Friday, 2 December 2016

Employers Can Terminate Probationary Employees Without Cause

(c) istock/Jrcasas

Can an employer terminate the employment of an employee on probation without cause? That was the fundamental question that the Ontario Divisional Court had to answer in the case of Barton v. Bowerman, unreported, Divisional Court File No. 16-DC-2178 (Ottawa.)

In an earlier post, An employer can only dismiss a probationary employee for just cause” – Why that statement may have been correct, but it doesn’t mean what you think, I wrote about what it means to be on probation and the statement in the case of Mison v. Bank of Nova Scotia, 1994 CanLII 7383 (ON SC) that, “… an employer can only dismiss a probationary employee for just cause.”

In that earlier post, I wrote the following with respect to the termination of a probationary employee:

First, it is clear, settled law that a provincially regulated employer requires neither just cause nor even reason to terminate the employment of an employee who is not on probation. Meaning that those employees who either (a) are not placed on probation, see my next point below, or (b) ‘survive’ the probationary period, most certainly can be terminated without cause or reason.

Second, the placement of an employee on probation is wholly at the discretion of the employer; there is no automatic probationary period.

Third, the act of placing an employee “on probation” cannot possibly elevate the employee’s rights; that would be antithetical to the point.

So if all of those points are legally correct, and I would submit that they are, then why is an employer required to demonstrate just cause to terminate the employment of a probationary employee at all? Sure, it’s a modified test under Mison, but still, what is the legal basis for requiring an employer to show fairness to employee to whom it has arguably provided more notice of an intention to ‘fire at will’ than one to whom it has not? It simply makes no sense to me.

I then asked for comments on the issue of probation, and Professor David Doorey of Osgoode Hall Law School wrote the following:

I'd argue that a probationary clause does not oust the right of employer to terminate with notice, without alleging that termination is for cause. But once employer asserts termination is due to unfitness or failure to meet performance standards, a probationary clause allows court to assess the employer's decision on a low threshold standard of review (did employer fairly evaluate, give employee a reasonable chance, not act in bad faith, etc). The probationary clause introduces a lower standard of cause for employers who want to avoid notice and rely on summary dismissal. Having said that, if a probationary employee is terminated while a probationary clause is still in effect, a court may presume that the termination was due to performance or unfitness and consider the employer's decision in any event. Since notice period for a probationary employee would always be very short, at least if the contract requires only ESA minimum notice, I've never understand the value to an employer of including a probationary clause. If the probationary period is less than 3 months, no notice is required under ESA, if 3-12 months, it is one week's notice. Why not just give the notice and be done with it?

What Professor Doorey did not know at the time was that his position was exactly what I intended to argue before the Divisional Court and on November 30, 2016, I did make exactly that argument.

So are we right?

Of course we’re right. It is long-settled law that, in Ontario, a provincially regulated, non-unionized employee may be terminated at essentially any time without cause provided only that the reason for termination is not prohibited by statute and the employer provides reasonable notice of the dismissal. On this point see the comments of Justice Stratas at paragraph 63 of his reasons for decision on behalf of the Federal Court of Appeal in Wilson v. Atomic Energy of Canada Limited, 2015 FCA 17 (CanLII).

Facts in Barton v Bowerman

In the case about which I write now, the appellant/plaintiff/employee had signed a contract of employment where she agreed to a term of probation for six months. Her employment was terminated after only two weeks of employment. The employer never alleged just cause for dismissal and provided her with two weeks’ pay in lieu of notice.

At trial, the reasons for decision of which were reported as Barton v Bowerman, 2016 CanLII 30100 (ON SCSM), the Honourable Deputy Judge Lyon Gilbert made the following findings with respect to the amount of notice to which the plaintiff was entitled:

Strictly speaking then, section 57 [of the ESA] would allow the Plaintiff compensation of one week’s pay in lieu of notice given her employment was less than one year. However, the Defendant determined that the appropriate compensation was two weeks which the Plaintiff refused. Strictly speaking, the law supports the Defendant’s position that one weeks’ pay in lieu of notice is all that is required in this case. Alternatively, if one were to look at what the common law would provide given the factors outlined in Bardal, the two weeks offered by the Defendant are in line with the jurisprudence cited to the court and the factors in this case.

On appeal, the appellant maintained her argument that she had been wrongfully dismissed. She relied upon, amongst other things, the pronouncement in Mison that an employer must provide the employee with a reasonable opportunity to demonstrate her aptitude for the position before summarily terminating her employment. (See paragraphs 41 and 42 of Mison and paragraphs 16-25 of Alexander v. Padinox Inc., 1999 CanLII 4542 (PE SCAD) for such comments.)

Decision

In providing his reasons for dismissing the appeal, a copy of which can be viewed by clicking this link: Barton v Bowerman, 16-DC-2178, the Honourable Mr. Justice Robert Smith of the Divisional Court sitting at Ottawa wrote the following

[7] I agree with the Deputy Judge’s findings that the employer was entitled to dismiss the Employee at any time during the probationary period without cause. The employer does not have to show cause to terminate an employee on a probationary employment contract and does not have to continue employing the employee for the full probationary period. The notice period of two weeks was reasonable as eh was only employed for 2 weeks.

In the result the appeal was dismissed with costs of $7,500 awarded to the respondents. That amount is, of course, in addition to the $8,000 awarded in costs by the trial judge. For a summary of that decision see my earlier post, Ontario Small Claims Court Judge Awards $8,000 in Costs Against Unsuccessful Wrongful Dismissal Claimant.

Commentary

It is important for readers to remember that this is a case that I argued. Indeed, I had a hand in pretty much every step of this case after the initial termination. (I did not write the employment contract nor was I involved before the initial ‘demand letter’ was received.) In that respect I will try not to laud myself too much.

What this case stands for is the proposition that notwithstanding what has been said about the duty of fairness that employers must show to probationary employees before summarily terminating their employment, i.e. terminating their employment for “just cause”, nothing prevents an employer from terminating a probationary employee without just cause and simply providing them with reasonable notice.

Takeaways for Employees with Labour Pains

The key takeaway for employees from this case, and indeed this saga, is that it is absolutely imperative to understand what “wrongful dismissal” is and is not. A summary of the meaning of “wrongful dismissal” can be found on my page What is Wrongful Dismissal?. Once you have read that summary, you should still call me.

In short, employers generally do not need a reason to end your employment. That may seem unfair, but it is the current state of the law in Ontario for non-unionized employees working in provincially regulated workplaces. (Not sure if your workplace is provincially regulated? Call me.)

If you are an individual looking for assistance with respect to the termination of your employment, contact the professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP; we would be happy to be of service to you.

Takeaways for Employers with Labour Pains

The case is a “win” for employers. To my knowledge, there has never been so clear a pronouncement of the right of an employer to terminate a probationary employee’s employment without cause; perhaps because the same is so axiomatic.

However, employers must still be cautious. Just because you can terminate a probationary employee’s employment without cause, does not mean that you may not owe them a considerable amount of reasonable notice. As I wrote about in my post Ontario Court Awards Four Months Notice to Employee Fired while “On Probation”, extended notice periods for probationary employees are not wholly foreign to Ontario law. Although the court in this case found that two weeks’ pay in lieu of notice was reasonable, not all judges would have necessarily awarded so little.

If you are an employer and you are considering taking on new employees, speak with an experienced employment lawyer first. A well-written employment contract can limit the amount of notice owed to any employee, not just those “on probation.” The professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

Sean P. Bawden is a partner with Kelly Santini LLP, located in Ottawa, Ontario, Canada. He practices in the areas of employment law and civil litigation. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.

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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.

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