Terminating probationary employees

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In Sprong v Chinook Lifecare Association, 2024 ABCJ 163, the Alberta Court of Justice had to decide whether an of employment constituted a fixed-term contract, or an ongoing contract that contained a probationary clause. The Court also had to decide the principles that apply to terminating probationary employees.

Background

The employer in this case, Chinook Lifecare Association (“Chinook”), employed Tania Sprong (“Ms. Sprong”) in a part-time customer service position from April 18 to June 14, 2023. Thereafter, further to a suggestion made by Ms. Sprong, the employer verbally offered her the full-time position of Director of Development.  The terms of the offer were that she would be paid $5,000 per month for a period of two months with a review in two months. Ms. Sprog accepted the offer and started working in her new role on June 15, 2023. On June 21, 2023, the employer terminated Ms. Sprog’s employment without notice or payment in lieu.

Ms. Sprog argued that the employer had offered her a fixed term contract for two months, and she was entitled to be paid out to the end of the two-month period. Chinook, on the other hand, argued that the two months was simply a probationary term which allowed it to terminate the contract at any time. Chinook also argued it did not have to provide Ms. Sprog with any notice of termination or pay in lieu, because she had been employed for less than 90 days.

Decision

Based on the facts before it, the Court held that the two-month period referenced in the offer constituted a probationary clause, not a fixed-term contract. Accordingly, Ms. Sprog was a probationary employee.

After reviewing the law relating to probationary employees, the Court confirmed that an employer had to establish “valid justification” lawfully terminate the employment relationship of a non-unionized probationary employee. To establish valid justification, the employer needed to show that: (a) it had given the employee a reasonable opportunity to demonstrate suitability for the job; (b) it decided the employee was unsuitable for the job; and (c) its decision was based on an honest, fair and reasonable assessment of the suitability of the employee. In determining suitability, the employer could consider not only job skills and performance, but also character, judgment, compatibility, reliability and the employee’s future with the company.

The Court held that Chinook had not taken any of the steps required to establish valid justification. Instead, Chinook had ended the employment relationship because it did not want to go in this “new direction” and also did not want to pay Ms. Sprog $5,000 per month.

On the issue of damages, the Court held that Ms. Sprog was entitled to reasonable notice under the common law. The Court found this amount to be $2,500, i.e., two weeks of salary, considering Ms. Sprog’s position, length of service, age, and the likelihood of her being able to find alternative employment. The Court denied Ms. Sprog’s claim for bad faith damages holding that Ms. Sprog had not established that the employer had engaged in conduct that was unduly insensitive, untruthful or misleading.

Employer takeaways

  • Provincial employment standards legislation does not mandate probationary clauses in employment contracts.
  • By including a probationary clause, an employer takes on additional obligations in relation to terminating the employee during their probationary period.
  • A probationary clause does NOT entitle an employer to terminate an employee based solely on probationary status.
  • In AB, an employer must show that it has “proper justification” to end the employment relationship. This means giving the employee a reasonable opportunity to show they can do the job, and assessing their suitability for the job fairly, reasonably and honestly, before deciding that the employee is unsuitable for the job. Similar principles apply in BC. See Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42
  • Although the law does not require an employment contract to be in writing, as a matter of best practice, it is advisable to state the terms and conditions of employment clearly and unambiguously in writing .

Job offers and employment agreements – a cautionary tale

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In Adams v. Thinkific Labs Inc., 2024 BCSC 1129,  the court had to determine the terms and conditions that governed the employment relationship between the employer and the plaintiff, in circumstances that involved an offer of employment followed by a formal contract.

Background

Ms. Adams, the plaintiff in this case, successfully applied for a position with Thinkific Labs Inc (“Thinkific”). On August 19, 2021, Ms. Adams received an extensive and detailed email offer from Thinkific that outlined her compensation, work schedule, benefits, and various entitlements (the “Offer”). The Offer stated that a formal employment contract would follow when Thinkific received Ms. Adams’ full legal name and desired start date. The Offer did not contain a termination clause or any restrictive covenants.

Ms. Adams accepted the Offer on August 20, 2021, and provided Thinkific with her full legal name and desired start date. Later that day, Thinkific sent her a formal document titled “Protection of Corporate Interests” (the “Formal Document”), which Ms. Adams signed. The Formal Document contained new terms relating to termination of employment, non-competition and intellectual property.

Ms. Adams commenced employment with Thinkific on September 20, 2021, and continued working for it until her employment was terminated on May 23, 2023.

Decision

After her employment was terminated, Ms. Adams filed a claim for wrongful dismissal. At the summary trial, Ms. Adams argued that she was entitled to common law notice because the Offer, which she considered as being the binding contract between her and Thinkific, did not contain a termination clause. She also argued that the Formal Document was unenforceable because Thinkific had not provided new consideration for the significantly altered terms of employment that it contained.

