Probationary Period Rights in Ontario: Everything You Need To Know

Probationary clauses are a common feature in employment contracts. These clauses provide employers with a “trial period” to assess an employee’s suitability for a role. However, understanding the legal framework and best practices surrounding probationary clauses is crucial for both employees and employers. In this blog, we will delve into the specifics of probationary clauses, their implications, and how they should be drafted to ensure enforceability.

What is a Probationary Clause?

A probationary clause is a provision in an employment contract that allows an employer to terminate an employee during a specific period, usually without notice or severance pay. This period is typically used to evaluate the employee’s performance and fit within the organization. In Ontario, there is no automatic probation period; employers must explicitly include a probationary clause in the employment contract to utilize this provision.

Legal Framework in Ontario

Ontario’s Employment Standards Act, 2000 (ESA) does not mandate a specific probationary period. The ESA does state that an employer shall not terminate an employee without providing notice or pay in lieu if they have been continuously employed for three months or more, although this is not explicitly a mandate for a probationary period:

  • No employer shall terminate the employment of an employee who has been continuously employed for three months or more unless the employer,
  • Has given the employee written notice of termination in accordance with section 57 or 58 and the notice has expired; or
  • Has complied with section 61.

If an employee is terminated during a probationary period that exceeds three months, they may be entitled to termination and/or severance pay, depending on the terms of the contract and applicable laws.

Legal Enforceability of Probationary Clauses

The Ontario Court of Appeal has addressed the enforceability of probationary clauses in Nagribianko v. Select Wine Merchants Ltd. This case highlights that even a brief probationary clause can be enforceable. The contract included a simple clause stating “Probation…Six months,” which was deemed sufficient to oust common law reasonable notice if the employee was terminated during this period. The court held that the term “probation” has a clear meaning at common law, allowing termination without notice if the employer determines the employee is unsuitable for permanent employment.

Key Considerations for Probationary Clauses 

To ensure enforceability, a probationary clause must be clearly stated in the employment contract. The language used should be straightforward to avoid ambiguity. Compliance with the ESA is also essential to ensure that the clause meets the minimum standards prescribed by law. The duration of the probationary period should be clearly defined to prevent misunderstandings. Generally, probationary periods are three months long, but if an employer chooses a longer period, they must provide notice or pay in lieu of notice before terminating the employee as required by the ESA.

Performance Measures

During the probationary period, the employer can assess the employee’s skills, performance, and suitability for the position. It is important for employers to exercise their contractual duty of good faith when performing these assessments. This includes providing clear expectations and feedback to the employee. Employers should also maintain detailed records of performance evaluations and any issues that arise during the probationary period.

Can a Probation Period be Extended

There may be cases where extending the probationary period is necessary to continue assessing an employee’s suitability. However, employers must ensure that the employment contract clearly states that the probationary period can be extended. Otherwise, extending the probationary period without such provision could be considered a constructive dismissal. Employers should communicate any extensions clearly to the employee and ensure that the extension is reasonable and justified.

Termination During Probation

Terminating an employee during the probationary period can be less complex than terminating a full-time employee, because it typically doesn’t attract notice or pay in lieu of notice obligations. However, employers must ensure that they are complying with the terms of the employment contract and the ESA. Again, if an employee is terminated during a probationary period that exceeds three months, the employee is likely entitled to notice or pay in lieu of notice pursuant to the ESA.

At Levitt LLP, we are dedicated to assisting employees and employers with issues that arise in the workplace. Whether it’s about probationary clauses or any other employment-related issue, our experienced team is here to advocate for you. Contact us for a consultation and take the first step in creating your ideal contract.

Please note that this article is only to be used as general information, and it does not constitute legal advice. We encourage employees and employers to contact Levitt LLP directly to understand provincial employment contracts better and seek legal advice to their questions.