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The increasing rights of probationary employees By Eric Durnford, Q.C.* I. Introduction

Canadian courts have consistently held that probationary employees must be treated fairly and given a reasonable opportunity to demonstrate their ability to do the job. Therefore, while the termination standard is somewhat lower for probationary employees, employers still must have some cause for terminating probationary employees. With respect to unionized employees, their access to grievance and arbitration proceedings may be limited, together with the bases on which their termination can be reviewed. Unionized employees are considered separately at the end of this paper. II. Non-Union Employees

Establishing the Probationary Period In order for an employee to be considered probationary, the probationary period must be clearly defined and agreed to by the employee, either orally or in writing, at the time the employee is hired and before starting work. In Easton v. Wilmslow Properties Corp., 1 the plaintiff was terminated after two weeks employment when it became apparent that she could not use the relevant computer software. However, despite the fact that the offer of employment contained a probationary period, the court concluded that the plaintiff was not subject to a probationary term because the offer did not clearly set out the probationary period and what would happen if the employment relationship terminated prior to the end of the probationary period. The court found that the use of the phrase probationary period was ambiguous because it did not spell out that it is meant to be a period when the employee must demonstrate that she is suitable for regular employment as a permanent employee and that [the plaintiff was] to go through a period of assessment to determine whether she is suitable for the job. 2 The employee was awarded three months reasonable notice due, in part, to the fact that she left secure employment. Employers must also ensure that, when the employee signs the offer of employment, its terms are clearly explained to the employee. For example, in Dang v. North American Tea, Coffee & Herbs Trading Co., 3 the plaintiff was not asked to sign the offer that contained the probationary period document or acknowledge its receipt. The document contained a six-month probationary period and the plaintiff was dismissed approximately two weeks prior to the expiration of the six months. The plaintiff testified that he did not read the document and a probationary period was not mentioned in his discussions with the employer. The court found that the plaintiff was not probationary because the letter setting out the probationary period was vague, and the employee was not asked to acknowledge receipt. The court accepted the plaintiffs evidence that he only scanned the offer letter and understood that he was going to be a long-term employee. The court also noted that the plaintiff received a performance bonus during the probationary period and was allowed to participate in the benefit and profit sharing plans; these facts strengthened the plaintiffs belief that his employment would be long term. The plaintiff was awarded three months reasonable notice. These cases demonstrate the need for employers to make it very clear on hiring an employee that, first, the employee is subject to a probationary period and, second, during the probationary period, if the employee is not suitable, he or she can be terminated without reasonable notice.

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[2001] O.J. No. 447 (S.C.). Ibid., at para. 14. 3 (2002), 19 C.C.E.L. (3d) 312 (B.C. Prov. Ct.).
Labour and Employment Law Perspective, CBA National Labour and Employment Law Section newsletter, Nov. 2007

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The probationary period should be discussed with the employee at the time of hire, and also included in a written offer of employment, which the employee should be required to accept in writing. It should also be specifically brought to the employees attention to ensure that he or she is aware at the outset of being hired on a probationary basis. To further stress that the employee is probationary, the employer may want to withhold benefits and performance bonuses until the probationary period is complete. Cause for the Probationary Employee While an employer is required to have cause for terminating an employee with no reasonable notice, the standard to establish cause is lower for probationary employees than for regular, permanent employees. The standard articulated in Kirby v. Motor Coach Industries Ltd. 4 is still applicable today: 1. The onus is upon an employer to show that it has just cause to discharge even a probationary employee. Just cause may be that the employee is, in the opinion of the employer, unsuitable for a job. The unsuitability that would justify the termination of a probationary employee may extend beyond grounds applicable to regular employees, and may include considerations such as character and compatibility, as well as ability to meet the present and future production standards expected by the employer. Where a probationer has been terminated for unsuitability, the employers judgment and discretion in the matter cannot be questioned. All of the foregoing is subject to the requirement of the employer showing that the discharge was in the bona fide exercise of the employers discretion and judgment and not for some other reason or improper motive that would not justify a dismissal. 5

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This shows that just cause for a probationary employee can include consideration of suitability and involve assessments of the employees personality, including his or her ability to get along with others. 6 However, the courts remarks also recognize that the employer must act fairly and for bona fide reasons when making the decision to terminate. The employer cannot act in a discriminatory manner or take into account irrelevant considerations. The requirement to act fairly and reasonably is elaborated upon in Ritchie v. Intercontinental Packers Ltd. 7 as follows: Thus where such an employee...is fired, it seems to me that the only onus that rests upon the employer to justify the dismissal is that he show the court that he acted fairly and with reasonable diligence in determining whether or not the proposed employee is suitable in the job for which he was being tested. So long as the probationary employee is given reasonable opportunity to demonstrate his ability to work in harmony with others, his potential usefulness to the employer in the future, and such other factors as the employer deems essential to the viable performance of the position then he has no complaint. As for the employer, he

