Short Service Big Pay Day – Probationary Periods

There are countless common misconceptions out there about probationary periods for employees. Many employees believe that an employer can simply send them out the door in their first three months with nothing, no matter what is on paper. In some circumstances, if an employer has written a longer probationary period into their employment contract, for example, the first 6 months, an employee may be anxious about their future employment and entitlements until such a period has elapsed.

They don’t need to worry.

First, employers need to put a probationary period directly into the employment contract to make it effective. There is no default or automatic probationary period for employees in Ontario. Rather, the Employment Standards Act requires employers to pay employees who have been employed for longer than 3 months a minimum required termination pay.  Except that does not mean that an employer can let an employee go recklessly at 11 weeks empty-handed simply for no other reason than the three-month deadline approaching. Employment contracts are subject to a duty of good faith, which include giving a new employee a fair chance to succeed in their role or improve if necessary.

As a recent case shows, a BC employer who failed to offer their employee that opportunity learned an expensive lesson.

The Case

In Tessema v. Nemesis Coffee Holdings, 2022 BCCRT 1113, Mr. Tessema had been hired as a delivery driver by the employer…and was then terminated after one day of work. The employer terminated him without cause but claimed that this was just done to spare his feelings and that he was not a good driver (although he provided no evidence at trial).

The employer and employee had no employment contract, and so there was no written agreement to any sort of probationary period. Thus, the employer would be legally required to provide reasonable notice – coverage until the employee could reasonably find comparable work considering his age, his tenure, the nature of his duties, and the job market.

It took this prior employee four weeks to find new work, and so his claim for reasonable notice was for four weeks’ pay in lieu of notice. He was only 32, earning $20 per hour as a delivery driver, and presumably, he should have been able to find something fairly quickly.  An employee in his position is legally obligated to ‘mitigate their losses’ and make efforts to find new work.

The Tribunal hearing this matter (it was a Civil Resolution Tribunal, not a Court) stated clearly that just because an employee has only short service, it does not disentitle them to a fair pay out.  Thus, while the employee’s claim was for 4 weeks’ pay in lieu of notice, the Tribunal awarded him 3 weeks’ pay in the amount of $1800, plus $13 in interest. When measured against his actual time in the driver’s seat, the employee made over $300 per hour as a delivery driver.

Lessons Learned

The employee, in this case, is unique since most employees terminated after a single day of work will vote to cut their losses and move on vs. seeking legal recourse. The cost of legal fees can be a deterrent, and by and large, most employees in a similar situation might not receive much compensation, if any at all.

Yet, the greater is that just because an employee is only employed for a short period of time, it does not automatically disentitle them from being compensated for the loss of their job. This is especially true if there are other determining factors, such as any discriminatory human rights reasons that influenced the decision.

Cases of short service employees receiving comparatively long notice periods may not come about every day, but they are far from rare. When it comes down to a legal challenge, employees usually have the benefit of the doubt, and the responsibility is on the employer to show that they have ‘done the right thing.’

There are, of course, ways to protect employers in similar situations. A well-drafted employment contract can contain very specific language about an employee’s entitlements upon termination, as well as specific probationary wording that helps protect an employer’s pocketbook even further.

Employers should also be mindful to document an employee’s performance, along with any warnings, discipline, or performance improvement plans that come into play. Employees need to be given a fair chance to improve, but if they are ultimately not cutting it, an employer should be able to justify their decision to end the relationship.

Lastly, seek legal advice before letting an employee go! An employment lawyer can help highlight the risks you may not see and advise you on how to protect your interests. We regularly counsel employers throughout the Cambridge, Kitchener, and Waterloo regions on these very issues. Contact us today to set up a consultation.

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