Probationary Employment
Summary
Probation is, “a trial period during which the employer will review and evaluate the employee’ssuitability for ongoing employment.”
Probation is not implied, it must be established as part of an employment agreement in advance of the employee’s start date.
Probation may exceed three months. But a longer probationary period does not avoid minimum termination notice periods established under the Employment Standards Act, 2000.
A probationary employee may be released for bona fide reasons that do not violate a statutory protection.
Extension of probationary employment agreements may be considered constructive dismissal if imposed without consent of the employee.
Under the common law, there is no formula for notice period for a short-service employee who is not on probation.
Probation Defined
Probation may be defined as a trial period during which the employer will review and evaluate the employee to determine suitability for ongoing employment.Longshaw v. Monarch Beauty Supply Co. (1995), 15 C.C.E.L. (2d) 232 (B.C.S.C.), at p. 2401
Probation not Implied
A probationary period will not be implied into a contract of employment and automatically imposed on the employee. In order to create a probationary period, the condition must be stipulated in the offer of employment and agreed upon before the employee starts to work.
If the employee accepts an oral offer of employment that does not specify a probationary period, then the deal has been made and no probationary period appliesLalingo v. A & A. Jewellers Ltd. (1997), 27 C.C.E.L. (2d) 211 (Ont. Gen. Div.), where notice was 4.5 months.2. The onus is on the employer to prove an alleged probationary term. From a legal perspective, an employer may not unilaterally impose probation after the fact.
Even if there is a company policy that stipulates all new employees are on probation, a court will look to the circumstances of the hiring in question to see if the policies were communicated to the employee and incorporated into the employment contract before the employee accepted the jobLalingo v A & A. Jewellers Ltd.(1997), 27 C.C.E.L. (2d) 211 (Ont. Gen. Div.) at pp. 216-217, where company policies were not brought to the employee’s attention prior to hiring.3.
As a practical matter, many employees will not object to the addition of such a provision after hiring for any number of reasons. The employee may have mistakenly assumed that probation is automatic. The more likely explanation is probably that the employee needs the job and is not going to “make waves” during the proverbial “honeymoon period”. However, there are circumstances where an employer’s attempt to impose probation retroactively may not be passively accepted.
No Three-Month Limit to a Probationary Period
The common law flows from court decisions. It does not impose any limit on the duration of a probationary period.
Historically, the common law did not oblige an employer to give notice to terminate an employee on probation. However, in modern times, this has been moderated by legislation.
TheEmployment Standards Act, 2000(Act)Employment Standards Act, 2000, section 54.4 , establishes a minimum statutory notice for all employees depending on their length of service.
To be clear, the Act does not create a probationary status for employees. Rather it says that no minimum notice is required for employees with less than 3 months serviceEmployment Standards Act, 2000, ss. 57(1)(a).5. After the third month of employment, the Act imposes a minimum requirement on the employer to give one (1) week’s statutory notice or termination pay.
Given the interplay between the common law and the Act, probationary periods will generally run for the first three (3) months of employment because the Act allows for termination without notice during that time-frame.
In some cases, the nature of the employee’s position makes it prudent to establish a probationary period in excess of three months. This is permissible as long as the rules for termination of the probationary employee comply with statutory requirements.
For example, if the contract included a six-month probation period, an employer’s decision to terminate the probationer after the third month would require the employer to give at least one week’s written notice or termination pay plus accrued vacation pay calculated in accordance with the Act.
As well, if the probationer had enrolled in an employer-sponsored benefits plan, the employer would be required to maintain benefits contributions and coverage in accordance with legislated requirements.
Onus and Standard of Cause on Termination
The onus will be on the employer to prove that it terminated the employment of a probationary employee for causeSometimes referred to as “just cause.”6.
It is generally understood that the test for cause is lower for probationary employees than it is for employees who were not hired on (or have passed their) probation. Beyond that, the legal waters tend to become a bit murkyFor a detailed analysis of just cause as it applies to probationers see: Just Cause – The Law of Summary Dismissal in Canada, Echlin, Randall Scott and Certosimo, Matthew, Canada Law Book Inc., 19987.
The leading case in this area is Ritchie v. Intercontinental Packers LtdRitchie v. Intercontinental Packers Ltd. (1982), 2 C.C.E.L. 147 (Sask. Q.B.).8.
Referring to Ritchie, the Court had the following to say about the onus and standard as it applies to probationary employees:
The employer is still required to show just cause but there is a lower standard as to what will constitute cause. A probationary employee can be dismissed if he is simply found not to be suitable. If the employee does not meet the standards of conduct reasonably imposed by the employer, he can be terminated in the probationary period. Similarly, a probationary employee who proves not to be compatible with the nature of the workplace or with other employees in the workplace can be terminated. All of this, of course, is subject to the requirement of the employer acting in a manner that is bona fideMiguna v. African Canadian Legal Clinic (1996), 18 C.C.E.L. (2d) 131 (Ont. Gen. Div.), at p.135.9.
In broad strokes, Ritchie can be used to support the following key points:
- The employer may evaluate suitability and/or compatibility (which involves an element of subjectivity).
- In doing so, it must impose reasonable standards of conduct (which imposes objective limits).
