Ontario: Employer Can Dismiss Probationary Employee Without Reasonable Notice

Employer made good-faith determination that employee was not suitable for position

By Frank B. Portman Mar 4, 2016
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A probationary employee can be dismissed without reasonable notice as long as the employer has acted fairly in determining whether the worker is suitable for the position, an Ontario divisional court ruled.

The Ontario Employment Standards Act (ESA) provides for a three-month period in which no minimum notice is required for termination. Often, employers in Ontario will adopt a three-month probationary period in light of this. However, this period may be insufficient to properly assess a new employee’s suitability. What if an employment agreement provides for a longer probationary period, but fails to expressly state what entitlements an employee would have in the latter part of that period—i.e., after the statutory three months?

Employee Terminated After Four Months

An employee terminated after four months of employment filed a wrongful dismissal claim in the Ontario Small Claims Court. The parties agreed that the employment contract provided for a probationary period of six months.

Employee entitlements to “reasonable notice at common law” are not based on a formula, but by a case-by-case assessment of various factors, such as length of service, age, nature of the position and re-employment prospects. In this case the employee was awarded four months (pay in lieu of) reasonable notice.

The employee handbook, which provided for termination during the probationary period on the minimum entitlements set out in the ESA, was not given to the employee until after he began working for the defendant. At trial, the court found that the employer could not rely upon the notice limitation clause in the handbook, due to a lack of fresh consideration. As a result, absent an express agreement concerning the employee’s entitlements during the latter three months of the six-month probationary period, the court held that the employee was entitled to common law reasonable notice.

The employer appealed.

Divisional Court Finds No Right to Reasonable Notice

The Divisional Court held that a probationary period is a well-understood concept: It is a period during which the employer and employee determine whether the employee is suitable for the position. It is understood as a period of minimal job security. During a probationary period, an employer need only act fairly in determining whether an employee is suitable for the position. If it has acted in such a manner, the employee can be dismissed without further notice and without being provided reasons.

As a result, a reasonable person in the circumstances of the plaintiff would have understood the risk and the circumstances of the less-stable employment relationship of a probationary period, even without having seen the employee handbook. On the basis of this understanding, once the employer made the good-faith determination that the plaintiff was not suitable for the position, it was entitled to terminate the plaintiff’s employment without reasonable notice at common law.

Nagribianko v. Select Wine Merchants Ltd., 2016 ONSC 490 (CanLII).

Professional Pointer: Employers would be well-advised to assess whether they require longer probationary periods than the three months set out in the Ontario Employment Standards Act to assess the suitability of candidates. Courts will typically respect probationary periods of reasonable length and will enforce limitations on employee entitlements for dismissal during such periods.

Frank B. Portman is a lawyer with the firm of Stringer LLP, the Worklaw® Network member in Toronto.

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