What is the legal effect of being “on probation”? While this blog has looked at the issue of an employee being employed pursuant to a written employment contract containing a period of probation, (see Ontario Court Awards Four Months Notice to Employee Fired while “On Probation”), a recent decision from the Ontario Divisional Court provides a new wrinkle to this issue.
In Nagribianko v Select Wine Merchants Ltd., 2016 ONSC 490 the Ontario Divisional Court, sitting as the court of appeal from a decision of the Ontario Small Claims Court found that “in the absence of bad faith, an employer is entitled to dismiss a probationary employee without notice and without giving reasons.”
For the reasons argued below, I would respectfully submit that the court in this case got it wrong.
Facts
As mentioned above, the case concerned an appeal by the employer, Select Wine Merchants, from the decision of Small Claims Court Deputy Judge Richardson, who awarded the respondent employee four months’ pay in lieu of notice.
The terms of the Respondent's employment were set out in a written employment contract signed on May 10, 2013.
The employment contract not only provided for an annual salary of $65,000; the right to participate in certain benefit plans and programs; a monthly car allowance of $750; paid vacation days, accrued at a rate of 6% of total earnings; use of a company laptop; and reimbursement of up to $150 per month for the business use of the Respondent's personal mobile communication device. It also provided for a probationary period of 6 months.
It was not disputed at trial that at the commencement of his employment, the Respondent faced a six month probation period. The Respondent conceded this point.
The Respondent commenced employment with the Appellant on May 27, 2013.
On November 21, 2013, Select terminated Mr. Nagribianko’s employment ,within the six month probation period, because “after careful consideration”, Select had concluded that Nagribianko was "unsuitable for regular employment."
On June 3, 2014, Nagribianko commenced an action against Select in the Small Claims Court seeking remedies including damages for wrongful dismissal.
Decision
In allowing the appeal and dismissing the plaintiff’s claim, the Honourable Justice Mary A. Sanderson wrote the following:
[38] In my view, the Deputy Judge erred in law in failing to enforce the clear terms of the employment contract that the Plaintiff had signed that made reference to a probationary period of 6 months.
[40] A reasonable person in the same circumstances as the Respondent/Plaintiff would have understood the term "probation" to mean a period of tentative employment during which Select would determine whether the Respondent/Plaintiff would be a suitable employee and would decide whether or not to make him a regular/non probationary employee.
[41] On his own evidence, the Plaintiff /Respondent understood that during the 6 month probationary period he would be at risk. He may have believed that the employer would find him to be a suitable employee, but a reasonable person in those circumstances would also have understood that that might not happen.
[42] A reasonable person would have understood, and on his own evidence, the Plaintiff/Respondent did understand that probationary is inherently unstable and tentative.
[43] Probationary employment, on its face and by its nature, is inconsistent with any inducement or promise of long-term employment.
[44] In this case the employer properly and in good faith applied the suitability test.
[45] Since the employer was entitled to terminate the probationary employment in good faith during the probation period, it is not necessary for this Court to determine the period of reasonable notice.
On the issue of the legal effect of a finding of an employee being “on probation”, Justice Sanderson wrote the following:
[33] Probation is a testing period for the employer to assess a probationary employee's suitability. It offers the employer an opportunity to determine if the employee will work in harmony with the organization, if hired permanently. Suitability includes considerations of the probationary employee's character, ability to work with others, and ability to meet the employer's present and future standards. Jadot v Concert Industries Ltd, [1997] BCJ No 2403 (BC CA) at para 30, Markey v Port Weller Dry Docks Ltd, 1974 CanLII 671 (ON SC), 47 DLR (3d) 7, 4 OR (2d) 12 at para 50.
