This article will explore the meaning of “probationary period” that employers often use in their employment contracts and answer some of the most common questions that you may have about this period.
Q: What is a probationary period?
A probationary period refers to the period that employers utilize to evaluate whether a new employee is a proper fit for a job. Employers can terminate the employee during this period without proving any notice or pay in lieu. It generally runs for three months, but could be longer.
Q: Is there a mandatory three-month probationary period under the Employment Standards Act?
No. Under the Ontario Employment Standards Act, 2000 (“ESA”), there is no statutorily defined term. Thus, probationary periods are creations of employment contracts rather than being statutorily mandated. Employers must insert a probationary period clause in the employment contract to rely on this.
Q: Is a probationary clause always enforceable?
No. If a probationary clause in the employment contract provides less than minimum entitlements under the ESA, it is not enforceable.
According to the ESA, employers shall not terminate an employee without providing notice or pay in lieu if they have been continuously employed for three months or more. Therefore, within the first three months of hire, employers are allowed to terminate the employee without providing any notice or pay in lieu.
If there is a probationary period longer than three months under the contract, employers must provide at least the ESA minimum notice or pay in lieu if they terminate the employee without cause after three months during this period.
Q: There is no probationary period clause or the clause is ambiguous in my employment contract. What am I entitled to if I am terminated by my employer?
Where the employment contract does not have a probationary period or any explicit language regarding notice entitlements in the period, you are entitled to reasonable notice or pay in lieu, even if you are terminated within the first three months of your employment.
Q: What is the standard for dismissal of a probationary employee?
The standard for dismissal of a probationary employee is suitability. In Nagribianko v. Select Wine Merchants Ltd. 2017 ONCA 540 at para 6, the Court noted,
“the status of a probationary employee has acquired a clear meaning at common law. Unless the employment contract specifies otherwise, probationary status enables an employee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for permanent employment, and provided the probationary employee was given a fair and reasonable opportunity to demonstrate their suitability.”
Under the common law, employers must act in good faith throughout the employment relationship. The employer’s conclusion must be a reasonable one and properly motivated. They may take into consideration factors such as character, compatibility and an ability to meet the present and future production standards expected by the employer.
It is improper for employers to reach its conclusion to dismiss an employee before the employee has been given a fair opportunity to demonstrate his or her ability.
Q: What are the probationary period advice for employers?
If you wish to provide a probationary period to employees with reduced or zero obligation to provide notice or pay in lieu during the initial three months, this should be clearly set out in the employment contract.
For this clause to be effective in court, the agreement should describe the length of the probationary period. It should also determine the notice period or pay in lieu that will be provided if the employee is terminated.