Employment Law Primer on Probation Periods and Just Cause

A lot of companies believe that there is an implied probationary period at common law allowing them to fire an employee without notice during the alleged probationary period. Equally, a lot of companies fire employees without providing them with any notice or pay in lieu believing that they have "just cause" to do so. Let's look at what the law has to say about both these issues.

Firstly, the case law states that the existence of a probation period is a question of fact to be established with the rest of the terms and conditions.

The employer wishing to rely on a probation period must discuss this fully with the employee before he/she accepts the position. In particular, the employee must understand what can befall him or her during the probation period. With or without a written contract the employer should advise the prospective employee of the length of the probation period and the fact that employment may be terminated at the discretion of the employer at any time during the period for any reason and upon a set amount of notice or pay in lieu of notice or upon no notice, if that is what is desired.

That said, the case law has been evolving over the past few years such that even during a probation period, assuming the court finds that one exists, there is an obligation on an employer to warn the employee before summarily dismissing them. Put differently, the concept of a probation period at law is eroding. The point here is that if your employment is terminated during an alleged probation period, you should have your situation reviewed by an employment lawyer.

Perhaps the single most important issue to any employee is what rights and obligations exist at the termination of his/her employment. There is an implied obligation at common law that an employer may terminate indefinite (no end-date) employment only upon reasonable notice or pay in lieu of notice. The exception to this rule is when the employer has "just cause" to terminate employment without notice or pay in lieu. What then constitutes "just cause" permitting an employer to terminate employment without notice or pay in lieu of notice?

The case law is very clear that summarily dismissing an employee with no notice is a serious matter not to be done lightly. To establish just cause, the employer must satisfy the court that the alleged misconduct of the employee was such as to interfere with and to prejudice the safe and proper conduct of the business of the company, and, therefore, to justify summary dismissal.

The issue is always whether the impugned conduct is so serious in the circumstances that it amounts to the employee's repudiation of the employment contract and that the continued presence of the employee will harm the employer. This is determined having regard to the facts and circumstances of the particular case and the societal morays of the day.

The more obvious types of "just cause" are gross incompetence, insolence, insubordination and dishonesty. Each one of the aforementioned types of misconduct has its own particular common law test and requirements that must be proven at trial in order to satisfy the court that dismissal without notice or pay in lieu was justified in the circumstances.

"Gross incompetence" is quite difficult to establish at trial. To succeed on this defence the employer must at a minimum, have provided a written warning to the employee outlining the areas of weakness that need improving, a detailed list of the reasonable standards that must be met, a reasonable time-frame within which to meet the standards and an unambiguous statement that if the employee fails to meet the standards by the required time, employment will be terminated.

"Insolence" refers to an employee displaying defiant or disagreeable behaviour such as using profanity or verbal abuse, or extreme criticism of the employer. Again, the court will only support "insolence" as just cause when it is satisfied that in the circumstances, the behaviour was so extreme as to demonstrate the employee's repudiation of the employment contract. Here, the court will examine the circumstances in light of present day standards of conduct.

"Insubordination" is the intentional disregard of a reasonable directive of the employer. An isolated act can constitute cause for dismissal if it amounts to a repudiation of the contract of employment. The employee must "wilfully" disobey an unambiguous and unequivocal directive necessary to the performance of his/her duties.

"Dishonesty" has traditionally been viewed as justification for summary dismissal because of the breach implied obligation at common law of the employee's duty and faithfulness. Certain employees will be held to a higher standard than others. In attempting to discern whether the alleged dishonest act destroys the foundation of the employment relationship, the court will examine all of the circumstances of the case.

If you have any questions related to employment law whether as an employee or employer, please do not hesitate to contact me. In employment law, an ounce of prevention is often worth more than a pound of cure.

Ms Leslie J Smith practises law at Haxell & Smith, Oakville, Ontario. Her civil litigation practice is focused primarily on Employment Law. She can be reached at (905) 845-0767 ext. 223.