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Ontario Top Court Says: 6 Month Probation Period is OK!

By July 24, 2017November 5th, 2019Employment Law

We regularly advise dentists that a 3 month probation period is the standard.  But recently, the Ontario Court of Appeal upheld terminating an employee during a 6 month probation period.

The Ontario Court of Appeal recently ruled on a case named Nagribianko v. Select Wine Merchants Ltd. The Court of Appeal agreed with a lower court’s decision against an employee who claimed wrongful dismissal during a probationary period.In this case, an employment agreement (which included a probationary period of 6 months) was signed, and the employee was terminated within the 6 month period.  The reason? He was “unsuitable for regular employment” (Side note: if you’re terminating an employee without cause, don’t give a reason!)

The employee sued in Small Claims Court for wrongful dismissal, and the Judge there awarded the employee 4 months of pay in lieu of notice of termination because the Judge couldn’t decide what was actually included in the probationary period.  The Judge also agreed with the employee that he did not receive a copy of the employee handbook before signing the agreement.

Luckily, the higher-level Judges completely disagreed with the Small Claims Court Judge.

Policy Manual Issue

This was an easy issue for the judges to consider.  A Judge of the Superior Court ruled that it was not necessary for the employee to see the policy manual to know that he was on a 6 month probation period. It was clearly in the contract and whether he saw the policy manual or not did not change that.

Probation Clause Issue

The Ontario Court of Appeal cited drew upon several cases in Ontario law that supported the Employer’s decision to terminate the employee during the stated 6 month probation period, and summarized the law succinctly:

“The basic principles of commercial contractual interpretation may be summarized as follows. When interpreting a contract, the court aims to determine the intentions of the parties in accordance with the language used in the written document and presumes that the parties have intended what they have said. The court construes the contract as a whole, in a manner that gives meaning to all of its terms, and avoids an interpretation that would render one or more of its terms ineffective. In interpreting the contract, the court must have regard to the objective evidence of the “factual matrix” or context underlying the negotiation of the contract, but not the subjective evidence of the intention of the parties. The court should interpret the contract so as to accord with sound commercial principles and good business sense, and avoid commercial absurdity. If the court finds that the contract is ambiguous, it may then resort to extrinsic evidence to clear up the ambiguity. Where a transaction involves the execution of several documents that form parts of a larger composite whole—like a complex commercial transaction—and each agreement is entered into on the faith of the others being executed, then assistance in the interpretation of one agreement may be drawn from the related agreements. See 3869130 Canada Inc. v. I.C.B. Distributing Inc. (2008), 2008 ONCA 396 (CanLII), 66 C.C.E.L. (3d) 89 (Ont. C.A.), at paras. 30-34; Drumbrell v. The Regional Group of Companies Inc. (2007), 2007 ONCA 59 (CanLII), 85 O.R. (3d) 616 (C.A.), at paras. 47-56; SimEx Inc. v. IMAX Corp. (2005), 2005 CanLII 46629 (ON CA), 11 B.L.R. (4th) 214 (Ont. C.A.), at paras. 19-23; Kentucky Fried Chicken Canada v. Scott’s Food Service Inc. (1998), 1998 CanLII 4427 (ON CA), 41 B.L.R. (2d) 42 (Ont. C.A.), at paras. 24-27; and Professor John D. McCamus, The Law of Contracts (Toronto: Irwin Law Inc., 2005), at pp. 705-722.” (para 16 of Salah v. Timothy’s Coffees of the World Inc.)

The rulings also put some much-needed support back for the employer about how the word “probation” should be interpreted by parties to an employment contract.  Ontario’s highest court determined that the word “probation” is not ambiguous, and a reasonable person would understand what it means (and that this idea has been around for at least 23 years):

“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: Mison v. Bank of Nova Scotia (1994), 1994 CanLII 7383 (ON SC), 6 C.C.E.L. (2d) 146(Ont. Ct. (Gen. Div.)), at para. 43.” (para 6 of the ONCA decision)

You should notice that in this case, the Employer still gave the employee notice of termination under the Employment Standards Act when terminating their probationary employment.  Even though the employee was a probationary employee, the Employer still gave the employee one week of notice of termination (since they had worked more than 3 months but less than 2 years).

Discussion

This case will definitely bring more clarity for Employers wanting to terminate short term and probationary employees, but it does not significantly change the law as we knew it.

A probation period of employment can be any reasonable length of time to which the Employer and employee agree (so long as it is written in a contract, with a solid termination clause, signed before employment commences).  Three months? Definitely (and no notice is required to be given).  Six months? Sure (make sure to give a one-week warning).  Twelve months? Depending on the job, yes, that may be reasonable in the circumstances (and again, give one week warning of termination).

What Dentists should also keep in mind, as mentioned above, is that a reason need not be given for a termination of employment.  Suitability is a reason.  Downsizing is a reason.  A slowdown in business is a reason.  Those are all valid reasons for terminating an employee, but a reason does not have to be given to an employee to terminate their employment without cause.  Notice of termination still needs to be given, but a reason does not.

As always, any underlying reason (or part of a reason) for terminating an employee must not be discriminatory or contrary to the Human Rights Code of Ontario.

It can be, at a minimum, awkward when explaining that someone’s employment is coming to an end. We are human and we ask questions.  In order to avoid liability in the future, an employer does not have to give a reason for terminating; the reason can simply be “there is no reason.”

For Dentists, probation periods and “working interviews” can be very helpful to determine suitability of an applicant in a position.  With the right safeguards and agreements in place, your dental practice can be easily protected.

DMC