BC Supreme Court clarifies law regarding employment probation https://www.mccarthy.ca/en/insights/blogs/canadian-employer-advisor/...

BC Supreme Court clarifies law regarding

employment probation

The British Columbia Supreme Court recently addressed key issues regarding
probationary periods in employment contracts.

Background

In Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42, the contract
of employment executed by the plaintiff, Mr. Ly, contained the following probation
clause: "Employees are required to serve an initial probationary period of six (6)
months for new positions" (the "Probation Clause").

Mr. Ly was dismissed from his position after two months and challenged the
enforceability of the Probation Clause. He argued that such a brief reference to
probation was not sufficient to rebut the common law presumption of reasonable
notice owed to dismissed employees. The Court rejected this argument, concluding
that the meaning of the term "probation" is well understood and noting that Mr. Ly
had not questioned or attempted to negotiate the Probation Clause (as he had done,
for example, with respect to a different clause in the agreement).

Mr. Ly further argued that the six-month Probation Clause was unenforceable
because its six-month duration fell afoul of section 63(1) of the Employment
Standards Act (the “ESA”), which requires employers to provide employees who
have served at least three months of employment with a minimum of one week's
notice or pay in lieu.

Decision

The Court acknowledged that the law regarding whether employers can require
probationary periods longer than three months was somewhat unclear. In
addressing this question, it affirmed that the common law presumption of
reasonable notice may be rebutted by a contractually agreed-upon probation
period, so that an employer may dismiss an employee without reasonable notice
during such period. It also affirmed that the minimum notice periods set out in the
ESA cannot be contracted out of or circumvented. Thus, after an employee passes
the three-month mark, he is entitled to the minimum one week’s notice provided in
the ESA, even if the parties agreed to a six-month probation period.

The Court also summarized certain key principles regarding probation periods,
which it defined as follows:

A probationary term of employment is best understood as part of a contract of

employment where: a) the employee is held to the requirement that for a specific
period of time that employee must demonstrate certain suitability requirements
set by the employer; and b) the employee may be dismissed without reasonable
notice (subject to statutory minimums) if he or she does not meet the suitability
requirements. If the employee meets the suitability requirements then, after that
period of probationary assessment, the employee's contract continues as a
contract of employment wherein the requirements of just cause and reasonable

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BC Supreme Court clarifies law regarding employment probation https://www.mccarthy.ca/en/insights/blogs/canadian-employer-advisor/...

notice apply. [emphasis added]

Although an employer is not required to give reasons for dismissing a probationary

employee, the Court will review the employer’s conduct in assessing the employee,
considering factors such as: whether the employee was made aware of the criteria
by which he would be assessed; whether the employee was given a reasonable
opportunity to demonstrate his suitability for the position; and whether the
employer acted fairly and with reasonable diligence in assessing suitability.

In Mr. Ly’s case, the Court concluded that the employer had not sufficiently
communicated to Mr. Ly the standards by which he would be assessed, had not
given him a reasonable opportunity to demonstrate his suitability, and had not met
the required standard of good faith in assessing him. Consequently, the Court found
that the employer wrongfully dismissed Mr. Ly. The Court awarded Mr. Ly pay in
lieu of three months’ reasonable notice because his contract did not specify a
specific notice period.

Key Takeaways

When contracting for probation periods greater than three-months, it is important

to keep the following in mind. Under the ESA, employees are entitled to notice of
termination of employment upon completing three months of continuous
employment, even if the probation period extends beyond three months. If the
contract does not contain an express termination provision equal to or greater than
the ESA minimum, then the employee will be entitled to reasonable notice at
common law, which can be a costly severance package for such a short-service
employee (as in Mr. Ly’s case).

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