Changing a new employee's status not easy
Question: If an employee is given full employment status on hiring, can the employer later implement a probationary period a few weeks later?
Answer: A probationary employee is hired conditionally on the basis that the employer must be satisfied at the end of the probationary period that the employee is suitable for the position in which she was hired, while an employee given full employment status on hiring is not subject to such a condition. Often, probationary employment contract language will specify that an employer may terminate a probationary employee for any reason without notice. Full status employees, on the other hand, are entitled to a statutory notice period pursuant to applicable employment standards legislation, or a common law notice period, prior to termination.
Implementing a probationary period a few weeks after employment has commenced, then, is tantamount to amending an existing employment contract, and increases the risk that an employer will be found to have constructively dismissed the affected employee.
Constructive dismissal results when unilateral changes are made to fundamental terms of an employee’s employment which are deemed sufficient, at law, to terminate the employment relationship. When an employer makes a change that is considered fundamental and imposes it unilaterally upon an employee, the employee does not have to accept the change and may take the position that she has been constructively dismissed and sue for wrongful dismissal.
To validly vary an employment contract after employment has already commenced, the parties must mutually agree to vary the term of the contract, it must be the intention of both parties to do so, and the employee must accept the employer’s attempt to vary the contract of employment. Further, the Ontario Court of Appeal has repeatedly recognized that new or additional consideration to support the variation must be exchanged by the parties.
Practically, to validly vary an employment contract, or to retain the right to vary an employment contract, an employer should:
• Seek employee consent — written and informed employee consent to proposed amendments will minimize the risk of successful constructive dismissal suits.
• Provide “fresh consideration” — if the proposed amendments impact substantive employee rights, employers should provide the affected employees with an additional benefit (such as a one-time payment).
• Provide reasonable notice of change – an employee should be given advance notice of all proposed amendments. Where the employee rejects the change, notice of termination with an offer of re-employment on the new terms and conditions is possible. Employers, however, might also consider providing notice of the contemplated amendments (along with notice that the employee may not continue under the existing employment terms at the end of the notice period) for a duration that is equal to or greater than the employee’s termination entitlements.
• Draft variation clauses – variation clauses in an employment agreement will support an employer’s claim that the proposed amendment was permitted by the employment contract.
Finally, if the employment contract contains a valid termination clause — meeting the statutory minimum entitlements in the applicable jurisdiction’s employment standards legislation — it may not be necessary for an employer to implement a probationary period at all.
For more information see:
• Potter v. New Brunswick (Legal Aid Services Commission), 2015 CarswellNB 87 (S.C.C.).
• Singh v. Valley Forge Automotive of Canada Ltd (1989 CarswellOnt 764 (Ont. Dist. Ct.).
• Stott v. Merit Investment Corp., 1988 CarswellOnt 887 (Ont. C.A.).
• Francis v. Canadian Imperial Bank Commerce, 1994 CarswellOnt 995 (Ont. C.A.).