[34] The nature of the employment relationship during probation is tentative. In Pathak v. Royal Bank, [1996] BCWLD 891 (BC CA) at para 8, the British Columbia Court of Appeal described the difference between probationary and regular employment:
... it is not appropriate to analogize from the legal and practical considerations pertaining to a regular employee in order to answer a question relating to a probationer's terms of employment. Probation is intended to ascertain whether a settled and ongoing relationship would work out. Its tentative nature is the controlling feature …[35] 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. Jadot v Concert Industries Ltd, [1997] BCJ No 2403 (BC CA) at para 29, Markey v Port Weller Dry Docks Ltd, 1974 CanLII 671 (ON SC), 47 DLR(3d) 7, 4 OR (2d) 12 at para 63.
[36] Where the employment of a probationary employee has been terminated for unsuitability, the employer's judgment and discretion in the matter cannot be questioned. All that is required is that the employer show that it acted fairly in determining whether the probationary employee was suitable and that he/she was given a fair opportunity to demonstrate his/her ability.
In the result, the case was dismissed. The dismissed employee was not entitled to anything.
Commentary
At the outset of this post I respectfully submitted that the court in this case got the decision wrong.
My reasoning for such an opinion is as follows. First, Mr. Nagribianko was employed for a period of a little less than six months. By operation of sections 5, 54, and 57 of the Employment Standards Act, 2000, he was owed at least one week’s notice of termination or pay in lieu thereof.
Specifically, section 5 of the Employment Standards Act, 2000 provides as follows:
… no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void, [unless the contract provides for a benefit greater than the minimum standards prescribed by the act].
Section 54 says that an employer shall not terminate the employment of an employee who has been continuously employed for three months or more unless the employer (a) has given to the employee written notice of termination in accordance with section 57 or 58 and the notice has expired; or (b) provides the employee with a payment in lieu of notice as prescribed by section 61.
So, if section 5 of the ESA says that the law prevails notwithstanding what a contract says, and section 54 of the ESA says that employers must provide employees employed for more than three months with at least the minimum amount of notice prescribed by that law, then obviously notwithstanding the fact that a contract says than an employee is “on probation”, employees employed for more than three months must – at the very least – be provided with the minimum amount of notice prescribed by that statute.
With the greatest of respect to Justice Sanderson, in my respectful opinion, the court’s decision that “it is not necessary for this Court to determine the period of reasonable notice” was incorrect. The employee was entitled to something, the legal question was, in fact, “how much”?
Takeaways for Employees with Labour Pains
The takeaway for employees is: just because an employer has told you that you are “on probation” does not necessarily mean that they can fire you without notice or payment in lieu, even if you have been employed for less than three months. Certainly if you have been employed for more than three months and an employer advises you that you are “on probation” there are issues that need to be discussed.
Takeaways for Employers with Labour Pains
The takeaway for employers is: if you wish to place your new employees on probation, draft an employment agreement (or better yet, retain an employment lawyer to draft one for you) that specifically sets out what is meant by that probationary period.
--As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.
Agreed, Sean.
ReplyDeleteI also take some issue with the court's contention that "The term "probation" has a recognized meaning in employment law"...and I think that this case is a great example of why that's a challenging thing to say - because the "recognized meaning", as applied by the Divisional Court, turns out to be plainly inconsistent with the ESA.
Even assuming that the court's right that the intention of the parties, in using the term 'probation' was to permit dismissal without notice, the clause would be void altogether on that interpretation.
One might argue that the use of the term 'probation' somehow builds in ESA minimums - thus entitling the plaintiff to one week, but no more. But my view is that this is the type of logic that the Supreme Court rejected in Machtinger: If the employer wants to be able to dismiss on the basis of the ESA minimums, contract expressly for that right.
In my own entry on the subject, I highlighted that most of the case law setting out the 'suitability test' is in union contexts - interpreting and applying collective agreements, which usually do expressly define probation. While there's no question that probationary dismissals in non-union contexts are subject to a similar type of my analysis, we have to be cautious when importing labour principles into employment law, simply because labour principles so frequently derive from terms of collective agreements which are frequently not present in individual contracts of employment.
http://lawyerbuchanan.blogspot.ca/2016/01/the-suitability-test-wrongful-dismissal.html