Terminating a Probationary Employee May 28 2019

All Canadian jurisdictions have defined periods relating to employee probation, generally falling within three to six months. All jurisdictions allow for employees to be terminated without any notice or pay in lieu within the probationary window, so long as the termination is for non-discriminatory reasons. This is commonly referred to as the “statutory probationary period” and is often used by the employer to determine whether or not an employee is suitable for a given role before committing to long-term employment.

Some employers elect to extend an employee’s statutory probationary period as part of their employment contract. This is particularly common when recruiting for executive roles. This practice has led to a common misconception; that the employment contract can supersede the legal requirement.

Can probationary employees be terminated without notice? 

It should not be assumed that employers can avoid termination notice requirements or common law obligations simply by extending the probationary period within an employee’s contract. Any probationary period that is longer than the statutory probationary period will result in the requirement to provide statutory notice or pay in lieu of notice. For example, in Ontario, the statutory probationary period is three months. If an employee were to be hired with a probationary period of six months as defined in their employment contract, they would still be entitled to one week of termination notice after working three months or more under the Employment Standards Act.

Generally speaking, an employment contract is only assumed to supersede the law when it provides the employee with a greater right or benefit than the minimum requirements as prescribed.

It should be noted that the standard for terminating an employee while on probation is different for unionized employees. In this case, employers have to demonstrate that the employee is “unsuitable” for the job and are being terminated for a non-discriminatory reason. Unsuitability must be reasonable and the employer must be able to show that the probationary employee was provided with a fair opportunity to improve before they were terminated.

What does this mean for employers?

In order to minimize liability for terminating an employee during their probationary period, we highly recommend that employers explain the reason for having a probationary period within an employee’s offer letter or employment contract. Employers should also include an employee’s notice, or pay in lieu of notice, entitlement if they are terminated within the statutory probationary period or the contractual probationary period (if longer than the statutory period).

For a template of an offer letter, employment contract, or a probationary period policy, please navigate to our Resource Centre. If you are an OnDemand subscriber and you have a question regarding your termination clause, or if you are dealing with a situation regarding the termination of a probationary employee, please do not hesitate to reach out to our OnDemand team.