Employee probation periods: an update

The Act aims to promote fair treatment of employers and employees by providing minimum standards of employment, by establishing procedures and notice periods for the termination of employment, and by providing employees with protection against unfair dismissal.

In June 2021, a number of changes were made to the Act, the motivation for which was to ensure that Bermuda’s legislation is in line with international best practices.

Prior to the amendments, there were no statutory limits on the length of an employee’s probation period. Also, employers had an option to terminate employment during probation for any reason and without notice.

Effective June 1 last year, the key differences concerning probationary periods are:

• A new or promoted employee may be required to serve a probationary period of not more than six months, commencing on the date of their employment or promotion;
• An employee is entitled to receive from their employer a review of their performance, on or before the completion of the first half of their probationary period;
• An employer may, before the expiration of the initial probationary period, and only after conducting the performance review mentioned in the preceding point, extend the probation period for a maximum of three months;
• During the probationary period, including any extension, employment may only be terminated without notice by the employer for a reason relating to the employee’s performance review, performance, conduct, or the operational requirements of the business — although this does not apply to employees serving a period of probation after a promotion.

These changes limit an employer’s ability to use probationary periods to dismiss staff, and provide an added layer of legal protection for employees on probation as employers are now only able to terminate without notice for specified lawful reasons.

Before the introduction of these amendments to the Act, employers were able to dismiss employees during their probation period without needing to justify the decision with a reason — such as misconduct or poor performance.

Issues have arisen as a result of employers failing to hold the required performance review halfway through the probation period.

Consequently, there have been challenges pursuant to this aspect of the amended legislation before Bermuda’s Employment and Labour Relations Tribunal.

In a recent decision by the tribunal, it was found in the employee’s favour that the employee had been unfairly dismissed due to the failure of the employer to follow the statutory requirements – specifically, failing to provide a mid-probation performance review.

The tribunal ruled that the employee was unfairly dismissed and awarded the employee:

• 16 weeks’ wages;
• “Notice pay” of one month — the tribunal noted that it considered the notice period inappropriate for an employee so senior in an organisation;
• Payment for 4.5 vacation days, prorated for the time employed;
• Payment for other benefits.

Employers must ensure that they understand and comply with the amendments to the Act in order to avoid unlawful dismissals.

When revising contracts, employers should carefully review them to ensure that the wording of any probation clauses complies with the amended legislation.