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Probationary periods in BC – Are you better off without them?

probationary periodsMany of our clients have new employees serve probationary periods, usually between 3 and 6 months, in order to evaluate whether the new employee is suitable for the position for which they have been hired. However, a recent case that has progressed through the BC Supreme Court may make you question whether probationary periods are worthwhile or whether you’d be better off without them.

In Ly v British Columbia (Interior Health Authority), 2017 BCSC 42, Ly brought a wrongful dismissal claim against his employer after he was fired two months into a 6-month probationary period. Ly received minimal training and asked his manager for a one-on-one meeting to discuss his progress after he’d been on the job for one month. The company did not respond to his request and one month later, terminated his employment without notice or pay in lieu of notice.

In court, the IHA argued that, for a number of reasons which they detailed, Ly was not suitable for the position. Ly argued that he was not aware of or informed about the performance standards and criteria he was expected to meet as a probationary employee. He also argued that he was not given sufficient opportunity to demonstrate his suitability.

The BC Supreme Court concluded that:

  1. IHA had not sufficiently informed Ly of the standards against which he would be measured;
  2. IHA had not given him a reasonable opportunity to demonstrate his suitability; and,
  3. IHA had not met the required standard of good faith in assessing Ly.

The Court concluded that Ly was wrongfully dismissed and awarded Ly 3 months of pay in lieu of reasonable notice.

Key Lessons

The Court summarized four factors that employers must consider when considering probationary employees’ suitability for employment:

  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.

Key Considerations

As a result of this case, employers can no longer conduct a cursory or superficial evaluation of whether a probationary employee is suitable for employment or a good “fit”. The process for determining suitability is becoming more onerous and requires employers to set and communicate performance standard and criteria, that they diligently assess actual performance against those criteria, and provide reasonable opportunity to the employee to meet the performance standards.

This case then begs the question, are probationary periods in BC really necessary?

Some considerations:

1.  The BC Employment Standards Act requires employers to provide a minimum amount of notice to employees in the event of their termination without cause (specifically no notice if termination occurs within the first 3 months of employment, 1 week’s notice after 3 months up to 12 months of employment, 2 weeks’ notice after 12 months of employment, 3 weeks’ notice after 3 years of employment, and an additional 1 week of notice per completed year of service thereafter, up to 8 weeks of notice).

If you have a good termination provision in your employment agreements which states that you will provide Employment Standards Act notice provisions in the event of a termination without cause, you are legally able to terminate employment during the first 3 months of employment without any requirement for notice, which is normally why employers include probationary periods in the first place. If your termination clause achieves the same objective, your probationary period may not be required.

Note:  The Employment Standards Act sets the minimum notice requirements in the event of a termination. Employers can and, in many cases, are encouraged to provide more notice than is required in order to attract qualified candidates and to position your company as an employer of choice.

2.    If you do include a probationary period, make sure that the terms and conditions are laid out in the employment agreement. Include:

  • The length of the probationary period;
  • Whether the probationary period can be extended; and
  • The amount of notice that will be provided in the event of a termination.

3.    Ensure that employees are made aware of the performance standards and criteria that they must meet at the start of employment, and provide them with sufficient training, feedback and opportunity to demonstrate their ability. Make sure that you meet with probationary employees regularly and advise them if they are or are not meeting the performance standards. Be clear and specific if performance is good or weak.

4.    Communicate your decision about successful or unsuccessful completion of the probationary period prior to the end of the probationary period. If employment inadvertently continues passed the end of the probationary period, the expectation is that the employee becomes a permanent employee which then makes it more complicated to end the employment relationship if the employee is not suitable for continued employment.

5.    If an employee has a probationary period that is longer than 3 months, employers must provide for the payment of severance at least equal to the minimum amount required by the Employment Standards Act. If your termination clause allows for termination without notice or pay in lieu of notice during a probationary period that is longer than 3 months, a Court would likely deem the probationary clause to be unenforceable.

While many employers have relied on probationary periods to allow for a low-risk trial period of a new employee, this recent court case shows that the risks aren’t quite so low. Regardless if an employee is on probation or not, employers have an obligation to effectively manage performance and communicate performance expectations. With that being the case, probationary periods may not be as necessary as in years past.

To see how we can update your HR policies and practices for your Vancouver-based small- or medium-sized business, please contact Clear HR Consulting.

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