Blog Post by Michael Truong, Lawrence Smith and Daniel Sorensen
Sorensen Smith LLP, Legal Counsel
April 5, 2019
Employers and employees often misunderstand what their respective rights and obligations are when it comes to “probation.”
Probation is not a term found or used in the BC Employment Standards Act.[1] In the absence of an express reference and agreement to probation, an employee is not simply bound to a probationary period. Probation is not simply implied as a term in an employment relationship; rather, probation is a creature of contract, which means it must be an express creation of contract.
If a term of probation was not discussed and agreed to, an employer cannot unilaterally impose one after employment has commenced. If an employer attempts to do this, and subsequently tries to terminate an employee during the alleged probation period, the employer may be in breach of its contractual obligations and may be liable to the employee for damages. Whether this is the case depends on the terms of employment, including any written employment contract.
The decision in Ly v. British Columbia (Interior Health Authority)[2] is clear that an employment contract does not need to indicate how the probationary period might be terminated or that a probationary period is a period of assessment of suitability in order for there to be a valid contractual probationary clause. Rather, an express reference to the term “probation” in a contract or letter of employment is sufficient. If a contract is silent on defining that term, then the courts will then imply certain baseline rights and obligations.
Where a term of probation has been agreed to, an employer does not have the right to terminate a probationary employee without notice for any reason. A probationary employee is an employee who is being tested to enable the employer to ascertain his or her suitability for permanent employment. Probation is the period when the employee may prove that he or she is suitable for regular employment as a permanent employee and will meet the standards set by the employer. As such, in order for an employer to avoid potentially paying compensation to a probationary employee,[3] an employer must undertake a good faith assessment of the employee’s suitability based on the criteria set out at the outset of the employment. The test of suitability was succinctly set out in Ly:[4]
[58] In determining whether an employer acted in good faith, courts have examined the process through which the employer determines whether the employee is suitable for permanent employment. While an employer is not required to give reasons for the dismissal of a probationary employee, that employer’s conduct in assessing the employee is reviewed by the court in light of various factors such as: 1) whether the probationary employee was made aware of the basis for the employer’s assessment of suitability before, or at the commencement of, employment; 2) whether the employer acted fairly and with reasonable diligence in assessing suitability; 3) whether the employee was given a reasonable opportunity to demonstrate his suitability for the position; and 4) whether the employer’s decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance but also character, judgment, compatibility, and reliability
[emphasis added]
It is important to note that terminating a probationary employee under the “suitability” analysis is lower than the standard under which an employee is terminated for “just cause.” The law recognizes a distinct difference in applying the test for a just cause termination, which if found, does not entitle the dismissed employee for common law or statutory notice under the ESA, whereas an employee dismissed as being unsuitable may still receive the statutory minimums under the ESA.
Where an employer does not meet the criteria in Ly when terminating a probationary employee, that employee’s termination is then construed as a “without cause” termination, thereby potentially entitling him or her to any applicable statutory minimums under the ESA or common law notice or both.
Likewise, if an employee completes the probationary period, the employee’s contract continues as a contract of employment wherein the requirements of just cause and reasonable notice apply, subject to amendments by any written contract.
In short, probation is not as simple of a concept as many employers and employees believe. There are many factors that could impact the validity of a probationary term, the criteria under which the probationary employee will be assessed, the termination itself, and the amount of severance or notice, if any, that may be owed to the dismissed employee.
If you have any questions or concerns about probation or find yourself in a situation involving a probationary period, whether as an employer or employee, we recommend that you seek independent legal advice because the existence of certain facts may change how the law is applied and some of the principles referenced above. If you do have questions or concerns, please contact us at 604-705-0022 for a consultation and we will be happy to assist you.
___________________