Probationary Periods in Ontario: What Employers and Employees Need to Know

Written on behalf of Peter McSherry

In the hiring process, employers and employees alike often focus on the long-term aspects of the employment relationship. However, the first few weeks or months after a new hire begins can be just as important as the broader trajectory of the role. In Ontario, the concept of a probationary period is a common feature of employment contracts; however, it is often misunderstood or misapplied. Both employers and employees should understand the legal framework governing probationary periods, their limitations, and best practices for managing this critical phase of employment.

What Is a Probationary Period?

A probationary period is a contractual term in which an employer and a new employee agree that the employee will be evaluated over a set period (typically three months) to determine their suitability for ongoing employment. During this period, the employer assesses performance, reliability, and fit within the organizational culture. It is also a time when the employee decides whether the position and work environment meet their expectations.

While the term “probation” is common, it is not automatically recognized under Ontario law unless it is expressly included in an employment agreement. Without a written agreement establishing the probationary period and its implications, the courts are likely to interpret the employment relationship as permanent from day one, which has significant consequences for termination rights.

The Employment Standards Act and Probationary Periods

The Employment Standards Act (ESA) provides minimum standards for most workplaces in Ontario, including rules related to termination notice and pay. Under the ESA, an employee who has worked for less than three months is not entitled to statutory notice of termination or termination pay. As such, employers often set the probationary period to align with this three-month threshold.

However, the ESA does not define or require a probationary period. Instead, it outlines the minimum entitlements applicable based on the length of employment. If an employer wishes to rely on the reduced notice obligations that exist within the first three months, the employment contract must clearly outline the existence of a probationary period and specify its duration.

If an employee is terminated after the three-month mark, even if a probationary period is still in effect under the employment agreement, they are entitled to at least one week of statutory notice or pay in lieu. This distinction is crucial for employers to understand to avoid contravening the ESA.

The Common Law and Probationary Employees

While the ESA establishes the floor for notice requirements, the common law often provides greater protections to employees, especially where there is no enforceable termination clause limiting entitlements to the ESA minimums. Probationary employees may, in some cases, be entitled to common law reasonable notice upon dismissal if the employment contract is silent or ambiguous on the subject.

Simply labelling an employee as “probationary” does not provide a blanket exemption from notice or justification obligations. Courts will examine whether the employer communicated clear expectations, provided constructive feedback, and evaluated the employee in good faith before terminating employment.

Clarity and Enforcement of Probation Clauses

To be enforceable, a probationary clause must be clearly worded and agreed to in writing, preferably at the time of hire. Vague language, ambiguous definitions of the probation period, or references that contradict statutory obligations may render the clause unenforceable.

For example, if a contract states that the probation period is “approximately three months” or does not specify whether notice is required during probation, a court may interpret the contract in favour of the employee. Similarly, if the probation period exceeds three months but the employer does not provide notice or pay in lieu when terminating after that period, the employer will likely be found to be in breach of the ESA.

Employers should be cautious to draft probation clauses that explicitly state the duration of the probation period, the employer’s right to terminate without notice or pay during that time (where permitted under the ESA), and what changes (if any) apply once the period ends.

Can Probation Be Extended?

In some circumstances, employers may wish to extend the probationary period to allow more time to assess an employee. While this is not prohibited, any extension must be clearly communicated to and agreed upon by the employee, preferably in writing. Without the employee’s consent, a unilateral extension could amount to a breach of contract (and potentially wrongful dismissal).

It is also essential to consider that once the employee passes the three-month ESA threshold, the employer is subject to minimum notice obligations even if the probation period is extended. An extended probation period does not override the ESA’s statutory notice requirements.

Termination During Probation

Many employers mistakenly believe they have unfettered discretion to terminate employment during a probationary period. However, the termination must still be conducted in accordance with the Employment Standards Act, the employment contract, and applicable human rights legislation.

If the employee is terminated within the first three months and a valid probation clause exists, the employer typically does not owe ESA notice or pay in lieu of notice. However, if the contract is silent on probation or contains an invalid probation clause, common law principles may apply, and the employee could be entitled to damages.

Moreover, probationary status does not exempt employers from complying with the Ontario Human Rights Code. A termination during probation that is based, even in part, on a protected ground such as disability, race, or gender may give rise to a claim for discrimination, regardless of the employee’s tenure.

Probationary Period Best Practices

For Employers

Employers in Ontario should ensure that their employment contracts are carefully drafted to include clear and enforceable probationary clauses. This includes stating the duration of the probationary period, the employer’s rights to terminate during that period, and how statutory notice obligations will be handled in the event of termination.

During probation, employers should document performance discussions, identify any performance concerns early, and provide the employee with a genuine opportunity to improve. Treating the probationary period as a structured evaluation phase, rather than a legal loophole to terminate at will, can help reduce legal exposure and improve workplace culture.

Employers should also conduct exit interviews or gather feedback from probationary employees to identify potential areas for improvement in onboarding, training, or communication.

For Employees

Employees should review any offer of employment carefully before signing, paying particular attention to any clauses related to probation, termination, and notice. If a probation clause is not clear or seems unusual, it may be beneficial to seek legal advice before agreeing to the terms.

Employees should also be proactive during the probationary period by seeking feedback, clarifying job expectations, and demonstrating a willingness to improve. If terminated during probation, employees should consider whether the employer acted in good faith and in accordance with the law. In some cases, legal recourse may be available, especially if there is evidence of discrimination or a breach of contract.

Communication & Good Faith Are Key to a Successful Probationary Period

Probationary periods serve an important function in employment relationships by allowing both employers and employees to evaluate suitability early on. However, these periods are governed by a complex interplay of statutory and common law obligations. Misunderstanding or misapplying the rules around probation can result in legal liability for employers and lost rights for employees.

Clear contractual language, good faith conduct, and a shared understanding of expectations are essential to making probationary periods work for everyone involved. By treating the probationary phase not as a loophole but as a mutual trial period, employers and employees can establish a foundation of trust and accountability that supports long-term success.

Contact Peter A. McSherry Employment Lawyer in Guelph for Comprehensive Advice on Probationary Periods

If you have questions about probationary periods, termination rights, or how to structure employment agreements that comply with Ontario law, Peter A. McSherry Employment Lawyer can help. Peter A. McSherry advises both employers and employees on navigating probation, drafting enforceable contracts, and addressing disputes that arise during the early stages of employment. To discuss your employment law matter, please contact us online or call 519-821-5465.