Canadian HR Reporter

CANADIAN HR REPORTER March 20, 2017 8 NEWS EmploymentSource™ Works as hard for you as you do for your clients Our premier employment content on WestlawNext® Canada is integrated with relevant case law, legislation, expert commentary and legal memos, allowing you to manage your practice in the most efficient way possible. It's the complete mix of resources you need to confidently advise on compliance, defend occupational and health and safety charges, or prepare successful dismissal or termination strategies. Search across multiple content types simultaneously Instantly evaluate what a claim is worth with the Wrongful Dismissal Quantum Service, an interactive service with report-building functionality Review exclusive commentary by Canada's foremost employment and occupational health and safety law experts Start ahead − and stay ahead − with our exclusive collection of legal memoranda Keep current with two leading employment and dismissal law newsletters and digests For a free demonstration, call 1-866-609-5811 or visit westlawnextcanada.com/employmentsource 00233WZ-52632 manager of quality and patient safety and client experience, with a team of six consultants and an administrative assistant. His offer letter stated his salary would be $98,000 and he would be required to serve an initial probationary period of six months. Ly's employment contract in- cluded a "valid and enforceable" probationary term, said the court in the Jan. 11 decision Ly v. British Columbia (Interior Health Au- thority), and the province's Em- ployment Standards Act (ESA) stated an employee was only enti- tled to one week's wages for com- pensation after three consecutive months of employment. IHA's probationary period was six months but it relied on the ESA's exemption to minimum notice pe- riods of "just cause," saying this in- corporated or subsumed the stan- dard of "suitability" typically applied to probationary employees. So employees who were as- sessed in good faith to be unsuit- able fell within the exemption. But suitability is the standard upon which probationary em- ployees are assessed, while just cause is the standard courts have established for non-probationary or "regular" employees, said the court. More importantly, IHA did not meet its legal obligation to carry out a good-faith assessment of Ly's suitability for continued employ- ment. Accordingly, the former manager was entitled to an award of damages based on reasonable notice of termination — three months' pay — along with addi- tional damages relating to various expenses incurred during the job. Reasonable notice Because Ly's contract did not set out his notice or severance rights on dismissal, he was entitled to damages under common law, cal- culated based on what would have been "reasonable notice" of his termination in the circumstances, said Brandt. "Ultimately, they had a clause that said, 'You're on probation for six months' but there was no severance-limiting component to it, so they added in an obligation on themselves to assess suitability in good faith without tying that to any severance expectations," she said. "(e court) put (its) foot down and said there's nothing in the leg- islation to suggest just cause en- compasses lack of suitability." ere's a very high threshold for an employer to show it has just cause to terminate someone, according to Laurie Jessome, a partner at law firm Cassels Brock in Toronto. "Just cause is all about whether or not the employee engaged in some kind of misconduct that makes continued employment impossible, essentially. So you're really focused on particular in- cidents and whether or not they happened and the extent to which they impacted your ability to con- tinue working with the person. A suitability analysis is much more fuzzy." If an employer is going to have a probationary period, it needs to understand there's a certain obli- gation that comes with that, said MacLeod. "e Supreme Court basically said, 'You have to be very clear if you're going to take away some- one's right to reasonable notice at termination.'" Good faith assessments In determining whether an em- ployer acted in good faith, its conduct is viewed in light of sev- eral factors, said the court: Was the employee made aware of the basis of the assessment before or at the start of the work? Did the employer act fairly and with reasonable diligence in assessing the employee? Was the employee given a reasonable opportunity to demonstrate his suitability? Was the employer's decision based on an honest, fair and reason- able assessment, including his job skills, performance, charac- ter, judgment, compatibility and reliability? While Ly made several attempts to better understand the basis for his employer's assessment of his suitability, his efforts were not responded to with clarity by the IHA, said the court. "Ly was simply not given a rea- sonable opportunity to demon- strate his suitability for his job as manager." Suitability is a completely grey area and every case is going to require contextual analysis as to what happened within the employment relationship, said Brandt. "You're going to have to go into what was communicated to the employee at the start and: Were they given an opportunity to meet those expectations or did the em- ployer change their expectations? Did the employer promise one thing and then determine suit- ability based on entirely different factors?" In this case, "the email re- cords were incredibly important to show that the employee had reached out to the employer on multiple occasions to try and set up meetings and to try and learn about the workplace and try and integrate himself," she said. is case is a good example of the detail a court will get into, such as email exchanges, discus- sions and meetings, said Jessome. "(ese) were all fodder for ex- amination to determine whether or not the decision had been made fairly." Terminating someone during a probationary period and show- ing that you did so in good faith "invites a level of scrutiny to the decision to terminate that you don't usually see, with the excep- tion of just cause termination," she said. "e courts feel as though it is their obligation to review and second-guess all the managerial decisions that were made with re- spect to that particular employee." Tips for employers Employers should think long and hard about whether they need a probationary clause, said Mac- Leod. Usually, they want one so they can terminate someone with no notice, not because they want to assess a person's suitability. "So I say, 'Well, there's more than one way to skin a cat and we can deal with that in the termina- tion clause,'" he said. "(It) provides certainty so when someone is ter- minated, both sides know what the obligations are." "Otherwise, you're left with a big fight about what reasonable notice is, and reasonable people can disagree significantly on what reasonable notice should be." If employers put in a termi- nation clause that reflects ESA minimums, they don't need a probationary period, he said, "be- cause you can terminate in the first three months with no notice and you don't have to assess their suitability." Having a probationary period communicates that there are ex- pectations, that there will be a pe- riod of assessment, and that having been hired, a person is not auto- matically in place for any guaran- teed period of time, said Jessome. "However, as we've seen from this case and other cases as well, they do invite judicial scrutiny if you rely on them and you're not prepared to offer a reasonable sev- erance package. So the preferred route, from a purely legal risk management perspective, would be to have a tight and enforceable termination clause that allows you to exit from the relationship with a minimal cost, particularly in the first year or so of service." If an employer feels strongly about having a probationary pe- riod because of the nature of its business or it onboards many new hires, it's important to have the right system in place to support it, she said. "It doesn't have to be overly elaborate but it should have key elements, as in a regular check-in, documented feedback from the employer to the employee, and re- cording the employee's response to that feedback." If an employer does want a pro- bationary clause, it should make sure the clause is in compliance with the ESA alongside clear ex- pectations, said Brandt. "Compliance with the ESA is the first step because if you're off- side the act, then the paper's not worth what it's written on." "As an HR best practice, if you're assessing someone based on the suitability standard, I think that implies an obligation to have meetings and followup with the employee to assess their ongoing suitability," she said. "You don't want the employee surprised at the conclusion of the probation- ary period that they didn't meet the suitability standard." Employee suitability grey area: Lawyer PROBATION < pg. 1 "If you're offside the act, then the paper's not worth what it's written on."

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