Many employees are labelled as “probationary” employees at the beginning of an employment relationship. However, despite the fact that they may be going through a “probationary” period, being fired or dismissed still does not mean that the employee does not necessarily have any options in terms of compensation upon dismissal that they are legal entitled to.

What is a probationary employee?

An employer may indicate in a valid clause in their employment contract or employment agreement with an employee that there is a probationary period at the beginning of the employment relationship. There is no default probationary period in Ontario, and it must be contained in the contract in order for the probationary period to be valid. This period is generally used by an employer to see if the employee is the right fit for the employment relationship with the employer. Employees who are employed during this period are called “probationary” employees.

In Ontario, there is no set probationary time under statute. However, under section 54 of Ontario’s Employment Standards Act (“ESA”), an employee who has been employed for less than three months can be terminated without statutory notice or pay in lieu of notice. This is the period normally used by employers as “probationary” for new employees, although there are instances where probationary periods extend to six months under an employment contract (however, under the ESA the period is limited to three months). It would be difficult for an employer to maintain a greater probationary period than six months in a clause in an employment agreement and that clause would usually be held to be invalid by Ontario courts.

What happens if the employee is dismissed during the probationary period?

The purpose of a probationary period is for the employer to determine whether the probationary employee is suitable and to give the employee the opportunity to demonstrate their ability and fit with the organization. Unlike in an instance where the employer wishes to terminate an employee for cause, the employer simply has to apply the “suitability” test in good faith during the testing period to determine, in the words of one court decision, if the employee will be able to “work in harmony” with the organization.

An employee who is subject to an enforceable probationary period that was set out in an employment contract will not be able to assert entitlements to common law notice. Instead, the probationary period clause set out in the contract will govern the employee’s remedy upon dismissal. However, qualifications are warranted.

Firstly, it will depend on whether the employee was dismissed during the first three months of employment or if they were dismissed on a date beyond the first three months of employment. If an employee was dismissed during the first three months of employment, the employee may have very little options in terms of legal entitlements to termination pay upon dismissal. This is because section 54 of the ESA provides that an employer may terminate an employee employed less than three months without statutory notice as we set out above. As such, and so long as the clause is legally compliant, the employee is not entitled to any statutory notice of termination, termination pay or severance pay.

If the employee is dismissed after the first three months of employment on a without-cause basis, and as long as the clause is legally compliant, the employee will be entitled to the remedies set out in the ESA.

Thirdly, to repeat: the probationary period clause must be compliant with the ESA and other legal requirements. For instance, if the probationary period is statutorily void or if the employee was induced to sign the contract under fraud or duress then the employee may be able to claim damages for wrongful dismissal at common law among other forms of relief.

Fourthly, the employer must assess the employee’s suitability in good faith, failing which the employer will be deemed to be in breach of the employment agreement and possibly even subject to moral damages.

Finally, in addition to the ESA, the employee’s dismissal must not be in breach of other statutory rights such as the Ontario’s Human Rights Code or Occupational Health and Safety Act.

How can Zeilikman Law help?

The employment lawyers at Zeilikman Law can assist any employee who was fired or terminated during a probationary period to determine if they were wrongfully dismissed and owed compensation or a severance package.

Zeilikman Law can be contacted online here or via telephone at (905) 417-2227 to schedule a confidential consultation.