Probationary Period Definition
A probationary period is a timeframe to which an employer can terminate an employee without notice (i.e. severance). Probationary periods run from the start of the employment relationship to, generally, three months after employment started.
Probationary Period in Ontario
By default, employment relationships do not have a probationary period. Employers must put a probationary period clause in the employment contract to rely on a probationary period.
To that end, many employers will use a probation clause in an employment contract that outlines a probation period, affirming that a termination without notice (i.e. severance, termination pay, etc.) can occur before the end of the probation.
If an employer does not insert a probation period clause in the employment contract, or if the contract is silent regarding probation, then an employee terminated within three months of hire will be entitled to notice of termination (i.e. a severance package). Indeed, employees without a probationary period would be entitled to notice / severance even if they were terminated on the first day of employment.
In summary, employees in Ontario are not subject to a probationary period unless they have a contract that specifically says they are subject to a probationary period. However, to be subject to a probationary period per an employment contract, the probationary clause must be enforceable:
Enforceability of Probationary Periods in Ontario
Probationary period law: The existence of a probation period is a question of fact in each case. Since it takes away an employee’s usual rights to notice / severance / termination pay, a probationary period must be expressly agreed to by the employee in an employment contract. It cannot be implied into the relationship.
A probationary clause may not be enforceable if it is unclear and ambiguous. To avoid uncertainty and ambiguity, an employer should point out the probationary period to the employee at the time of hire. However, a simple probationary period clause that just said: “probation – six months” was held to be enforceable in one case.
Probation period rules: A probationary clause is not enforceable if it provides less than minimum employment standards. Under the Employment Standards Act, which provides minimum protections for employees in Ontario, an employee is eligible for notice of termination or termination pay if he or she has been continuously employed for three months or more by his or her employer. Thus, no probationary clause can limit notice of termination below minimum standards after three months is up.
If an employer would like a probationary period longer than three months, then it must promise at least provide minimum standards notice / termination pay / severance after three months during the probationary period.
Terminating an Employee During the Probationary Period
The standard for summary dismissal without notice from non-probationary employment is “just cause”. On the contrary, the standard for dismissal from probationary employment is the lesser threshold: “suitability”.
Probation is a testing period for an employer to assess a probationary employee’s suitability. It offers the employer an opportunity to determine if the employee will work in harmony with the organization if hired permanently. Suitability includes considerations of the probationary employee’s character, ability to work with others, and ability to meet the employer’s present and future standards (see Markey v Port Weller Dry Docks Ltd, 1974 CanLII 671 (ON SC), 47 DLR (3d) 7, 4 OR (2d) 12 at para 50.
Even still, a probationary employer should extend to the probationary employee a reasonable opportunity to demonstrate suitability for permanent employment.
Nevertheless, in the absence of bad faith, an employer is generally unfettered to dismiss a probationary employee without notice and without giving reasons. (see Markey v Port Weller Dry Docks Ltd, 1974 CanLII 671 (ON SC), 47 DLR(3d) 7, 4 OR (2d) 12 at para 63.)
Probationary Period Canada
Probationary period law is the same throughout Canada. However, while most provinces do not permit an employer to terminate an employee without notice within 90 days, three provinces/territories allow an employer to terminate an employee without notice within six months:
|Newfoundland and Labrador
|Prince Edward Island
Summary: Probation Periods
Employers are free to put probationary periods in employment contracts. However, the probationary clause should be directed to the attention of the employee, and it should be clear and unambiguous.
A probationary period can be as long as an employer wants. Most probationary periods are 90 days, but I have seen enforceable probationary periods as long as six months. However, regardless of the length of the probationary period, an employer must promise to pay termination pay if an employee is terminated on probation after, generally, three months. If a probationary employee is terminated before three months, no notice / termination pay / severance is owed.
An employee is free to terminate an employee on probation where the employee is not “suitable”. “Suitability” is the employer’s discretion, and a court will not question an employers decision to fire a probationary employee unless the employer acted in bad faith, failing to permit the probationary employee a reasonable chance to succeed.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.