The Ontario Court of Appeal (ONCA) recently considered the issue of probationary terms in an employment contract in a review of a Divisional Court decision. Ontario law allows a first appeal to the Divisional Court from the Superior Court of Justice in cases involving lower thresholds of monetary claims. In turn, a further appeal is allowed from Divisional Court to the ONCA, when this court allows for such an appeal.

The Details

The contested contract of employment set out the probationary period as simply, “Probation…Six Months”.

The issues were twofold: First, was the contract language clear and precise enough to be enforceable? Secondly, given an effective contract, what does “probation” require of the employer in order to terminate?

The employer had terminated the plaintiff’s position “after careful consideration”, having concluded that he was “unsuitable for regular employment”.

The Decisions

The case was successful at trial, as the judge had determined that the wording of the contract was unclear. Four months’ damages were awarded, as it had been argued successfully that there was an issue of “inducement” from a prior secure position. This allowed for the enhancement of what would normally be a modest notice period.

The Divisional Court set aside this decision on appeal.

The Court of Appeal agreed. It found that the contract was clear and unambiguous by the use of the word “probation” and that the meaning of this term indeed was well known at common law. This provision allowed the employer to terminate if such a decision that the employee was not suited for permanent employment had been made in good faith. This statement was at odds with earlier caselaw which had required the employer to bring to the attention of the employee their perceived deficiencies during this time period. To this issue, the Court stated that the employee must be given “a fair and reasonable opportunity to demonstrate their suitability”, perhaps a subtle distinction with a substantive difference in consequence.

The Court also found that the agreement did not violate the requirement that an employer must always comply with the minimum statutory notice required after three months of employment, which in this case would have been one week. The contract was silent on this issue, as opposed to affirmatively contradicting this obligation.

The result of this decision was that the employer was within its rights to terminate without notice. Costs were ordered against the employee of $5,000. The costs award at the Divisional Court is not apparent but it very likely allowed for the trial costs and the first level appeal costs to the employer.

Employers’ View

While the employer was ultimately successful in this instance, the contract should have been more carefully written to show compliance with legislation and a clearer definition of “probation” to the aid of both parties. The employer in this context would be wise to advise the employee of its view of their failings.

Employees’ Take Away

Litigation in this instance was high stakes poker. The case was challenging and the costs as awarded, which were comparatively modest, nonetheless likely made the risks of litigation substantially high.

Get Advice Before You Act

If you have questions about the language in an employment contract or any employment issue, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins. We regularly advise employees and employers on issues in the workplace. Contact us online or by phone at 416 364 9599 to schedule a consultation.