Employer 'seemed to have a misunderstanding of what a probationary period was all about': lawyer
An employer breached a probationary employment agreement when it terminated a worker’s employment without notice or sufficient justification, an Alberta court has ruled.
“The [Alberta] Employment Standards Code says an employee isn’t entitled to notice if their employment has been less than 90 days, but all that really means is that they're not entitled to the statutory minimum notice period,” says Stephen Torscher, a labour and employment lawyer at Carbert Waite in Calgary.
“That's often something that catches employees and employers off guard - they think they don’t have to pay anything if they decide to let them go within that 90-day period, but that's not the end of the story.”
Chinook Lifecare Association is a not-for-profit association in Lethbridge, Alta., that provides electronic monitoring safety devices to seniors and is governed by a volunteer board featuring a president, three board members, and a board secretary. Chinook hired the worker on April 18, 2023, to be a part-time customer service person. The worker was responsible for client intake and care, asset inventory maintenance, and running the office.
On June 14, during the board’s monthly meeting, the worker proposed creating a new position for herself as the director of development of programming. She said she wasn’t willing to work at her current hourly rate and she could be a grant writer to help fund development, donor relations, and project development.
Following this proposal, the board approved an initial offer to the worker to place the worker in the new position, with a review of her salary and the position after two months starting on July 1. The worker declined and the board agreed to a second offer of $5,000 per month for two months, with a review in two months. One of the board members immediately conveyed the second offer to the worker, who accepted the same day.
Termination of employment
The worker began working in the new role the following day, June 15. However, the board held an emergency meeting on June 20 where it voted to terminate the worker’s employment without cause. Chinook’s president informed the worker of her termination the next day.
The worker filed a wrongful dismissal action, claiming that she had a fixed-term contract of $5,000 per month and she was entitled to damages of $10,000 for the balance of the contract. She also claimed $5,000 in damages for Chinook’s bad faith in terminating her, which she alleged caused her reputational harm in her small community, where she applied for other jobs but wasn’t successful.
Chinook countered that the board member who offered the new position didn’t have the authority to do it on her own and that the worker was a probationary employee who could be terminated without cause at any time.
The court determined that the board member had the authority to convey employment offers on behalf of the board, as it was clear that the other board members were aware of and supported her authority during their discussions and votes on the employment offers.
The court noted that a fixed-term contract must involve a specified end, whether it be a calendar date or the completion of certain tasks, that’s explicitly stated in the contract, whether written or verbal. There also must be “a distinct expression or necessary implication by the parties for the intention to enter a fixed contract,” said the court.
Probationary period
The court also noted that for a probationary period to be in place, “the employee and the employer must both recognize that future employment is dependent on the performance during the specified time period.” However, although the Alberta Employment Standards Code allows employers to skip termination notice for employees employed for 90 days or less, it doesn’t preclude common law damages for a without-cause termination, the court said.
“The common law applies unless the contract specifically sets out entitlements on termination that oust the presumption that the common law would apply, and there wasn't any language like that in this contract,” he adds. “So the common law does apply here, and you look to the usual Bardal factors to determine what a reasonable notice period would be.”
The court found that, while no written contract existed, the evidence indicated that the worker’s employment was probationary. The board members testified that the worker’s role was subject to review after two months, with no guarantee of continued employment, and the worker herself acknowledged that she understood that there would be a review of her position after two months and they didn’t guarantee that she wouldn’t be terminated within those two months.
However, the court pointed out that, under the common law, employers must provide probationary employees with a reasonable opportunity to demonstrate their suitability for a role in order to justify terminating without notice. The court determined that Chinook didn’t provide the worker with sufficient time to showcase her abilities in the newly-created position. Instead, her termination appeared to stem from the board’s reluctance to pursue the new direction her role represented and concerns about the associated costs. These reasons weren’t valid grounds for termination during a probationary period, said the court.
“The employer has to decide [during the probationary period] that the employee isn't suitable for the job, and that decision has to be based on an honest, fair, and reasonable assessment of the suitability of the employee,” says Torscher. “None of those circumstances were present in this case, at least on the evidence that was provided - and I think you can make a common-sense argument that if you only give an employee five days to perform their role, that's probably not an adequate period of time to give them an opportunity to show that they can meet the needs and requirements of the position.”
Breach of probationary employment agreement
The court disagreed that Chinook acted in bad faith, as there was no evidence that the organization acted in a way that was “untruthful, misleading, or unduly insensitive.” The worker’s claim that her termination negatively affected her reputation in the community was speculation without evidence, the court said.
The court ruled that Chinook breached the probationary employment agreement but dismissed allegations of bad faith and claims for reputational harm. It ordered Chinook to pay the worker $2,500, equivalent to two weeks’ salary, as damages for the breach of the probationary agreement. It declined to award her the full two months’ salary she had sought, citing the probationary nature of her role.
The uncertainty around the two-month period could have been avoided with a written agreement setting out the terms and understanding of the parties, says Torscher.
“[Chinook] seemed to have a misunderstanding of what a probationary period was all about, and didn't use that as a proper opportunity to assess the performance and suitability of the employee during that period of time,” he says. “Having some clarity about the terms of your employment offer and having a properly drafted employment agreement - whether that's an offer letter or a full-blown multi-page employment contract - just having it all in writing up front and ensuring that everyone understands what those terms are, could have clarified a lot of the uncertainty.”
“One of the interesting things about this case is, I don't think that being a probationary employee or being on a fixed-term contract are mutually exclusive - you can be a probationary employee on a fixed-term contract,” says Torscher.
