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Decision focuses on probationary employees

Focus on: Labour & Employment Law
|Written By Michael McKiernan
Decision focuses on probationary employees
Jeff Dutton advises employers to include details about probationary period terms in employment contracts.

A Court of Appeal decision offers important lessons for both probationary employees and their employers, according to the lawyers who argued the case.

In Nagribianko v. Select Wine Merchants Ltd., a unanimous three-judge panel of the province’s top court sided with the employer, which had fired its employee Alexander Nagribianko toward the end of an agreed six-month probationary period. 

Nagribianko had initially won common law damages equal to four months’ salary and benefits at Small Claims Court, only to see the award overturned at the Divisional Court.  

Although the text of Ontario’s Employment Standards Act makes no mention of probationary periods, the appeal court noted that the concept “has acquired a clear meaning at common law.”

“The decision recognizes that probationary employment is fundamentally different from regular employment. A probationary term is intended to ascertain whether a settled and continuing relationship is likely to work out,” says Gavin Mac­Kenzie, who acted for Select Wine at the divisional and appeal courts.

MacKenzie, co-founder of Toronto litigation boutique MacKenzie Barristers LLP, says the decision clears up lingering confusion about the status of probationary employees by confirming that, “unlike a regular employee, a probationary employee may be dismissed without cause and without notice during the probationary period,” so long as the employer acts in good faith and gives the employee a chance to show suitability for the job.

Despite the setback at the province’s top court, Nagribianko’s lawyer, Howard Markowitz, says he took solace from the appeal court’s recognition that probationary employees are still entitled to ESA minimum termination pay, even without a reference to the law in the employment contract. 

In Nagribianko’s case, his ESA-prescribed entitlement was one week’s severance pay, since he had spent more than three months but less than two years in the job.

Markowitz, a partner at Toronto employment law firm Du Markowitz LLP, also acted for his client at the Small Claims Court trial.

He says he didn’t charge him for the subsequent appeals “because I believed on principle that it was necessary to uphold the right of all employees, even those on probation, to minimal [ESA] termination pay.”

The case dates back to May 2013, when Nagribianko left his job to join Select Wine’s alcohol import agency.

A week short of the expiry of the probationary period, the company terminated his employment, claiming that, after “careful consideration,” it had concluded he was “unsuitable for regular employment” due to a key customer’s refusal to deal with Nagribianko.

Nagribianko sued for wrongful dismissal in Small Claims Court, where a deputy judge agreed that the probation clause in the contract, which simply stated “probation . . . six months,” was unenforceable, in part because he was never given a copy of the employee handbook, which spelled out the employer’s right to fire him during the six-month period.

The trial judge then awarded him common law damages amounting to four months of salary and benefits, after finding Nagribianko had been induced to leave his previous stable employment for a shot at a new job with greater responsibility and possible advancement. 

However, the Divisional Court overturned the decision in a 2016 ruling.

The court found that Nagribianko had demonstrated an understanding of what probationary periods entail, as well as their inherent instability.

In the appeal court’s June 27 decision upholding the Divisional Court decision, the three judges wrote that the short probation clause was unambiguous and enforceable.

“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,” the decision reads.

Jeff Dutton, the principal at Toronto firm Dutton Employment Law, says the decision sets a “low bar” for the enforcement of a probation clause, but he adds that he would still advise employers to include more detail about the term in employment contracts. 

“I had expected they might come down on the side of the employee due to the fact there was some ambiguity about the length of the probationary period,” he says.

Jonathan Borrelli, a management-side employment lawyer, says he was pleasantly surprised by the appeal court’s employer-friendly interpretation of the term “probation” in the employment contract, relying on an objective assessment of the parties’ intentions, rather than the employee’s subjective understanding.  

“The Court of Appeal tells us that this is a standard definition that has been around for more than 20 years, and that any reasonable person would understand what it means,” says Borrelli, who practises with Toronto-based DMC LLP, a law firm focused on serving dental practices.         

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