On its part, Thinkific argued that the Offer was not a binding agreement because it did not include Ms. Adams’ full name and the start date, and Ms. Adams knew that her employment with Thinkific depended on her signing the Formal Document.  Thinkific further argued that it was unnecessary to provide new consideration for the changes in terms of employment contained in the Formal Document in circumstances such as the case in question.

The court agreed with Ms. Adams and held that the Offer constituted a binding employment contract between the parties because it contained detailed and comprehensive terms of employment,  and the lack of Ms. Adams’ full legal name and desired start date were simply minor administrative details. The court held that consequently, given that the Offer did not have a termination clause, Thinkific had wrongfully dismissed Ms. Adams when it terminated her employment without providing her with common law notice. On the facts of the case, the court deemed the common law notice period to be five months.

The court held that the Formal Document, which imposed new and burdensome terms on Ms. Adams that had not even been “hinted at” in the Offer, was unenforceable, because Thinkific had “imposed” these terms on her without providing new consideration other than that she could keep the job if she agreed to them.

Employer Takeaways

  • Detailed offers of employment can constitute binding contracts, even if certain minor administrative details are pending.
  • As a matter of best practice, it is preferable to have a single contract that details the terms of employment rather than a two-step process of an “offer” followed by a formal contract.
  • If an employer prefers to do both, the initial “offer” should contain just the basic terms.
  • An employer must provide new consideration if it is introducing or changing key terms of employment; it cannot rely on continued employment as consideration.

Injury To Dignity award for Workplace sexual assault/harassment

In Ms. L v. Clear Pacific Holdings Ltd. and others, 2024 BCHRT 14,  the BC Human Rights Tribunal (the “Tribunal”) awarded the complainant $100,000 for injury to dignity, feelings and self respect, for sexual harassment and assault.

Background

Ms. L, the complainant, worked as a personal assistant to Sydney Hayden and his companies for approximately 21 years. Her usual places of employment were Hayden’s house and his yacht. At the time she started working for Hayden, Ms. L was dependent on cocaine. In her complaint Ms. L alleged that Hayden had emotionally abused, sexually harassed, and physically and sexually assaulted her while she worked for him. She also alleged that he had withheld her wages and abandoned her in Mexico.

Decision

In a hearing held via videoconference, the Tribunal found that Hayden had discriminated against Ms. L on the basis of sex and disability in violation of section 13 of the BC Human Rights Code. The Tribunal found that the power imbalance between Hayden and Ms. L was “profound” not only because he was her employer but also because of her personal circumstances, including her substance use disorder (which he had exploited by supplying her with cocaine he kept on his boat), her problems with her abusive ex-husband, the isolation of her workplace i.e., Hayden’s house or boat, and the fact that Hayden, who was 17 years older than Ms. L, had positioned himself as her mentor and caretaker. Evidence led at the hearing indicated that Hayden’s actions had impacted Ms. L significantly, including resulting in PTSD, panic attacks, drug overdose, declining health, hypervigilance, and nightmares. Ms. L’s evidence was uncontested as the respondents did not participate in the hearing. Based on all of the facts before it, the Tribunal concluded that it was appropriate to award Ms. L $100,000 for injury to dignity, given the nature of the discrimination, the length of the discrimination, and the lifelong impact of the discrimination on all aspects of Ms. L’s life. The Tribunal also awarded Ms. L the sum of $61,541.90 in lost wages, and $8,699.84 for expenses incurred because of the discrimination.

Takeaways

  • $100,000 is the highest the Tribunal has awarded to date, for injury to dignity for sexual harassment and assault. It is also the Tribunal’s second highest injury to dignity award overall.
  • The award in this case reflects an upward trend in the Tribunal’s awards as well as awards in Ontario.
  • Some of the discriminatory acts occurred outside of BC. However, the Tribunal had jurisdiction to hear evidence regarding all of them, because they arose in an employment relationship that had a sufficient connection to BC.

Injury to Dignity award for Workplace sexual assault/harassment

Surreptitious recordings and moral damages, Oh my!

Surreptitious recordings and moral damages, Oh my! img

In Teljeur v Aurora Hotel Group, 2023 ONSC 1324, a court had to decide whether an employee who had been terminated without cause, was entitled to moral damages because of the employer’s actions.

Background

John Teljeur worked as the General Manager of Pinestone Resort & Conference Centre, which was operated by the Aurora Hotel Group (“Aurora”).

On December 6, 2021, about three years after he was hired, two senior Aurora executives informed Mr. Teljeur that his employment was being terminated without cause. During the termination meeting, which was held privately, the executives told Mr. Teljeur that Aurora would pay him out for the week and give him eight weeks of pay in lieu of notice. The executives also told Mr. Teljeur he could resign as it would be better for him.

