By OptiVal Editorial Desk
A probationary period in Ontario sounds simple: try the person out, and let them go with nothing owing if it does not work. Plenty of owners learn the hard way that it does not work like that. A contract says six months of probation, the hire is let go in month four, and the business still owes termination pay. This guide explains the three month rule underneath it, and the rights that apply from day one.
Ontario sets the rules out in Termination of employment: Your guide to the Employment Standards Act. What follows is general information, not legal advice on a specific dismissal. If a contract gives a greater right or benefit, the contract terms apply.
What a probationary period in Ontario actually is
Start with the surprise: the Employment Standards Act, 2000 (ESA) does not create a probationary period, and never uses the word probation. A probationary period exists only because a contract says so. It is a trial window agreed in writing, usually three to six months, during which the employer assesses suitability.
What the ESA does set is a qualifying period for termination notice. An employee continuously employed for less than three months is not entitled to notice or termination pay under the ESA. Once the employee reaches three months, the employer can end the employment only with written notice, termination pay instead of notice, or a combination of the two. The ESA does not require a reason. That changes nothing about the notice owed.
So there are two clocks in every new hire. The contract clock runs for whatever period the contract states. The ESA clock runs for three months from the start date, and no wording can stretch it.
The three month clock, and why it does not pause
The three months means continuous employment, not days actually worked. A person counts as employed during time they are not working but the relationship still exists, for example while off sick, on a leave, or on lay off. A remote administrator who starts on January 5 and takes a week of sick leave in February still crosses the line in early April. Diary that date when the offer is signed.
At three months the notice scale starts small and grows with service:
- Less than 1 year of employment: 1 week of notice.
- 1 year but less than 3 years: 2 weeks.
- 3 years and up: 1 week for each year of employment, to a maximum of 8 weeks.
Termination pay is a lump sum equal to the regular wages for a regular work week, multiplied by the notice weeks owed. The employee also earns vacation pay on it, and the employer must keep making the contributions needed to maintain benefit coverage through the notice period. It is due by the later of 7 days after the employment ends or the next regular payday.
A worked example: a remote hire let go at four months with no notice given. She works 37.5 hours a week at $24 an hour, so her regular wages are $900 a week. With less than a year of service she is owed 1 week: $900 of termination pay, plus 4 per cent vacation pay on it, $36, for $936 in total, with benefit contributions continued for that week.
The six month probation trap
The most common drafting mistake we see is a six month probationary period paired with a sentence saying no notice is owed during probation. That clause promises something the ESA forbids after month three. A contract can give an employee more than the ESA minimums. It cannot give less.
Practical result: a dismissal in month four, five or six of a six month probation still needs the ESA week of notice or termination pay, even though the employee is still on probation on paper. And if the contract has no clear clause at all, or the clause is vague about length and notice, the employee may be entitled to common law reasonable notice, usually more than the ESA minimum. Probation protects an employer only when the clause is clear, agreed before the start date, and kept inside the ESA floor.
Rights that apply from day one
Probation is a trial, not a waiting room where the law is switched off. From the first shift, an Ontario employee on probation is covered by:
- Minimum wage: $17.95 an hour general rate since October 1, 2026, and $19.70 an hour for homeworkers, meaning employees who do paid work in their own home. Our Ontario minimum wage 2026 guide works through the rates.
- Hours of work and overtime rules, including the three hour rule covered in our three hour rule guide.
- Vacation pay accruing at 4 per cent of gross wages from the first pay, even though vacation time itself is earned after 12 months.
- Sick leave after 2 consecutive weeks: up to 3 unpaid, job protected days a year.
- The Ontario Human Rights Code. The Ontario Human Rights Commission confirms in its legal framework guidance that employment under the Code includes probationary employment. Its guidance on ending employment is blunt: it is not a defence to a discrimination claim that the employee was on probation.
- Reprisal protection. An employer cannot end employment, in probation or out of it, because the employee asked about an ESA right, refused work beyond the hours limits, or took an ESA leave.
Running probation well with a remote hire
Most probation problems in remote teams are record problems, not people problems. If the fit is wrong, you want a file that shows a fair assessment of suitability: expectations set at the start, check ins that happened, gaps that were named, and support offered. A dismissal with no notes invites an argument that the real reason was something else.
- Put the probationary period, its length, and what happens on a dismissal during it in the signed contract, before day one. Diary the ESA three month date separately.
- Run short reviews at 30, 60 and 90 days. For a remote finance hire, test real work: a bank reconciliation, a payroll run, a month end close against a deadline.
- Give feedback in writing as you go. Silence for eleven weeks followed by a sudden fail is hard to defend as a fair trial.
- If you extend probation, do it in writing before the original period ends. The extension changes nothing in the ESA: notice is still owed from month three.
- Set payroll up correctly from the first pay: wage rate, vacation pay at 4 per cent, and deductions. Our remote staffing team builds this into onboarding.
Probation, handled properly
Three months is a short trial, and it works when the contract, the calendar and the review notes all say the same thing. OptiVal runs payroll at $29 per employee per month plus a $149 setup fee, and bookkeeping starts at $199 per month (CAD, HST extra). See our pricing page for the full rate card. Led by qualified professionals with more than 75 years of combined experience, PwC-trained, we help owners hire remote staff with the paperwork done properly. Book a free consultation for a second look at your next hire.
