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Probationary Period Terminations Explained

When it’s time to welcome a new employee, you’re probably eager to see how they will fit in with your organization. Those first few months, which some employers set as a probationary period, are an important time for the employee and employer.

An often-repeated HR myth is that if an employee is on probation, the employer may terminate for any reason—even no reason—without notice or termination payments. Let’s unpack why this is a myth and how you can effectively manage legal probationary periods.

What is a probationary period?

A probationary period refers to the period when employers evaluate whether a new employee is meeting expectations, or is a proper “fit” for the job.

There is no standard length for a probationary period, though often they are 90 days. Some employers may use probationary periods up to one year, especially in roles that require a more comprehensive onboarding, or higher level of responsibilities. Another use of probationary periods is often linked to eligibility to participate in benefits plans.

Here are five essential facts you need to know about probationary periods:

  1. Probationary periods are creations of employment contracts rather than legislation.

No jurisdiction’s employment or labour standards legislation defines a “probationary period.” This means that employers must insert a probationary period clause in the employment contract for one to exist.

For this clause to be effective, the agreement should describe:

  • The length of the probationary period;
  • How it limits the employer’s notice obligations upon termination; and
  • The ability to extend a probationary period if required, and under what circumstances.

The probationary clause should be clear and unambiguous and directed to the attention of the employee.

  1. You are obligated to provide notice or pay in lieu of notice once an employee passes the threshold for length of service.

Employers can terminate an employee without notice or pay in lieu of notice if the employee hasn’t completed the minimum length of service. The minimum length of service varies across jurisdictions (for example, it’s three months in Ontario). Once the employee passes that threshold, you are obligated to provide notice or pay in lieu of notice. The amount of notice is mandated by employment and labour standards and is based on the employee’s length of service.

Employers often try to extend the probationary period when they are unsure whether an employee is a “good fit” or when the employee is not meeting expectations for the role. If you want to extend the probationary period, this right needs to have been stipulated in the employment contract. Otherwise, it can result in a constructive dismissal claim by the employee and open the risk for possible common law damages.

Keep in mind that extending the probationary period does not remove the obligation for employment standards termination pay. Once the minimum length of service is met, you must provide notice or pay in lieu of notice.

Common Law Notice

If the employment contract does not have a probationary period or any explicit language regarding notice entitlements in the period, employees terminated who do not meet the notice requirements under employment standards may still be entitled to common law reasonable notice or pay in lieu.

  1. You still have the duty to accommodate.

Even if an employee is “on probation,” you are obligated to accommodate your employee under human rights legislation.

If you want to learn more about the duty to accommodate, check out some common misconceptions about workplace accommodations and learn about what to do if you receive a medical note from an employee.

  1. Employers must act in good faith.

Under common law, employers must act in good faith throughout the employment relationship. Your conclusion that an employee is unsuitable for the role must be reasonable and properly motivated.

In Nagribianko v. Select Wine Merchants Ltd. 2017 ONCA 540 at para 6, the Court noted,

“the status of a probationary employee has acquired a clear meaning at common law. Unless the employment contract specifies otherwise, probationary status enables an employee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for permanent employment, and provided the probationary employee was given a fair and reasonable opportunity to demonstrate their suitability.”

In the context of a probationary period, it’s improper to reach a conclusion to dismiss an employee before the employee has been given a fair opportunity to demonstrate their ability. You may take into consideration factors like character, compatibility, and ability to meet the present and future performance standards of the role.

You must ensure that the employee knew what the role was, that they had the tools and training to do the job, that they were advised of any shortcomings, and that you provided sufficient support to help the employee meet expectations.

If a new employee is accused of specific misconduct, they still must be provided with an opportunity to give their side of the story, regardless of length of service or probationary status. (This is one element of what is known as “natural justice.”)

  1. Employers should conduct reviews and provide feedback about performance problems.

Feedback about performance problems is essential so that a new hire can succeed in their position. Conducting regular performance reviews with the probationary employee is one way to accomplish this. Performance reviews during probationary periods are also an excellent way to gauge how well a new hire is adapting to their role and provide them with the support many new hires need at the start of a job.

Remember to keep detailed records of these performance management review meetings, including agreed upon performance goals and any feedback that was provided. This way, you can demonstrate that you have given the employee a fair and reasonable opportunity to meet performance expectations. It also provides you with documentation to support your decision to terminate if these expectations are not being met.

Key takeaways

  • The law does not automatically impose a particular probationary period. To terminate an employee during a probationary period without being liable for common law reasonable notice, you must have an employment contract with a proper probationary period clause.
  • Regardless of the length of the probationary period, an employer must provide notice or termination pay if an employee is terminated after attaining the minimum length of service required for notice under employment or labour standards.
  • An employer’s duty to accommodate under human rights legislation applies regardless of an employee’s period of employment.
  • “Suitability” or determining an employee is not a “good fit” is at the employer’s discretion. A court will not question an employer’s decision to fire a probationary employee unless the employer acted in bad faith and did not permit the employee a reasonable chance to succeed.
  • New hires must be given a fair and reasonable opportunity to meet performance expectations. Providing regular performance reviews and feedback is one way to achieve this.

Trending challenges for employers across Canada

Our award-winning team of HR advisors answers over 15,000 calls a year from clients coast to coast on all things HR. We speak with clients daily about the situations they face. Here are a few examples of some of the questions we advise on and assist with:

  • I hired an employee a little less than three months ago. They were on a medical leave for three weeks since they were with us and recently returned to work. Can I extend their probationary period so I can evaluate their suitability based on a full three months of being at work?
  • My employee has reached the end of their three-month probationary period; however, they are currently on a medical leave. Can I terminate the employee based on the fact they have missed several days from work?
  • We have an employee on a six-month probationary period that is almost up. The manager has just told me that they are not a “good fit,” and they want to terminate. There have not been any reviews or other concerns discussed with this employee—is there any risk with this termination?
  • I found out our newly hired employee has some questionable content on their public social media, so we don’t wish to continue employment. Can we terminate as an “unsuccessful probation”?

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