Mr. Teljeur brought a motion for summary judgement in the Ontario Superior Court of Justice, seeking among other remedies, reasonable notice of 10 months and moral damages in the amount of $20,000.

Decision

On the issue of reasonable notice, the Court held that Mr. Teljeur was entitled to seven months based on his senior management role, three years of employment, age at time of termination (56 years), and his difficulty in finding new employment which the Court said was likely due to his age and the COVID-19 pandemic.

On the issue of moral damages, the Court held that Mr. Teljeur was entitled to the sum of $15,000 for the employer’s actions. In arriving at this decision, the Court relied partly on a surreptitious recording of the termination meeting that Mr. Teljeur had made. The factors that led to the award of moral damages for employer actions the Court found were untruthful, misleading or unduly insensitive, included the employer’s:

  • failure to give Mr. Teljeur written notice of termination as required by the Ontario Employment Standards Act (the “Act”);
  • failure to provide Mr. Teljeur with his statutory entitlements within the time frame stated in the Act;
  • altering Mr. Teljeur’s terms and conditions of employment during the notice period by not reimbursing his business expenses in the amount of $16,680.03;
  • act of giving Mr. Teljeur statutory pay in lieu of notice after assuring him that it would give him eight weeks pay in lieu;

The Court noted that while there was no medical evidence to document the stress suffered by Mr. Teljeur the above noted factors were sufficient to show that Mr. Teljeur suffered additional significant stress on top of the stress of being terminated.

Employer takeaways

  • Employers must comply, at a minimum, with obligations set out in applicable legislation.  This is non-negotiable.
  • If an employer makes representations or promises in relation to the termination, the employer must fulfil those obligation.
  • Employers should train staff who conduct termination meetings, on termination best practices.
  • Surreptitious recordings of workplace conversations are on the rise. Always assume that you are being recorded and act accordingly.

Employers, are your termination clauses clear and unambiguous?

Employers, are your termination clauses clear and unambiguous img

In Bryant v Parkland School Division, 2002 ABCA 220, the Alberta Court of Appeal held that three employees were entitled to common law notice upon termination of employment although the employer had provided them with contractual notice.

Background

This case involved Thomas Bryant, Natalie Dzioba and Silke Larison, long-term employees of the Parkland School Division, each of whom had signed an employment agreement that contained a termination clause which read:

“This contract may be terminated by the Employee by giving the Board thirty (30) days or more prior written notice, and by the Board upon giving the Employee sixty (60) days or more written notice”.

On June 2, 2014, the employer terminated each employee’s employment without cause, after providing each with 60 days’ prior notice.

Lower court decision

The employees filed an application with the Alberta Court of Queen’s Bench for damages reflective of common law notice. At trial, they argued that they understood the termination clause as containing a “minimum” amount of notice, and that they would be provided severance calculated based on their years of service.

One employee had been employed with the employer for almost 10 years and the other two for almost 15. Thus, common law reasonable notice would have been considerably greater than the contractual 60-day notice given by the employer.

The chambers judge rejected the employees’ argument, finding that the termination clause was unambiguous and not reasonably open to more than one meaning. The employees appealed the decision to the Alberta Court of Appeal (the “Court”).

Court of Appeal Decision

  • The Court disagreed with the chambers judge and held that the termination clause was “not sufficiently clear, unequivocal and unambiguous” to remove the employees’ right to common law notice .

    In arriving at its decision, the Court reiterated the following principles:

    • In employment law, any contractual uncertainty should be resolved in favour of the employee. Thus, if a termination clause could reasonably be interpreted in more than one way, a court should prefer the interpretation that is favourable to the employee.
    • Courts take the above approach because there is a power imbalance in the employment relationship and employees have limited opportunities to negotiate their contractual terms.
    • Employment contracts are presumed to contain an implied term that requires employers to provide reasonable notice i.e., common law notice upon termination without cause.
    • The presumption is rebutted only if the contract unambiguously limits or removes the right to reasonable notice.

    The Court found that the termination clause in question did not rebut the presumption that the three employees were entitled to common law notice because:

    • the clause did not clearly fix the employees’ entitlement to  notice and did not impose an upper limit;
    • if the employer had intended to give only 60 days’ notice, it could have simply said so; and
    • by saying “sixty (60) days or more”, the contract left open an interpretation that the employer intended the notice period to reflect common law reasonable notice subject to a minimum of 60 days.

Employer takeaways

  • Employees who are terminated without cause are entitled to common law reasonable notice. This is the starting point.
  • To rebut the above presumption, it is essential to have a written employment agreement that clearly and unambiguously sets out the employee’s entitlement to notice.
  • In employment law, any contractual uncertainty is generally resolved in the employee’s favour.

