Many employers in BC think probation is a period under which they can easily dismiss employees without having to explain why or pay them anything. This is incorrect.
Employers may be liable to pay fortunes to an employee if they do not have proper probation clauses in their contracts that are complaint with BC laws, and for not following some legal pathways in ensuring the employee gets a chance to perform up to expectation.
What Is a Probation Clause?
A mainstay of most employment contracts is the probation clause. The purpose of a probation clause is to permit an employer to test and see if an employee is suitable for the position for which they are hired. Typically, a probationary period is for a duration of 2–3 months but may be longer depending on the position.
Additional Purposes of Probation Clauses
Probation clauses can still be useful for:
- Delaying enrollment in benefit plans until both parties are certain of the fit
- Assessing technical skill requirements for certain positions
- Allowing termination for inability to perform job duties
If an employer wants to extend a probation period beyond three months, they should consult an employment lawyer to discuss the risks and benefits.
Common Mistake: Terminating Employees on Probation for Any Reason
Many employers assume that, during a probation period, they can terminate the employment of the probationary employee “for any reason” – without any liability to pay severance pay or pay in lieu of notice.
This is incorrect.
Canadian courts have held that to terminate an employee during the probation period, the employer must:
- Show that they were actively taking steps to assess the employee’s fit for the position
- Provide the employee a clear standard to be met
- Offer training and the opportunity to meet that standard
- Demonstrate that the standard set is reasonable for the position
The Employment Standards Act (ESA) & the 3?Month Rule
The Employment Standards Act (the Act) contains what could be called a three month “probation period” built into the liability for length of service requirement. The Act holds that, under the Act, no notice or pay in lieu of notice is required if an employee is terminated in the first three (3) months of their employment.
This is why a properly drafted termination clause that limits an employee to the minimum notice required under the Act is often the most important term in an employment contract. Read more on termination clause pitfalls in employment contracts
Risks of Improperly Drafting Employment Contracts
If employers want to rely on a probation clause to terminate employment, they must ensure:
- A good faith effort is made to train and assess the employee
- The employee’s skills and suitability are objectively evaluated
- The employer can demonstrate all steps taken if challenged
If these requirements are not met, the employer:
- May not be able to rely on the probation clause
- Could be liable for severance pay or pay in lieu of notice
- Faces significant liability if the contract does not limit the employee’s entitlement by using specific wording unique to BC laws
Your Probation Checklist:
When considering dismissing an employee on probation, consider the below check list:
| Considerations | Have You Done This? |
|---|---|
| Clearly defined job expectations? | ? Yes ? No |
| Communicated those expectations to the employee? | ? Yes ? No |
| Provided training relevant to the role? | ? Yes ? No |
| Allowed a reasonable opportunity to meet expectations? | ? Yes ? No |
| Set standards that are reasonable for the position? | ? Yes ? No |
| Actively monitored and documented performance? | ? Yes ? No |
| Provided feedback during the probation period? | ? Yes ? No |
| Documented any performance discussions or evaluations? | ? Yes ? No |
Best Practice Recommendation
To avoid the risk of having their probation assessment procedure deemed “unreasonable,” an employer may be better served by relying on a carefully drafted termination clause and employment contract which limits an employee to the minimum severance required under the Act.
YLaw’s employment lawyers offer employment contract review and drafting services to ensure compliance.
Conclusion
- Employers should be cautious when relying on a probation clause for termination
- Ask: Does this role reasonably require skills/ability assessment?
- A properly drafted termination clause is typically more effective
- If relying on a probation clause, be prepared to defend your standards and process
- Contact an employment lawyer if considering extending probation beyond three months
What You Should Do Next
If you’re drafting or relying on probation or termination clauses in employment contracts, ensure your practices and policies are legally sound. Contact YLaw for advice or a contract review.
Authors: Leena Yousefi and Brian Grootendorst are experienced employment lawyers serving employers and employees with all their issues across BC.
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