Employees on Probation - LawNow Magazine

Employees on Probation

Employment Law Column

Since it takes away an employee’s usual rights, a probationary period must be expressly agreed to by the employee.  It cannot be implied into the relationship.  The [employer] must clearly indicate what will happen if the relationship ends before the probation terminates.  – Easton v. Winslow Properties Corp., [2001] O.J. No. 447

Introduction

When we hear the term that an employee is “on probation” it sounds like the employee committed a crime.  However, “probation” comes from the verb “to prove.”  Many employers choose to start new workers in probation to prove themselves, allowing the employers to evaluate performance and assess the suitability of the new hires for long-term work.

Employment contracts often stipulate a period of probation, during which new employees can be dismissed without notice or cause.  This article describes the law of probationary employment.

Legislation

While there is no specific legislation creating employment probationary periods, most provincial employment standards legislation states that termination notice is not required when an employee has been employed for three months or less. In assessing suitability employers cannot set the bar so high that it is not reasonably possible for a probationary employee to succeed. Likewise, employees do not have to give notice of quitting if they have worked for an employer less than three months.

It is important to remember that this is the statutory minimum, and the common law (judge-made) notice principles about reasonable notice are more generous.

Common Law

In 1955, an arbitrator in Re United Electrical Workers & Square D Co., Ltd. [6 L.A.C. 289] described probation thus (at para. 8):

An employee who has the status of being “on probation” clearly has less job security than an employee who enjoys the status of a permanent employee.  One is undergoing a period of testing, demonstration or investigation of his qualifications and suitability for regular employment as a permanent employee, and the other has satisfactorily met the test.  The standards set by the company are not necessarily confined to standards relating to quality and quantity of production, they may embrace consideration of the employee’s character, ability to work in harmony with others, potentiality for advancement and general suitability for retention in the company.

However, judicial decisions and arbitrations on the issue are not consistent.  For example, in MacLennan v. Freedom Ford Sales 2002 ABPC 87 (CanLII), the court found the employee was hired indefinitely and that his termination without notice and pay was justified because a probationary period was implied in the employment contract.

The Ontario Superior Court of Justice disagreed in Easton, finding the phrase “Probationary Period” in the employer’s letter offer ambiguous, “without further explanation (it) does not make the plaintiff a probationary employee.”  Rather, employers must describe “a period when the employee must demonstrate that she is suitable for regular employment as a permanent employee” and that she was “to go through a period of assessment to determine whether she is suitable for the job.”

Employers must give probationary employees a reasonable opportunity to prove their suitability and fairly evaluate their performance.  In Rocky Credit Union Ltd. v. Higginson, 1995 ABCA 132 (CanLII), the Alberta Court of Appeal said:

To establish justification for the dismissal of a probationary employee, the employer need only establish that (1) he had given the probationary employee a reasonable opportunity to demonstrate his suitability for the job; (2) he decided that the employee was not suitable for the job; (3) that his decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance, but character, judgment, compatibility, reliability, and future with the company.

Courts will not require that the employer establish actual cause, just that the employer concluded the employee was unsuitable, on the above criteria. The day an employee makes it past the probation period, regular notice or cause is required for dismissal. In assessing suitability employers cannot set the bar so high that it is not reasonably possible for a probationary employee to succeed.  The Prince Edward Island Court of Appeal agreed in Alexander v. Padinox Inc., 1999 CanLII 4542 (PE SCAD).

The most recent case on that point is Cao v. SBLR LLP,[2012] O.J. No. 3328.  Cao, hired as an accountant after signing a three-month probationary contract, was fired after one month for not meeting performance standards.  The employee manual indicated that employees experiencing performance issues would be told about their performance and be given suggestions for improvement.  Ms. Cao was terminated one month into her job without this feedback.  The small claims judge said employers dismissing probationary employees must act “fairly and with reasonable diligence” in determining whether or not the employee is suitable to the job.  The probationary employee must be afforded a reasonable opportunity to demonstrate ability to meet the employer’s standards. The judge concluded Ms Cao was wrongfully dismissed because her employer could not demonstrate inadequate work performance and did not follow its own policies of helping employees improve job performance. Ms. Cao was awarded four months’ salary.

In 1998, a Quebec court awarded a senior Montreal executive almost six months’ salary and $8,000 in moral damages after the employee was fired only 11 days into his six-month probation period.

Once the probation has expired, an employer cannot extend it without the employee’s consent: Lowery v. Calgary (City of), 2002 ABCA 237 (CanLII)The day an employee makes it past the probation period, regular notice or cause is required for dismissal: Schwartz v. Selkirk Financial, 2004 BCSC 712 (CanLII).

Human rights legislation applies to the benefit of probationary employees before they are dismissed.  Employers must investigate discrimination allegations even if this means extending employment beyond the probationary period: Bertrend v. Golder Associates, 2009 BCHRT 274 (CanLII).

Conclusion

The law of employment probation has become more nuanced in the last few decades as judges acknowledge that employees are real people.

Given the uncertainty about whether probation is an automatic, implied condition in every new job start, both parties should be protected by a clear statement of the existence and duration of any probation period in the employment contract.  Merely inserting a reference to a probationary period may not be sufficient.

If there are specific qualifications, skills or certifications essential to a job, they should be referenced in both the job posting and the contract.  Employers must always follow their own manuals and policies even with probationary employees.  These documents are legal promises made to employees.

An employer who fails to follow its own policies when dealing with employees, sets the performance bar too high, or otherwise is too harsh in assessing probationary employees’ suitability risks being found to have acted in bad faith.

Employment probation has come a long way in the law.  The employer, as well as the employee, has quite a bit to prove.

 

Authors:

Peter Bowal
Peter Bowal
Peter Bowal is a Professor of Law at the Haskayne School of Business, University of Calgary in Calgary, Alberta.
 

Luke Stephenson
Luke Stephenson is a student at the Haskayne School of Business, University of Calgary (2014).
 


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