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Ontario Court of Appeal enforces simple probation clause

probation clauseEmployers generally owe their employees common law reasonable notice upon termination without cause. However, if the parties agree to a probation period in an employment contract, the right to common law reasonable notice can be ousted if the employee is terminated within the probationary period.

A recent Ontario Court of Appeal case, Nagribianko v. Select Wine Merchants Ltd., 2017 ONCA 540 (CanLII), considered whether a very brief and to the point (i.e., just two word) probationary clause contained in an employment contract was clear enough to be enforceable.

Background

The Plaintiff Alexander Nagribianko signed an employment contract with the Defendant Select Wine Merchants. The employment contract contained a clause providing for a probationary period of 6 months, which simply stated, in very basic terms: “Probation…… Six months.”

Within six months of starting out at Select Wine Merchants, Select Wine Merchants terminated Mr. Nagribiank’s employment, without cause, but also without common law reasonable notice, due to the presence of the probationary clause. Mr. Nagribiank thereafter sued for wrongful dismissal, claiming he was owed common law reasonable notice because the probationary clause, being just two words, was unclear and therefore unenforceable.

Decision

The Court of Appeal held that the key term “probation” in the (just two word) probationary clause had a clear meaning recognized time and again by that court:

The parties agreed to a probationary contract of employment, and the term “probation” was not ambiguous. 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….

Therefore, the inclusion of the (just two word) probationary clause containing, at the very least, the key word “probation,” was sufficiently clear for said probationary clause to be enforceable. As a result, the court held that the employee was not owed common law reasonable notice.

Tips for employers

Although it is advisable for employers to explicitly contract the terms of any probationary clause with more than two words, with well-defined employer expectations during the probationary period, plus the consequence of termination within the reasonable notice period, this case demonstrates that the term “probation,” almost alone, has a well-established meaning that can bind parties to an employment contract permitting the employer to terminate an employee without reasonable notice in the applicable probationary period.

At the same time, employers should be reminded that probationary clauses must not provide for no notice if the employee is terminated any time after six months or longer, which is the point in time that Ontario employers must provide at least one week of notice to terminated employees as per Ontario’s Employment Standards Act. Otherwise, the probationary clause could be void due to the fact it provides for a notice period shorter than the statutory minimum contained in the Employment Standards Act.

 

Jeff Dutton

Employment Lawyer at Dutton Employment Law
Jeff is a leading employment lawyer in Toronto. He represents both individual employees and management in all matters. Prior to founding Dutton Employment Law, Jeff was a prosecutor for the Ministry of Labour. He has been successful at the Ontario Labour Relations Board, Ontario Court of Justice and the Ontario Superior Court. Jeff is a frequent lecturer on employment law matters and has been widely published in newspapers and trade journals. Read more.
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