Key Takeaways
For employers:
- If you’re going to include a probationary period provision, make sure it is enforceable and complies with minimum standards.
- Consider if the probationary period provision is really necessary, or does the main termination provision suffice?
- Be aware that the existence of a probationary period does not mean that you can terminate for any reason. Document performance issues and ensure terminations aren’t arbitrary, discriminatory, or otherwise run afoul of the employee’s rights.
For employees:
- Read your contract carefully. Just because you’re “on probation” doesn’t mean you have no rights.
- If you’re let go during or shortly after your probation period, you may still be entitled to notice of termination, especially if your contract is silent or poorly drafted.
What Is a Probationary Period?
A probationary period is a set amount of time at the beginning of an employment relationship, typically 3 to 6 months, during which the employer assesses whether the employee is a good fit for the role.
Termination During Probation
A probationary period is generally understood as a precarious period of employment, during which an employee can be terminated more easily than once they “pass probation.” This is not necessarily the case. In a non-unionized environment, employers almost always have the right to terminate an employee with appropriate notice, and a termination during the probationary period is no different.
However, in most provinces, minimum standards legislation allows employers to terminate an employee without cause during the probationary period with little or no notice. This will only be the case when the employee’s contract contains a valid termination provision that limits the employee’s entitlements on a termination without cause to minimum standards.
In Ontario, if an employment contract includes a valid termination clause that limits the employee’s entitlements to only the minimum standards under the Employment Standards Act, 2000 (ESA), the employer may terminate the employee during the first three months without providing notice. Once the employee’s length of employment is longer than three months, the employee will be entitled to notice.
Even during the probationary period, termination decisions cannot be made for discriminatory reasons, as a reprisal when an employee as asserted their rights, or during times when an employee may be on a job-protected leave.
Are Probationary Periods Necessary?
Probationary Periods often cause problems because they are effectively additional termination provisions where things can go wrong.
If a contract has a valid termination provision, limiting the employee’s entitlements to statutory minimums only, then they can be terminated without notice during the first three months of employment, regardless of the presence of a probationary period provision. If this is what the employer is hoping to achieve with the probationary period provision, then it does not need to be included. The main termination provision will suffice.
Like many aspects of employment contracts, the main reason to include a probationary period is to communicate expectations. The existence of a probationary period clause tells the employee that they are effectively being auditioned during the probationary period. It is also common that benefits will only start after the probationary period is completed. But, as noted, just because the employee is in their probationary period, it does not necessarily mean that the employer can terminate their employment more easily.
Questions About Probationary Periods?
Whether you’re an employer navigating your first hire, looking to ensure that your contract is compliant, or an employee who’s just been terminated, we can help. Our firm advises on employment contract drafting, policy compliance, and wrongful dismissal claims, including during the probation period.
