Contracts for probationary employees are enforceable
A recent Divisional Court decision that quashed a lower court ruling awarding damages to a man who was terminated during his probationary period is a reminder that employees can be held to the terms of their contracts, says Vaughan employment and civil litigation lawyer Arthur Zeilikman.
“If properly drafted, employees who sign a contract will be held to its terms,” says Zeilikman, principal of Zeilikman Law. “Clauses on probationary periods are enforceable.”
In Nagribianko v. Select Wine Merchants Ltd., 2016 ONSC 490 (CanLII), the employee signed a contract that clearly spelled out a six-month probationary period. He was terminated after about five months, when “after careful consideration,” the company determined the employee was “unsuitable for regular employment,” according to the written decision.
A deputy judge in Small Claims Court awarded common law damages to the worker equivalent to four months’ salary and benefits in lieu of reasonable notice.
However in the Divisional Court appeal, Judge Mary Sanderson overturned that ruling, finding that probation is a testing period to determine an employee’s suitability.
“Probationary employment, on its face and by its nature, is inconsistent with any inducement or promise of long-term employment,” Sanderson wrote. “In this case the employer properly and in good faith applied the suitability test.”
Zeilikman tells AdvocateDaily.com if someone is terminated during a probationary period, the employer does not need just cause to end their employment without notice.
“The employee needs to be suitable, considering the probationary employee’s character, ability to work with others and meet the employer’s future standards,” Zeilikman says.
“If the employer determines you are not suitable in good faith, you will not get your common law notice.”
Under the Employment Standards Act, an employee who is working from three months to a year is entitled to one week’s notice, he says. “Usually employers use the initial 90-day period as a probationary period,” Zeilikman says.
But when an employee signs a contract determining otherwise, as in this case, they are bound to the terms of that contract, he adds, as long as the contract is not in violation of the Employment Standards Act or is otherwise illegal.
Zeilikman says he agrees with the ruling in Nagribianko v. Select Wine Merchants Ltd. because it involved a simple matter of enforcing a contract.
He refers to the judge’s decision and her statement that “the deputy judge erred in law in failing to recognize that contractual interpretation is an objective exercise.”
“That was an objective question of how you regard the contract,” Zeilikman says.
A six-month probationary period is enforceable if the employee is found to be unsuitable, he adds.
“You can be terminated any time. It’s not like you have a right to your job. But for without-cause dismissals, you have to be given notice. That’s the difference.”