Probationary periods are often essential tools for both
employers and employees to determine the viability of a new
employment relationship. In recognition of this, the
Employment Standards Act provides for a
three-month period in which no minimum notice is required for
termination. However, in some professions this period may not be
sufficient for the parties to properly assess a new employee's
suitability for a position.
Select Wine Merchants involved a decision by the small claims
court of the wrongful dismissal claim of an employee terminated
after four months of employment. The parties agreed that the
employment contract provided for a probationary period of six
months. However, there was disagreement as to what legal effect the
probationary period had. The employee handbook, which provided for
termination during the probationary period on the minimum
entitlements set out in the ESA, was not given to the employee
until after he began working for the defendant. As a result, the
Deputy Judge found that the defendant could not rely upon the
notice limitation clause, and that as a result, the employee was
entitled to common law reasonable notice. The trial judge granted
an award of four months' notice.
The employer appealed.
The Divisional Court held that a probationary period is a well
understood concept. It is a period during which the employer and
employee determine whether the employee is suitable for the
position. It is understood as a period of minimal job security.
During a probationary period, an employer need only act fairly in
determining whether an employee is suitable for the position. If
they have acted in such a manner, the probationary employee can be
dismissed without further notice and without giving reasons.
As a result, a reasonable person in the circumstances of the
plaintiff would have understood the risk and less stable employment
relationship during a probationary period, even without having seen
the employee handbook. On the basis of this understanding, once the
employer made the good faith determination that the plaintiff was
not suitable for the position, it was entitled to terminate the
plaintiff's employment without reasonable notice.
The Court allowed the appeal and overturned the trial verdict,
dismissing the employee's claim for any greater amount than
that set out in the ESA.
Probationary periods are often valuable tools for employers to
determine whether significant hiring decisions are appropriate.
Employers would be well advised to assess whether they require
longer probationary periods than the three months set out in the
Employment Standards Act to assess the suitability of
candidates. This case shows that courts will respect probationary
periods of reasonable length, and will enforce limitations on
employee entitlements for dismissal during such periods, provided
statutory minimum requirements are respected.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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