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Have an Employee on Probation? Make sure they have a contract

By March 31, 2017September 30th, 2019Employment Law

I just read a good case out of British Columbia that still has an effect here in Ontario – and I know applies to Dentists (who hire employees on probation without a written contract).

Many dentists I speak to want to put their team members on contract once they have completed their probationary period.  I consistently tell them that the contract needs to be in place (signed, sealed, delivered!) before the first day of work, so that they can be protected by the contract (and the termination clause).

Well, for an employer in BC, they tried doing this, but failed miserably (see 2017 BCSC 42)

The BC Case (Ly v. British Columbia (Interior Health Authority))

A new employee signed an employment contract with the employer, which had a long (6 month) probation period and no termination provision. After about 10 weeks, the employer terminated the employee.  Since it was less than three months, the employer provided no notice or pay in lieu of notice of termination.

Even though the employee had only worked for a very short period of time, they sued their former employer – and won.

Without a termination provision in the contract, the judge’s main concern was whether the employer had a duty to act in good faith when assessing the employee’s suitability, considering factors such as whether the employee was made aware of the basis for the employer’s assessment of suitability, whether the employer acted fairly and with reasonable diligence in assessing suitability, and whether the employee was given a reasonable opportunity to demonstrate their suitability.

The Judge ultimately determined that the employer did not act in good faith and the employee was entitled to common law reasonable notice of three (3) months.

Yes – an employee who had worked less than 3 months was entitled to 3 months of pay upon termination.

This is why I stress that a solid, reasonable termination clause (limiting employees to the termination entitlement under the legislation) is always important to have for every employee – including probationary employees!

Without it, you can run into legal trouble down the road – and end up paying for it too.