Probationary Employees and Termination – What You Need to Know:

What is a Probationary Employee?
Numerous employers hire employees on a probationary term to assess and evaluate the suitability of a new hire.

One does not automatically become a probationary employee upon commencing work for their employer. An employee must first agree to becoming a probationary employee, the terms of which are set-out in the employment contract. In Ontario, while employers usually dictate that the employee’s probationary period will last for 3 months in order to relieve themselves of statutory notice of termination or pay in lieu thereof, employers can extend the probationary period subject to an agreement by both parties.

While it is true that employers may terminate an employee at any time, at their discretion, with or without cause, employers are bound by a duty to treat all employees with good faith both during their employment and at termination. Furthermore, employers are always subject to act in accordance with human rights provisions and legislation such as the Ontario Human Rights Code, regardless of the employee’s status.

The Suitability Test

Probationary employees are subject to the suitability test, which gives the employer a lower standard of justifying cause for termination. In Mitchell v The Queen [1979] 23 O.R., (2d) 65 (H.C.J.), the court declared that the purpose of the probationary period is to ascertain the suitability of the employee for regular employment and to determine if the employee will “meet the standards set by the employer.”

In Ritchie v Intercontinental Packers Ltd. [1982] SJ No 78, the court stated that an employer will satisfy their obligations under the test if the probationary employee is given a fair and reasonable opportunity to demonstrate his/her ability, which includes the employee’s ability to to work in harmony with others, the employee’s potential usefulness… and “such other factors as the employer deems essential to the viable performance of the position.” (paragraph 14)
Most recently in the British Columbia case of Ly v Interior Health Authority [2017] BCSC 42, the court held that when dismissing a probationary employee, the employer must have: demonstrated that the employee was made aware of the suitability requirement, acted with reasonable diligence, given the employee a reasonable opportunity to demonstrate his suitability and base the decision on an honest, fair and reasonable assessment of the suitability of the employee, including not only skills and performance but also character, judgement, compatibility and reliability. (paragraph 58)

The Duty to Act in Good Faith

Employers must always be mindful of their duty to act in good faith when making an assessment of the employee’s suitability. Failure to do so before terminating a probationary employee may lead to a determination that the employee was wrongfully dismissed. In Cao v SBLR LLP [2012] OJ No. 3328, the Plaintiff was an accountant working for SBLR LLP, when she was terminated one month into her probationary period. The Ontario Small Claims Court reiterated that while an employer may terminate a probationary employee for unsuitability, any conclusion reached to do so must be reasonable and made in good faith. Employees must be given a fair opportunity to demonstrate their ability before being terminated. (paragraph 64)

In Cao, The Plaintiff was able to point to numerous actions and omissions by the Defendant, supporting her claim that she was wrongfully dismissed. Notably, she received no feedback on her performance or periodic performance reviews, she was never given the opportunity to demonstrate specific abilities needed for the job, she was not provided with the opportunity to improve her skills and the reason provided for her termination on her Record of Employment was contrary to the reason she was provided with at termination. The court concluded that even if the Defendant’s reasons for termination amounted to just cause, the Plaintiff was wrongfully terminated as the employer did not act in good faith for the reasons listed above.

Final Thoughts

Based on the aforementioned points, employers would be wise to enter into a written agreement, detailing the nature of the probationary period and ensuring employees are aware of their obligations to prove suitability for regular employment.

Employers should give employees a fair and reasonable opportunity to demonstrate their suitability and afford them the chance to correct and improve on any deficiencies before any decisions are made to terminate their employment.

Contact Us

If you’ve been terminated while a probationary employee, call us now for a free consultation at 416-238-7105 or email us at info@hsklaw.ca.

Disclaimer: This article does not serve as or should be construed as legal advice. It is only intended to provide general information. No portion or use of this article establishes a lawyer-client relationship with our firm.