums under the ESA, as well as inform probationary employees of their expectations at or near the start of employment, and provide the employee with a reasonable opportunity to meet them.