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(1980), 6 Man. R. (2d) 395 (Man. Co. Ct.); reversed on other grounds (1981), 10 Man R. (2d) 36 (C.A.). Ibid., at pp. 404-405. 6 See, for example, Jadot v. Concert Industries Ltd., (1995), 10 C.C.E.L. (2d) 13 (B.C.S.C.), upheld at (1997), 33 C.C.E.L. (2d) 29 (B.C.C.A.). 7 (1982), 2 C.C.E.L. 147 (Sask Q.B.).
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cannot be held liable if his assessment of the probationary employees suitability for the job is based in such criteria and a fair and reasonable determination of the question. In my opinion the law does not require the employer to do anything more. 8 However, employees must be provided with any training promised and must have a reasonable opportunity to prove they have the ability to do the job. 9 Obligation to Assess and Provide Feedback In addition to the obligation to provide both training and the opportunity for an employee to prove his or her ability, the employer must also assess the employee and provide him or her with feedback during the probationary period. For example, in Alexander v. Padinox Inc., 10 the employee had not met his production targets for the year and had difficulty getting equipment repaired properly. The employer successfully argued, at trial, that these two circumstances provided it with sufficient cause to terminate the probationary employee. However, the Court of Appeal overturned this finding and noted that the evidence revealed that the employer did not hold the employee solely responsible for the failure to reach his production targets but rather viewed it as a failure of the entire production team. Further, the equipment that was improperly repaired was not one of the employees responsibilities. The Court of Appeal noted that the employee was never formally evaluated with respect to his suitability or given any assessment regarding his abilities. The employee was not given an opportunity to prove he was suitable for permanent employment or provided with proper assessment by the employer; therefore, he was entitled to reasonable notice. The Court of Appeal found that the period of reasonable notice was the remainder of the probationary period of five months. The Court of Appeal noted that a probationary employee expects a reasonable and objective assessment of his performance and suitability for the position permanently, and also expects the relevant aspects of his employment to be evaluated regularly by the employer and discussed with the employee so as to give the employee an opportunity to correct any defective action. 11 The court also held that the scope of the evaluations and the opportunities to improve performance depend on the length of the probationary period. In Caissie v. Family and Childrens Services of Yarmouth County, 12 the plaintiff was hired as a social worker with a one-year probationary period. The employer completed written evaluations of the plaintiff after three months and six months, and the evaluations were reviewed with the plaintiff. In the evaluations, the employer noted that: the employee made promises to clients he could not keep, he did not have sufficient knowledge of the Family and Childrens Services Act, he had poor record keeping skills, and he spent excessive amounts of time talking and socializing in the office. Following the six-month review, the employer provided the plaintiff with a letter advising that he would be dismissed unless there was significant improvement. At the end of the two months, no improvements were noted and the plaintiff was terminated. The termination letter noted the various concerns outlined in the plaintiffs performance reviews. In concluding that the employer had acted fairly in terminating the plaintiff, the court noted that the employer had determined after the six-month review that the plaintiff could not satisfactorily fulfill the position and had given him an opportunity to improve. As such, the plaintiffs action for wrongful dismissal was dismissed.

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Ibid., at p. 153. Benson v. Co-op Atlantic (1985), 12 C.C.E.L. 186 (Nfld. Dist. Ct.), upheld at (1987), 15 C.C.E.L. 239 (C.A.). 10 (1999), 181 Nfld. & P.E.I.R. 317 (P.E.I.C.A.), reversing (1999), 175 Nfld. & P.E.I.R. (S.C.T.D.). 11 Ibid., at para. 24. 12 (1999), 175 N.S.R. (2d) 317 (S.C.).
Labour and Employment Law Perspective, CBA National Labour and Employment Law Section newsletter, Nov. 2007

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Therefore, in order for an employer to successfully show that an employee was unsuitable based on performance, and was properly terminated during the probationary period, the employer must have evidence that the employee was not performing well. The employer must also show that the employees shortcomings were brought to his or her attention during the probationary period, and that the employee was given an opportunity to improve. Without this evidence, employers may be found to have acted in bad faith when terminating such employees. In this regard, the test for terminating probationary employees for performance issues is somewhat similar to that for permanent employees. III. Unionized Employees

