'You Gotta Have (Good) Faith' ... Terminating Without Notice During The Probationary Period

A recent decision from the Supreme Court of British Columbia, Ly v. British Columbia (Interior Health Authority) 2017 BCSC 42, provides helpful clarification of the law on termination of probationary employees on the basis of "suitability" and sends a cautionary note about the importance of fair and objective assessments during probationary periods. Considered in concert with a recent case from the Alberta Court of Appeal, it may be more predictable for employers to rely on a well-drafted termination clause and simply terminate without cause, instead of rolling the dice and terminating without notice based on a probationary employee's "unsuitability".

The facts

Mr. Ly was hired as the Quality and Patient Safety and Client Experience Manager at the Interior Health Authority ("Health Authority") in November 2014. He was terminated 2 months later, in January 2015, without notice, pursuant to the probationary clause in his employment contract on the basis that he:

Took no time to learn about the department; Disregarded the direction of his supervisors; Had insubordinately imposed his vision of how things should be done, which impacted morale and employee retention in the department; and Failed to take steps to fully and clearly comprehend the expectations of him. The probationary clause at issue was simple and provided:

"Employees are required to serve an initial probationary period of six (6) months for new positions".

There was no termination clause in Mr. Ly's employment contract. At trial, Mr. Ly alleged that his employment contract did not contain a valid probationary period, the probationary clause violated employment standards legislation, and that he was wrongfully dismissed on the basis that the Health Authority did not conduct a good faith assessment of his suitability.

The decision

Justice Morellato held that the probationary clause in Mr. Ly's employment agreement was valid - meaning that he could be dismissed without notice during the probationary period, provided the Health Authority acted in good faith in its assessment of his "suitability". However, the Court held that the Health Authority had not carried out a good faith assessment and awarded 3 months' notice on the basis that:

Mr. Ly made genuine and concerted attempts to better understand the expectations and standards upon which he was assessed; the Health Authority did not respond to these attempts with sufficient clarity. The workplace was complex and there was...