Labour and Employment Law Blog

Many savvy employers incorporate probation clauses into employment agreements with new employees. Courts have recognized the legitimacy of such clauses, which have the effect of putting the employee on notice that the employee's performance is being evaluated and that the employee must satisfactorily pass the probationary period if the employee is to continue employment with the employer.

In a non-union workplace, the standard probationary period is often three months, which is the length of time before the employer will owe the employee one week's notice or pay in lieu of notice under section 63 the BC Employment Standards Act (the “Act”). It is important to note that employers and employees may not contract out of the Act. Accordingly, this three month window is the only opportunity for employers to terminate an employee's employment absent just cause without providing some notice or pay in lieu. An effective probation clause will oust any common law entitlement during the probationary period, allowing the employer to dismiss without notice or pay in lieu for any reason that is not discriminatory.

In a unionized workplace, if a collective agreement outlines a mechanism for ending employment, section 63 of the Act does not apply. This means that the probationary period set out in the collective agreement may exceed three months. Indeed, a collective agreement probationary period could be based on cumulative hours worked rather than linear time.

The BC Labour Relations Code requires that every collective agreement provide that employees may not be dismissed except for just cause, but the employer and union may agree to a different standard for probationary employees. Often, the agreed-on standard for dismissing a probationary employee is "suitability", a somewhat amorphous concept that takes into account factors such as the probationary employee's:

• performance;
• attitude and compatibility;
• capability and skill; and
• capacity to meet future production requirements.

Arbitrators have typically granted employers a very wide latitude in assessing suitability, recognizing that an assessment of a probationary employee involves intangible and subjective factors which must be taken into account by the employer. The assessment is largely subjective; however, employers are sometimes surprised to learn that the assessment of suitability has been interpreted by arbitrators to imply a requirement to assess the employee fairly, which in many instances requires the employer to warn the employee that there is some deficiency prior to the end of the probationary period and provide the employee with a reasonable opportunity to demonstrate improvement.

Failure to warn has been fatal to an employer's case at arbitration in respect of a probationary employee's wrongful dismissal grievance in a number of BC arbitral decisions. While some arbitrators have held that there is no overarching duty to warn in all cases, the trend is to require the employer to put the employee on notice that failure to demonstrate improvement may result in dismissal at the end of the probationary period. At arbitration, if an employer fails to demonstrate that it fairly assessed the employee prior to termination, the typical remedy awarded by arbitrators is reinstatement, often with backpay, and sometimes subject to a renewed probationary period.

Factors demonstrating that the employer has fairly assessed the probationary employee include:

• clearly communicating the reasonable standards expected by the employer;
• informing the probationary employee of deficiencies;
• clearly communicating to the probationary employee that a failure to rectify deficiencies will result in termination of employment at the end of the probationary period; and
• providing the probationary employee with the opportunity to demonstrate improvement.

The lesson for employers is to treat a probationary period as an active period of evaluation and training, rather than taking a passive approach. The decision about whether or not to transition an employee should not be made at the last moment before the end of the probationary period. Rather, the employer should work with the employee on an ongoing basis to determine whether the employee can be moulded into the type of worker the employer needs in its workforce. Observed performance deficiencies should be addressed with the probationary employee right away.

We remind you of the importance of documenting meetings with probationary employees where performance issues are raised, and continuing to monitor and document the probationary employee's progress afterward. Only after the employee has been provided a fair opportunity to demonstrate suitability, including by rectifying performance deficiencies, will termination during the probationary period be upheld.