The Right to Grieve In addition to the above comments, unionized employees may have additional rights and protections under a collective agreement. Recent decisions have indicated that probationary employees retain the right to grieve their dismissal even if the collective agreement specifically excludes them from the grievance procedure. Labour relations legislation provides that all collective agreements must contain provisions for final and binding settlement, by arbitration or otherwise, of all differences between the parties arising out of the interpretation, application, administration or alleged violation of the collective agreement. In light of this statutory requirement, Canadian courts have held that, if a probationary employee has a substantive right under the collective agreement about which there can be a difference, any attempt to limit recourse to the grievance/arbitration procedure for final settlement of such difference will be void as being contrary to law. 13 Therefore, the objective of management when negotiating collective agreements is to ensure that probationary employees have no substantive rights in relation to their termination under the collective agreement so that there is no arbitral difference. 14 However, in Parry Sound (District) Social Services Administration Board v. Ontario Public Service Employees Union, Local 324, 15 the Supreme Court of Canada held that employment-related statutes are incorporated into every collective agreement, and that employers cannot contract out of their provisions. Further, arbitrators have jurisdiction to decide whether these statutes have been breached, even if no express provision of the collective agreement has been engaged. As such, probationary employees can always grieve the violation of an employment-related statute. In Parry Sound, a counsellor was dismissed during her probationary period, shortly after returning from her maternity leave. In response to a grievance alleging that the dismissal was discriminatory, the employer countered that, under the collective agreement, a probationary employee could be discharged at the sole discretion of the employer. The majority of the Supreme Court of Canada held that the Human Rights Code is part of every collective agreement and that violations of the Code are arbitrable. In its view, while there was no express provision in the collective agreement preventing the employer from discharging a probationary employee, the provision of the Human Rights Code which prohibits discriminatory discharges is an implicit term of all collective agreements. Therefore, a discriminatory discharge of a probationary employee constitutes a violation of the collective agreement and is arbitrable.

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See for example: Newfoundland and Labrador Association of Public and Private Employees v. Newfoundland (Treasury Board), [2003] N.J. No. 166 (C.A.). 14 For a case where the employer was successful in preventing the probationary employee from being able to grieve his termination see: United Steelworkers of America, Local 5385 v. Noranda Mining and Exploration Inc., [2002] N.B.J. 160 (Q.B.). 15 [2003] S.C.J. No. 42.
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In R.K. MacDonald Nursing Corp. and C.A.W.-Canada Loc. 2017 (Knox), 16 the arbitrator held that even if the probationary employee cannot grieve the issue of whether her termination was unjust, the matter is still reviewable by the arbitrator to determine whether the termination was: conducted in accordance with the principles of procedural fairness, reasonable, done in good faith, non-discriminatory, and not arbitrary. Therefore, regardless of the language in the collective agreement, the termination of a probationary employee will always be arbitrable on the issues of alleged breaches of employment-related statutes, procedural fairness, reasonableness, good faith, discrimination and arbitrariness. The Standard of Arbitral Review Generally speaking, for seniority-rated employees, an arbitrator may evaluate not only the basis for which discipline was imposed, but also the justness and reasonableness of the sanction applied, including whether or not the discipline imposed violated the collective agreement. However, given the underlying purpose of probationary status, it follows, at least on the issue of termination of employment, that unless the collective agreement provides otherwise, different tests or standards may be applied to the discharge of probationary employees. In Newfoundland and Labrador Association of Public and Private Employees v. Newfoundland (Treasury Board), 17 the Newfoundland Court of Appeal found that the following principles, which were adopted by the arbitrator with respect to the standard of review of the termination of a probationary employee, were reasonable and widely espoused: 1. Observing that the purpose of a probationary period is to permit the employer to review suitability, the review should be somewhat less rigorous than the review that follows the termination of a regular employee. The onus of justifying the discharge of any probationary employee rests upon the employer. The employer must affirmatively prove that the probationary employee was unsatisfactory in the sense that he or she does not meet the standards that are imposed for regular employees. The employer must not set unreasonable standards. The assessment of a probationary employee will not be satisfactory if such an assessment is carried out in a manner which arbitrary, discriminatory or in bad faith. 18

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IV.

Conclusion

In both the unionized and non-unionized workplace, it has become increasingly difficult to limit the remedies available to probationary employees on termination and to give the employer unfettered discretion to determine whether the employee is suitable for permanent employment. Employers

(2004), 126 L.A.C. (4th) 225 (Veniot). Supra, footnote 13. 18 For a discussion of what constitutes discrimination, arbitrariness or bad faith see: Re R.K. MacDonald Nursing Home Corp. and C.A.W., Local 2017 (2004), 78 C.L.A.S. 439 (Veniot). The concept of bad faith with respect to the termination of a probationary employee is also discussed in Loyalist College of Applied Arts and Technology v. O.P.S.E.U. (2003), 225 D.L.R. (4th) 123 (Ont. C.A.).
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Labour and Employment Law Perspective, CBA National Labour and Employment Law Section newsletter, Nov. 2007

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must carefully draft contract terms to ensure the probationary period is clearly defined and to give the employer sole discretion to ensure suitability. In the unionized workplace, limiting access to grievance and arbitration for probationary employees can be difficult. Clear language in the collective agreement that the termination of a probationary employee is not a grievable difference is needed. However, probationary employees will still be able to access the grievance and/or arbitration process if they allege a breach of human rights or other employment-related statute, and decisions to terminate probationary employees can be reviewed to ensure that they are procedurally fair, non-discriminatory, reasonable, done in good faith and not arbitrary. No contractual language can preclude such grievances. *Eric Durnford is a partner with the firm McInnes Cooper.

Labour and Employment Law Perspective, CBA National Labour and Employment Law Section newsletter, Nov. 2007