Dismissing a probationary employee
It is not uncommon for employment agreements to include a probationary clause. The rationale behind a probationary period is to enable the parties to determine whether a continued employment relationship is viable. While some employees may decide to leave of their own volition during the probationary period, in the vast majority of cases, the decision to continue or discontinue employment is made by the employer.
Length of probationary period
Typically, the probationary period chosen by employers is three months. However, a probationary period could even be as long as 12 months (for very senior positions), or some other length of time in between.
The reason employers in British Columbia most often select a three-month probationary period is because the Employment Standards Act (British Columbia) does not require notice, or pay in lieu of notice to be given to an employee who is terminated within three months of being hired.
Employer obligations during probation
While employers are not required to give reasons when dismissing an employee during the probationary period, they still have an obligation to the employee to act in good faith in assessing the employee’s suitability for permanent employment.
An employer is also obliged to provide an employee with at least the minimum notice required by statute.
In the recent decision of Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42, the BC Supreme Court clarified the law relating to dismissing a probationary employee.
The Interior Health Authority (Interior Health) hired Mr. Ly in the position of Manager of Quality and Patient Safety and Client Experience at a salary of $98,000 per year. Ly’s offer letter stated “… Employees are required to serve an initial probationary period of six (6) months for new positions…” The offer letter was silent on the issue of notice.
Interior Health terminated Ly’s employment approximately two months into the job without giving him any notice, or pay in lieu and Ly sued for wrongful dismissal.
At trial, the evidence also showed that Interior Health did not make any good faith attempt to assess Ly’s suitability for continued employment during the two-month period. This was despite the fact that Ly had proactively sought constructive direction and clarity regarding his position from his supervisor.
The court held that Interior Health had not given Ly a reasonable opportunity to demonstrate his suitability for the job for which he was hired and that it had not met its legal obligation to carry out a good faith assessment of Ly’s suitability for the position.
On the issue of notice, the court held that Ly was entitled to three months reasonable notice because the probationary clause did not contain a contractual termination clause which limited Interior Health’s liability.
Key takeaways for employers:
- The test for dismissal during probation is suitability.
- An employer has the implied contractual right to dismiss a probationary employee without notice (subject to employment standards minimums) and without giving reasons provided the employer acts in good faith in assessing the probationary employee’s suitability for the position.
- In considering whether an employer acted in good faith, a court will look at the process used by the employer to determine suitability. Factors that the court will look at include: whether employee was made aware of the basis for the employer’s assessment of suitability before, or at the time of commencing employment;
whether the employer acted fairly and with reasonable diligence in assessing suitability
whether the employee was given a reasonable opportunity to demonstrate suitability for the position
whether the employer’s decision was based on an honest, fair and reasonable assessment of the suitability of the employee
- When the employer is assessing suitability, the employer can consider not only job skills and performance, but also character, judgment, compatibility and reliability.
- If an employer does not act in good faith in assessing suitability, then the employer would be liable for damages for wrongful dismissal.