Employers generally owe their employees common law reasonable notice upon termination without cause. When the parties agree to a probationary period in an employment contract, however, the right to common law reasonable notice can be ousted if the employee is terminated within the probationary period.
In Nagribianko v. Select Wine Merchants Ltd., Ontario’s highest court considered whether a cursory probationary clause contained in an employment contract was clear enough to be enforceable.
Alexander Nagribianko’s employment contract with Select Wine Merchants Ltd. contained a clause providing for a probationary period of six months, which stated, in the most basic terms: “Probation…… Six months”.
Select Wine Merchants terminated Nagribianko’s employment without notice prior to the end of this six-month period, stating that “after careful consideration”, it had concluded that he was “unsuitable for regular employment.” Nagribianko sued for wrongful dismissal, claiming that he was owed common law reasonable notice because the probationary clause, being just two words, was unclear and therefore unenforceable.
As we discussed in “Termination during a Probationary Period”, the Divisional Court reversed the Small Claims Court decision that held that Select Wine Merchants had wrongfully terminated Nagribianko’s employment.
The Court of Appeal upheld this decision.
The court confirmed that the word “probation” in an employment contract has a clear and unambiguous meaning and that “[t]he status of a probationary employee has acquired a clear meaning at common law”. Unless the employment agreement specifies otherwise, probationary status enables an employee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for permanent employment.
In this case, the parties agreed to a probationary contract of employment. Although the probationary “clause” was a mere two words, the court held that it was sufficiently clear to be enforceable.
As a result, Nagribianko was not owed common law reasonable notice.
While we encourage employers to draft more precise probationary clauses in employment agreements than the one challenged in this case, the Court of Appeal’s decision affirms that the term “probation” has a well-established legal meaning that permits an employer to terminate an employee without reasonable notice after making a good faith assessment about his suitability for a position where a probationary clause –however brief– has been included in the employment contract.
To avoid any uncertainty, however, we encourage employers to draw the probationary period to the employee’s attention and ensure that he understands it.
When preparing employment agreements, it is important that employers understand the significance of a probationary period and their legal obligations, particularly when considering dismissal during that period. It is also important that employers remember that, for probationary periods of over three months, employees dismissed while on probation must be provided with their entitlements under the Employment Standards Act.
Finally, employers cannot terminate an employee for any reason during a probationary period. As the court noted in this decision, the employee must be provided with a fair and reasonable opportunity to demonstrate his suitability for permanent employment and the employer’s decision to terminate must be made in good faith.
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