A clear written employment contract
can be an invaluable tool for employers looking to ensure that
their permanent employees are a good fit within their organization.
The recent decision of Nagribianko v Select Wine Merchants
Ltd from the Ontario Divisional Court confirms
that employers can rely on a probationary period to terminate an
employee without an entitlement to common law reasonable
Common law reasonable notice is a
type of damages that can be awarded to employees who are
terminated. The amount is determined by assessing a variety of
factors such as the age of the employee, the length of service, and
the position the employee held. Common law reasonable notice is a
separate entitlement from the minimums owed to a terminated
employee outlined in the Employment Standards Act, 2000
Nagribianko, Select Wine Merchants Ltd
("Select") and the Plaintiff had a written employment
contract that set out a six month probationary period. The contract
did not expressly define when or why Select could terminate the
relationship during the probationary period. The contract did
reference an employment handbook that provided more details;
however, this handbook was not provided to the Plaintiff until
after the contract had been signed. As a result in Small Claims
Court, the Deputy Judge held that Select could not rely on the
handbook to terminate the Plaintiff without notice simply because
he was "unsuitable for regular employment."
At Small Claims Court four
months' notice was awarded to the Plaintiff. Select
successfully appealed this judgment. The Divisional Court
determined that there is a clear difference between probationary
and non-probationary employment. When determining whether an
employer can rely on a probationary period to dismiss an employee
without providing reasonable notice the test is suitability. This
means that an employer must give a probationary employee a fair
opportunity to demonstrate suitability for permanent employment.
However, an employer can dismiss a probationary employee without
notice and without giving reasons, as long as there is no bad
The Divisional Court also confirmed
that even though Select could not rely on the handbook to define
probation, that probationary employment would have been understood
by a reasonable person to mean a period of tentative employment
during which an employer would determine if the employee was
suitable for permanent employment. In this case the Plaintiff even
admitted that he understood probationary employment to be
inherently unstable and tentative. As a result the failure to
successfully incorporate the employment handbook was not fatal to
This decision is good news for
employers. It confirms that a probationary period written into an
employment contract can be successfully relied on to avoid payment
of common law notice if the employee is not suitable for permanent
employment. Despite the Company's ultimate (but
likely costly) victory in this case, CCP encourages employers to
include stronger language in their probationary clauses such as the
notice (or lack of notice) the employee will receive if their
employment is terminated during the probation period and the
purpose of the probation period (to determine suitability for the
position). Employers should also remember that
any probationary period that goes beyond three months will require
the payment of ESA entitlements. This is because the
ESA limits a probationary period to 3 months which cannot
be contracted out of. However, a longer probationary period that
provides for ESA entitlements can be relied on to avoid
owing reasonable notice at common law.
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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