Probationary Periods — The Biggest Misconception in Canadian Employment Law

The Myth That Will Not Die

Ask any business owner in Ontario what a probationary period means and you will get some version of: "I can let them go for any reason, no notice, no cost." This is the single most widely held misconception in Canadian employment law. It is wrong in multiple dimensions, and it costs employers money every year.

A probationary period is not a legal free-fire zone. It is not a hall pass from employment standards. And in most cases, it does not even do what employers think it does.

What the ESA Actually Says

Under Ontario's Employment Standards Act, 2000, the termination notice and pay provisions kick in after an employee has been continuously employed for three months. Before three months, the employer has no obligation to provide statutory notice or pay in lieu. After three months, the minimums apply regardless of what the employment contract says.

This three-month threshold is often confused with a "probationary period," but they are entirely different concepts. The ESA's three-month rule is statutory. A probationary period is contractual. The two may overlap, but they are governed by different rules.

Here is the critical point: the ESA is a floor, not a ceiling. Even during a contractual probationary period, the employer cannot provide less than the ESA minimum. If the probationary period is six months and the employer terminates at month four, the ESA minimums apply — the employee is entitled to at least one week's notice or pay in lieu.

Common Law Notice: Where It Gets Expensive

The ESA is the easy part. The hard part is common law. And this is where the Nagribianko line of cases changed everything.

In Nagribianko v. Select Wine Merchants Ltd., 2014 ONSC 4216, the Ontario Superior Court confronted a familiar scenario: an employer terminated an employee during a probationary period and assumed it owed nothing. The court disagreed.

Justice Corrick held that a probationary clause in an employment contract must be clear and unambiguous to displace the common law presumption of reasonable notice. If the clause simply says "there is a three-month probationary period" without specifying what happens at termination — specifically, whether notice is limited to the ESA minimum or excluded entirely — then the common law reasonable notice period applies even during probation.

The implications of this are enormous. An employee terminated at two months into a poorly drafted probationary period could be entitled to common law reasonable notice — which, even for a short-service employee, might be two to four weeks' pay. For a more senior hire with a longer probation, the damages could be far greater.

The Jadot Decision: Reinforcing the Rule

In Jadot v. Concert Industries Ltd., 2015 BCSC 1135 (applied approvingly in Ontario), the court reinforced that probationary language must clearly limit the employer's termination obligations. A clause that simply creates a probationary period without specifying the consequences of termination during that period is legally insufficient.

The court drew a distinction between two types of probationary clauses:

- **Clauses that limit notice:** "During the probationary period, the employer may terminate employment with one week's notice or pay in lieu." This is enforceable.

- **Clauses that merely label a period:** "The first three months of employment are a probationary period." This is essentially meaningless for limiting termination obligations.

Most employment contracts in Canada use the second type. They create a probationary period but never specify the legal consequences. These clauses are, for practical purposes, decorative.

What Probation Actually Does (When Drafted Properly)

A well-drafted probationary clause does exactly two things:

1. **Lowers the threshold for termination.** During probation, the employer need not show cause for termination. It is enough to demonstrate that the employee was given a fair opportunity to demonstrate suitability and was found unsuitable. The leading case is *Mison v. Bank of Nova Scotia*, (1994) 150 AR 93 (Alta. QB), which held that the employer's obligation during probation is to assess suitability in good faith.

2. **Limits the notice period.** If — and only if — the clause clearly specifies a limited notice entitlement during probation.

The first function is important but often overstated. Even without a probationary clause, an employer can terminate a short-service employee without cause — it just owes reasonable notice. The probationary clause does not create a right that would not otherwise exist; it creates a contractual framework for evaluating suitability.

The "Suitability" Requirement

Even during a valid probationary period, termination is not completely at-will. In Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42, the court held that an employer must provide the probationary employee with a reasonable opportunity to demonstrate their suitability for the position. Termination during probation can be challenged if:

- The employee was never told what standards they needed to meet

- The employer provided no feedback during the probationary period

- The termination was based on reasons unrelated to suitability (e.g., discriminatory grounds)

- The employer did not act in good faith in its assessment

This is a lower threshold than proving just cause, but it is not no threshold. "We just didn't feel it was working out" is not a legal defence. The employer must have a genuine, good faith basis for concluding the employee was unsuitable.

Human Rights Protections Apply in Full

One point that cannot be overstated: human rights protections apply from day one. There is no probationary exemption from the Ontario Human Rights Code. An employer who terminates a probationary employee because of a disability, pregnancy, race, religion, or any other protected ground faces the same liability as terminating a 20-year employee.

In Fair v. Hamilton-Wentworth District School Board, 2016 HRTO 1302, the Human Rights Tribunal of Ontario held that a probationary termination was discriminatory because the real reason for the termination was the employee's disability. The employer's reliance on the probationary period did not shield it from liability.

This is particularly relevant for employees who develop a mental health condition or physical injury during probation. The employer cannot use the probationary period as a pretext for terminating someone who becomes inconvenient to accommodate.

What About "Extended" Probationary Periods?

Some employers extend probationary periods beyond the initial term. This raises its own legal problems. In Singh v. Island Investment Development Inc., 2013 PESC 10, the court examined whether an employer could unilaterally extend a probationary period. The answer depends on what the contract says. If the contract provides for extension, and the extension is reasonable, it is generally enforceable. If the contract is silent on extension, unilaterally extending probation may constitute a constructive change to the employment terms.

The safer approach is to either draft the contract with an extension provision or, if the initial probationary assessment is inconclusive, make a definitive decision within the original period.

The Drafting Trap

Here is the fundamental problem: most probationary clauses are drafted by people who do not understand the law. A clause that says "the first 90 days are probationary" without any termination provisions is the legal equivalent of decorating a wall with a "No Trespassing" sign that is not attached to a fence.

To be legally effective, a probationary clause must:

1. **Specify the length of the probationary period.**

2. **State what happens at termination during probation** — typically, that the employer may terminate with ESA minimum notice or pay in lieu only.

3. **Comply with the ESA.** A clause that purports to provide less than the ESA minimum is void.

4. **Be brought to the employee's attention before they start work** — as required for any enforceable termination clause.

Even a perfectly drafted probationary clause exists within the broader context of the employment agreement. After Waksdale v. Swegon North America Inc., 2020 ONCA 391, if any termination provision in the employment contract violates the ESA, the entire termination scheme — including the probationary clause — may be void.

What Employees Should Know

If you have been terminated during a probationary period, you may still be entitled to:

- **ESA minimum notice or pay in lieu** if you have been employed for more than three months

- **Common law reasonable notice** if the probationary clause does not clearly limit your entitlements

- **Human rights remedies** if the termination was connected to a protected ground

- **Damages for bad faith** if the employer conducted itself unfairly in the manner of termination

Do not assume that "probationary" means "no rights." It almost never does.

The Takeaway

Probationary periods in Canadian employment law are not what most people think they are. They are contractual mechanisms, not statutory exemptions. They must be carefully drafted to have any legal effect. They cannot override the ESA. They cannot override human rights protections. And if they are poorly drafted — as most are — they may not limit the employer's obligations at all.

The biggest misconception in Canadian employment law is not complicated to understand. It is just expensive to ignore.