Terminating a Probationary Employee? Not So Fast…

April 5, 2017

The recent decision of Pound v. iWave, 2016 PESC 39 (CanLII), is a good reminder for employers of the requirements to dismiss an employee during a probationary period.

In this case, the Employee accepted a written offer of employment on various terms.  The offer also stipulated:

Your employment will be probationary for the first 3 months. The purpose of this probationary period is to assess your skills, performance and your ability to work in harmony with others in the organization, and to take appropriate action to ensure the company’s success.

The Employee was terminated two weeks before the end of the probationary period and brought an action for wrongful dismissal against the Employer.  A number of issues were considered at trial including whether the Employer fulfilled its common law obligation with respect to a probationary employee?

To answer this question, the PEI Supreme Court followed the principles set out in the leading case on the determination of rights for probationary employees in PEI, Alexander v. Padinox Inc. [1999] P.E.I.J. No. 88, which are summarized below:

  • Employer must show cause to justify the dismissal of a probationary employee.
  • “Cause” for probationary employees is a lower standard than what is required to terminate regular employees (e.g. unsuitability of character, compatibility and the employee’s ability to meet standards of conduct reasonably imposed by the employer).
  • The employee must be given a reasonable opportunity to demonstrate his or her ability to meet the standards the employer sets out when hired, including not only a testing of skills, but also the ability to work in harmony with others, potential usefulness to the employer, and other factors as the employer deems essential.
  • “Cause” is satisfied if the assessment of the probationary employee’s suitability for the job is based on the criteria above and determined fairly and reasonably.

In consideration of all the evidence (witness testimony, letters and email exchanges), the Court concluded that the following actions were properly taken by the Employer in advance of the termination:

  1. The Employer informed the Employee via the letter of dismissal that it no longer wished to continue beyond the probationary period. Although not extensive in nature, the letter of termination did provide a reason for the dismissal.
  2. The employment offer described the purpose of the probationary period as a period in which the Employer could measure the Employee’s skills, performance, and ability to work in harmony with others in the organization, and to take appropriate action to ensure the company’s success.
  3. The Employer provided constructive feedback to the Employee during the probationary period in accordance with an orientation plan, which set out the job standards and a process for feedback during the probationary period. Although there were examples of both positive and negative feedback, the evidence in its entirety showed that the employer found the employee to be unsuitable for the position in the long term. The Employee was advised of these shortcomings in a sensitive way, but without success.
  4. The Employee was given the reasonable opportunity to demonstrate his ability to perform the tasks as requested.

In light of the above, the Court found that the Employer discharged the limited onus on it to justify the Employee’s dismissal.  “Cause,” with respect to a probationary employee, is a lower standard than “just cause” respecting a permanent or regular employee.   In this case, unsuitability for the position was sufficient and the Employer reasonably and fairly reached that conclusion by taking various opportunities to assess performance and provide feedback to the Employee in accordance with the orientation plan.  As such, the Employer fulfilled its common law obligation to the probationary employee.

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