Ontario case shows termination during probation could be risky business

Most employers consider it ‘safe’ termination – but that may not be the case
By Liz Bernier
|Canadian HR Reporter|Last Updated: 05/16/2016

Many employers generally assume that terminating an employee who’s still in his probationary period is a clear-cut process — so no reasonable notice is necessary.

But that may not be true, if a recent Ontario case is any indication. 

In Nagribianko v. Select Wine Merchants, Alexander Nagribianko was a probationary employee of Select Wine Merchants who was terminated in 2013 during his six-month probationary period after the employer said he was “unsuitable for regular employment.”

 In 2014, Nagribianko sued for wrongful dismissal. And in 2015, he was awarded notice equivalent to four months’ salary and benefits as the court said the employer had “induced” Nagribianko away from a secure job elsewhere, and he was never provided with an employee handbook, which held important information about probationary periods with that employer. 

But upon appeal, the Ontario Superior Court of Justice Divisional Court dismissed the lawsuit, saying Select Wine Merchants applied the suitability test properly and in good faith.

“A probationary employer must extend to the probationary employee a fair opportunity to demonstrate suitability for permanent employment. However, in the absence of bad faith, an employer is entitled to dismiss a probationary employee without notice and without giving reasons,” said the judge. “Probationary employment, on its face and by its nature, is inconsistent with any inducement or promise of long-term employment.”

Issues for employers

The case is interesting for a number of reasons, said Hendrik Nieuwland, partner at Shields O’Donnell MacKillop in Toronto.

“First is you don’t often see people litigate when they’ve been terminated during the probationary period. There’s not a lot of law on the subject,” he said. “The amount of money at stake is often too small, so most employers… are not as concerned about being sued when they fire someone within the probationary period. But, of course, employers need to be concerned about that when they actively recruit someone from secure employment, which appears to have been the case here.”

That this particular case was appealed is not surprising, said Aaron Rousseau, founding partner at Rousseau Mazzuca in Toronto. 

“It was pretty obvious that the trial judge got it wrong,” he said. “Probation normally is going to defeat any claim of inducement, so there was no way that the plaintiff should have been getting four months’ (notice).

“I do think that the judge has moved Ontario a little closer — in terms of the importance of probation — to the line that’s generally been taken in B.C.”

Probation is not as neat and tidy as a lot of employers would like it to be, said Rousseau. 

“This employer had exactly the right instinct, which was not to stop with just saying in the contract that there was probation, but to actually spell out how long of a notice period would be required during the probation period. But they didn’t implement it properly because they didn’t put that into the main body of the contract, and then they didn’t give him the handbook that contained that line,” he said. 

“Probation has some hurdles if you want to rely on it as an employer, which is why it’s better to have the one-two punch of a termination provision as well as a probationary clause.”

The trouble with probation is it tends to require the employer to demonstrate the employee did lack suitability, and the employee had a fair chance to prove herself, said Rousseau.

“That is not necessarily a terribly high bar to meet, but it is a bar to meet. So there are cases, for example, which say that the employer needs to articulate some kind of standard, and it also needs to give the employee feedback on whether he or she is meeting that. So that’s something that often is actually not happening in the first few months of employment, where the employer may just be thinking of one review near the end of the probation period,” he said. 

“To take advantage of a probationary clause often requires some work on the part of the employer.”

Given that probation could provide the employer with the ability to avoid reasonable notice, in a sympathetic case, then the employer may well be held to some of those procedural elements if the judge doesn’t want to send the plaintiff away empty-handed, he said.  

Risks and responsibilities 

Probationary periods in some cases can be tricky because there isn’t always a common understanding of what they mean, said Doug MacLeod, principal at MacLeod Law Firm in Toronto. 

“Does it mean that there’s an enhanced monitoring of the employee during that period? I think for some big organizations, there probably is a special process for probationary employees where maybe there is some kind of training or orientation program, or maybe some kind of regular meeting to make sure that they’re getting the support they need and dealing with performance issues before they become a problem,” he said. “But... I don’t think really there’s much extra done. I think most employers have a probationary period because they want to be able to terminate the person during the probationary period without having to pay them any (notice).”

Some employers likely implement probationary periods just because they think they should — they haven’t really given it much thought, he said. 

But that could potentially present a risk if there is a termination that’s about personality clash — not about suitability for the job, said MacLeod. 

“The interesting thing about this case is I take a completely different take on it than the judge did,” he said. “He had some interesting language in there about the employee being given an opportunity to show they are suitable… with small and medium employers, I don’t think that’s necessarily the case. I think sometimes there’s supervisors who arbitrarily just don’t like somebody, and they don’t really talk to them about why and they can’t really put a finger on why.”

In some cases, employers will terminate without telling a person why there’s a concern, he said. 

“This may open the door for employees to say the onus is on the employer to show that they gave the employee an opportunity. So I think you’ll start seeing employees saying, ‘I thought everything was going fine, nobody said anything to me, I did a good job and they didn’t meet their legal burden,’” said MacLeod. 

“Up until this case, I don’t think many employees would think about contesting or think about looking to get termination pay if they were terminated during their probationary period — it wouldn’t occur to them. But I think, ironically, this case sort of opens the door a little bit (to that).”

Best practices  

Another important consideration is when the probationary employee has been recruited from another organization, said Nieuwland. 

“If you recruit someone from secure employment and terminate them quickly thereafter, if you don’t have an enforceable termination clause in your contract, you could be on the hook to pay severance based on the years of service not only with you as the new employer, but with the former employer. And sometimes that can be quite a bit,” he said. 

The first thing employers need to be aware of when they recruit someone is to make sure they have an enforceable termination clause in their contract, said Nieuwland. 

“Generally, with probationary employees, the lesson from this case is if you want to fall within the test that the judge described, you have to make sure you give the employee a fair chance to demonstrate their skills and abilities,” he said. 

“Basically, what that means is you don’t engage in bad faith assessment. Bad faith assessment would be a number of things, like not actually doing the assessment — terminating without assessing the person at all, which is often done with short-service employees… another problem potentially is if you’re not clear about what the standard is to meet as an employee. That can arise when you don’t have written job descriptions that clearly set out what someone’s roles and responsibilities are that they’ll be measured against.

“Then, of course, there are the standard things you can think of, like discriminatory decisions.”

Another best practice? Don’t rely solely on the probationary clause, said Rousseau. 

“Also include a termination clause,” he said. “(And) whether or not you have a separate termination clause, you still should be articulating clear standards and giving employees feedback (on) where they’re not meeting those standards.”

That’s also going to be helpful in terms of pre-emptively dealing with potential claims of discrimination or bad faith, said Rousseau.  

“That’s just generally a good HR practice,” he said. “The other thing is the trouble with probationary clauses in practice is if it’s a three-month clause, a six-month clause, employers are busy, you’re running a business, often I see people doing the evaluation just after the end of the probationary period — in which case, you’ve missed your chance. And that is all too common.”

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