Probation
When hiring new workers, employers often start with a period of probation to assess if the new hire will be a good fit. The idea is that if it isn’t a good fit, the employee’s employment will be terminated with little or no severance.
Our courts have ruled that employers have a general duty to act in good faith towards employees at the time of dismissal. Our courts have also ruled that an employer has the implied contractual right to dismiss a probationary employee without notice and without giving reasons, if the employer acts in good faith in assessing the employee’s suitability for the permanent position. While an employer doesn’t have to prove just cause, this duty to assess suitability may require giving the employee a fair chance to demonstrate their skills and fit for the position.
If the employer doesn’t act in good faith in assessing the employee’s suitability for the permanent position, an employer may not be able to dismiss the employee without providing notice or severance (see here for more information on calculating severance).
In short, using the word “probation” doesn’t actually give an employer carte blanche to dismiss an unsuitable employee without notice or severance. Using the word “probation” means that an employer must act in good faith when assessing the new hire’s suitability. While an employer is always obligated to act in good faith, absent the word “probation” there is no such obligation to assess suitability, or to give an employee a fair chance to demonstrate their skills and fit for the position.
Employers should evaluate why they want to place an employee on probation before using probationary periods by default. If an employer truly intends to set clear expectations for the probation period, provide regular, constructive feedback to the employee, and specific guidance if an employee’s performance is falling below expectations, then a probationary period may be useful. However, if an employer’s goal is to minimize the notice or severance that must be paid if a new hire isn’t working out, this goal may instead be met with a well-drafted termination clause in a written contract.
