Terminating a probationary employee

Beware of potential pitfalls before making the decision to terminate
By Brian Kreissl
|Canadian HR Reporter|Last Updated: 11/13/2017

Question: We have a new employee who just isn’t working out. How can we terminate him legally and fairly without having to provide notice or pay in lieu of notice?

Answer: Depending on the situation, it may be possible to terminate a new employee without providing notice or pay in lieu of notice. However, there are a number of potential pitfalls you need to be aware of before making the decision to terminate.

 While it is very common for employers to arrange the first three or six months of employment to be probationary, a court will not infer a probationary period in the absence of a contractual provision to that effect. Because of that, it is important to spell this out in a written employment agreement or employment offer letter signed by the employee before the first day of employment.

It is possible to terminate a probationary employee with little or no notice, but both parties have to agree on the probationary period. In the absence of such a provision in the employment contract, a court will apply reasonable notice in the event a non-union employee is dismissed without notice or cause during the first few months of employment.

Employers of unionized employees need to comply with the collective agreement, but some agreements stipulate that employees won’t be covered by the collective agreement until after they have passed their probation (so the same rules would apply as with respect to non-union employees).

Probationary periods and employment standards

Another potential problem, for example, is when probationary periods extend beyond three months when the applicable employment standards legislation provides for notice after three months. In particular, many employers these days have six-month probationary periods. Legislation in most Canadian jurisdictions mandates that at least one week’s notice must be provided on termination (other than for cause) after three months (some even provide for two weeks after three months or one week after 30 days).

In such cases, it is important to provide minimum notice or pay in lieu of notice that complies with the governing legislation — even if the probationary period extends beyond the threshold of one or three months. The minimum notice required is one week in Alberta, British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, Saskatchewan and the Yukon, and two weeks in New Brunswick, the Northwest Territories, Nunavut, Prince Edward Island and federally.

A threshold of 30 days for when those notice requirements begin to apply under the applicable employment standards legislation is required in Manitoba; it’s 90 days in the Northwest Territories and Nunavut; three months federally and in Alberta, British Columbia, Newfoundland and Labrador, Nova Scotia, Ontario and Quebec; and six months in New Brunswick, P.E.I., Quebec and the Yukon.

However, in the absence of a probationary period or a valid termination clause in an employee’s contract of employment, it is important to note that simply complying with the employment standards minimums may not be sufficient.

A court could potentially award considerably more in a wrongful dismissal case — particularly if a short-serving employee was induced or enticed to come and join the employer from a secure position elsewhere.

Avoid terminating on a whim

There is a misconception among many employers and the general public that a probationary employee can simply be terminated on a whim — essentially for frivolous reasons or for no reasons at all. This is incorrect.

While the threshold to terminate a probationary employee is much lower than the standard required for just cause termination of a “regular” employee, probationary employees should be given an opportunity to prove themselves and be provided with performance expectations and feedback. They should also be given an opportunity to improve their performance where it is found to be lacking.

Complete a probationary review

It is very important to conduct a probationary review before the probationary period is over. This is particularly important in cases where the employee has not passed her probation and is being terminated.

Otherwise, if you wait until after the conclusion of the probationary period, the employee is no longer on probation and higher standards (and notice requirements) apply.

Probationary reviews should be somewhat formal and provide feedback to the employee. Even if the individual is being kept on, the review should provide both positive and constructive feedback.

In some cases, it may be possible to extend the probationary period. However, this requires the consent of both parties and the situation can be rather dicey.

Therefore, it is a good idea to obtain the advice of a qualified employment lawyer before doing so.

Brian Kreissl is the product development manager for Thomson Reuters Legal Canada’s human resources, OH&S, payroll and records retention products and solutions. He can be reached at brian.kreissl@tr.com.

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