Terminating probationary employees

Can an employer truly give notice of termination with no notice or pay in lieu?
By Meghan McCreary
|Canadian HR Reporter|Last Updated: 10/30/2017

Question: Can an employer truly terminate a probationary employee with no notice or pay in lieu? Does it make a difference whether it’s early in the probationary period or when it’s almost complete?

Answer: An employer is permitted to terminate a probationary employee within the statutory probationary period, without notice of termination or pay in lieu, for any reason that is not discriminatory.

Most employment standards legislation across Canada dictates that an employee may be terminated without just cause in the first three months of employment, without notice or pay in lieu of notice.

In a unionized environment, the standard to terminate a probationary employee is “suitability” rather than just cause. In other words, the employer must be able to demonstrate the probationary employee is “unsuitable” and the unsuitability is not based on any discriminatory reason.

Unsuitability is a low threshold, but the grounds that demonstrate unsuitability must be reasonable, and the employer must demonstrate the employee was given a fair opportunity to try to meet the requirements of the job he was hired to do.

Technically, it does not matter whether the termination of an employee occurs early in the probationary period or just prior to the end of a probationary period. However, where a suitability standard is being applied, it is easier for the employer to demonstrate the probationary employee has been given a fair opportunity to succeed in the job if he has had more time on the job to demonstrate proficiency (or lack of proficiency).

It is common, however, for employers to impose probationary periods that are longer than the three months allowed under employment standards legislation. In such cases, employers should be careful to stipulate in writing the standard upon which the employee will be assessed during the probationary period (for example, a “suitability” standard rather than a “just cause” standard) and the notice or pay in lieu to which an employee will be entitled if she is dismissed during the extended probationary period.

Any probationary period in an employment contract that is longer than three months will trigger statutory notice of termination or pay in lieu. Therefore, an employer can stipulate an employee will have a six-month probationary period, and he will be assessed on a suitability standard during that period. But if the employee is dismissed after more than three months of employment, he will still be entitled to at least statutory notice of termination upon dismissal.

The employer can limit any further common law liability for termination if an employee is dismissed during an extended probationary period by stipulating that only statutory notice will be payable if the employee is dismissed during the extended probation (for example, after three months but before six months of service).

Arguably, an employer does not have to provide common law notice within a probationary period that is longer than the statutory period if an extended probationary period is a term of the employment contract.

To rely on this right, an employer should set out, in an offer letter or employment contract, the purpose of the probationary period and the employee’s entitlement if terminated within the extended contractual probationary period.

Doing so will demonstrate that an extended probationary period was a term of employment agreed to by the parties which limited common law liability for termination during the probationary period.

Meghan McCreary is a partner practising labour and employment law at MacPherson Leslie & Tyerman in Regina. She can be reached at (306) 347-8463 or mmcreary@mlt.com.

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