- Standards of conduct must be communicated to the probationary employee at the time of hiring.
- The probationary employee must be given a fair opportunity to meet those standards and should be reasonably informed (or warned) about his/her progress (or lack thereof) during the trial period.
- In assessing the probationary employee, the employer must make its determination for untainted valid reasons.
In light of this, an employer should be careful to consider and list the work-performance criteria at the outset of the relationship in the offer of employment. To avoid tainting its determination to dismiss, the employer must actually evaluate the employee against those criteria – and not other onesLongshaw v. Monarch Beauty Supply Co. (1995), 15 C.C.E.L. (2d) 232 (B.C.S.C.) where the decision to terminate the probationer was found not to be in good faith because it was made on criteria different from those established at hiring.10.
In sum, the common law requires that the employer provide a probationer with a “fair, honest and valid assessment” of his/her competence and suitability for ongoing employmentCanadian Employment Law, Ball, Stacey Reginald, Canada Law Book Inc., 1997, p. 11-45.11.
Unilateral Extensions of Probationary Periods
Strictly speaking, an employer may not unilaterally extend a probationary period without the consent of the employee. To do so would arguably constitute a constructive dismissal. However, in most cases, the imbalance between the bargaining power of the employer and employee will usually result in the employee acquiescing in, or actively accepting, the extension by continuing to work for the employer. Having done that, the employee would be hard-pressed to subsequently assert a claim for constructive dismissalMiguna v. African Canadian Legal Clinic (1996), 18 C.C.E.L. (2d) 131 (Ont. Gen. Div.), at p.134.12. In addition, the employee who stays on in such circumstances will likely be found, in any event, to have mitigated most, if not all, their damages arising from an alleged constructive termination.
Notice Considerations
Where the employer does not prove the dismissal of a probationary employee for cause, it will be liable to provide notice or compensation in lieu of notice. If the employment contract is silent on the subjectof notice entitlements, the common law will imply an obligation to provide reasonable notice based on legallyrelevant factors such as the employee’s age and nature of the positionBardal v. Globe & Mail (The), [1960] O.W.N. 253, 24 D.L.R. (2d) 140 (H.C.J.): 1. Character of Employment; 2. Length of Service; 3. Age of the Employee; 4. Availability of similar employment, having regard to the experience, training and qualifications of the employee. See also, Bramble et al v. Medis Health and Pharmaceutical Services Inc. (1999), Can LII 13124 (NB CA), where the Court discussed that factors will be relevant based on actual evidence of the particular case.13.
By definition, length of service of a probationer will be short. In these cases, other factors such as recruitment from other employment and the employee’s actual period of unemployment will carefully considered by the court and may well result in a significant notice period.
For example, in Lalingo v A & A. Jewellers Ltd(1997), 27 C.C.E.L. (2d) 211 (Ont. Gen. Div.).14., the Court found that the employer had not established a probationary period before the employee was recruited from their other employer. The Court awarded notice of 4.5 months, taking into account an actual period of 9.5 months of unemployment for the employee.
In Longshaw v. Monarch Beauty Supply Co(1995), 15 C.C.E.L. (2d) 232 (B.C.S.C.).15., the employer’s termination decision was not found to be in good faith because the termination was based on criteria that differed from the criteria that were established at time of hiring. As there was no just cause, it awarded the probationer a 6-month notice period.
While in many cases, the notice period for a short-service employee will not be longer than a month or two, there is no formula that limits the notice period as the two above examples show.
Escape Hatch
An employer may avoid the uncertainty of assessing and applying the lower standard of cause for probationary employees by incorporating a specific notice period in the employment contract. For example, the parties may agree at the outset to a moderate notice period if the employer terminates employment for reasons other than cause during the first three to six months.
This would enable the parties to end their relationship at a cost that the employer can presumably afford without arguing over cause.
By the same token, establishing a specific contractual notice period for the short term would not affect the employee’s longer-term entitlement to “reasonable notice” if the employment ends outside this initial period – unless the termination provisions of the contract expressly address the event of a termination after the successful completion of the employee’s probationSlater v. Sandwell Inc.(1994), 5 C.C.E.L. (2d) 308 (Ont. Gen. Div.).16.
Just as with other contract terms, care must be taken to ensure that the termination clause in an employment agreement complies with minimum legislated requirements – for example in relation to notice, provision of vacation pay and continuation of insured benefits coverage or contributions.
Conclusions
Cases dealing with probationary employeesrarely end up in court as they generally involve short service employees who may not have a significant notice entitlement.
Where an employer asserts cause to terminate a probationer, it will have to prove the probationary status and the existence of cause. The standard for cause for aprobationary employeesis lower than that applied to regular employees. However, from an evidentiary standpoint proving that the employer made “fair, honest and valid assessment” is not an easy task – especially where the measurement criteria are vaguely established or extremely subjective. It may be more cost-effective for the employer and more predictable for the employee of they on a sensible notice provision allowing the employer to terminate without cause on giving notice or pay in lieu of notice in accordance with minimum legislated requirements.
This article is for general information only. It is not intended to provide legal advice for any particular situation and should not be construed as doing so.