Non-compete clauses in purchase and sale of a business

Non-compete clauses in purchase and sale of a business img

In Dr. C. Sims Dentistry Professional Corporation v. Cooke, 2024 ONCA 388, the ON Court of Appeal had to determine the enforceability of a non-competition clause in relation to a dental practice.

Background

Dr. Sims purchased Dr. Cooke’s dental practice (the “Practice”) in July 2017. The share purchase agreement (the “Agreement”) required Dr. Cooke to work two-five years in the Practice. Pursuant to the Agreement as well as a stand-alone agreement, Dr. Cooke also covenanted not to work within a 15 km radius of the Practice for a period of five years after leaving the Practice.

Approximately eight months after the parties’ association ended, in November 2020, Dr. Cooke commenced working for a dental practice located 3.3 km away from the Practice. Dr. Sims obtained an interlocutory injunction against Dr. Cooke and from August 2021 until April 2022 Dr. Cooke worked at a different location. At trial, Dr. Cooke argued that the non-competition clause in the Agreement was unenforceable given the duration and geographic location. When he was unsuccessful, Dr. Cooke appealed to the ON Court of Appeal.

Decision

Affirming the decision of the lower court, the Court of Appeal held that the covenant was enforceable.

The Court noted that although courts “regularly find” restrictive convents with a duration of five years to be reasonable in the context of the purchase and sale of a business and the purpose of a restrictive covenant in these circumstances was to protect the goodwill of a business that is sold from being diminished by the vendor’s own actions, “[e]verything depends on the nature of the business, and each case must be assessed in light of its own circumstances”. The Court noted, in the circumstances of this case, the trial judge accepted Dr. Sims’ evidence that the five-year period that the parties had agreed to, reflected the reality that it took a patient several years to build a relationship of trust with their dentist and that Dr. Cooke’s own evidence at trial had been that he knew that more than 100 patients intended to leave the Practice at the end of the two-year period, when his association was terminated.

In terms of geographic location, the Court stated the trial judge had noted that a 15 km radius had been considered appropriate in other cases involving dental practices, and it was reasonable in the current circumstances as it would have made it very easy for Dr. Cooke’s patients to have followed him if he had moved to a location that was nearby.  The Court also noted that Dr. Cooke’s counsel had not raised any objections about the duration and scope of the Agreement, during negotiations.

Takeaways

  • The purpose of restrictive covenants in the context of the purchase and sale of a business is to protect the interests of the purchaser and the goodwill of a business.
  • Restrictive covenants in the context of the purchase and sale of a business are generally presumed to be valid. However, the reasonableness of impugned restrictive covenants must be determined based on the facts and circumstances of each case.
  • Parties should exercise due diligence when entering into restrictive covenants. The time to raise concerns about the reasonableness of a restrictive covenant is during negotiation. In the current situation, the evidence of Dr. Cooke’s solicitor at trial was that it was not raised as an issue at the time the parties entered into the Agreement.
  • NB: unlike restrictive covenants in purchase and sale situations, restrictive covenants in employment relationships are presumed to be invalid, and the burden of proving otherwise lies with the employer. Note also that effective October 25, 2021, non-compete clauses in employment relationships are prohibited in Ontario with certain exceptions.

“Just Cause” terminations – refresher for employers

Just Cause terminations refresher for employers img

In Lefebvre v. Gisborne Holdings Ltd., 2023 BCSC 2231, the BC Supreme Court had to decide whether the employer had dismissed Ms. Lefebvre, who had been hired pursuant to an 18-month fixed-term contract (the “Contract”) for cause.

Background

On June 24, 2022, Ms. Lefebvre had a heated telephone conversation with the employer’s largest client which she reported to Ms. Teunissen, her immediate supervisor. On June 30, 2022, Ms. Lefebvre was asked to attend a meeting with Ms. Teunissen and the Human Resources Manager (“HRM”). At this meeting, Ms. Lefebvre’s communications with the client was discussed, and the employer also alleged that some technicians had reported concerns about Ms. Lefebvre’s communication style.

After the meeting, the HRM sent an e-mail to Ms. Lefebvre and Ms. Teunissen summarizing what had been discussed. In response, Ms. Lefebvre sent  a strongly worded email to the HRM on July 4, 2022. The e-mail was critical of Ms. Teunissen and Ms. Lefebvre alleged that she had not been treated with courtesy and honesty. This e-mail was copied to Ms. Teunissen, who found it to be “borderline insubordinate”.

On July 7, 2022, the employer terminated Ms. Lefebvre’s employment “effective immediately” and paid Ms. Lefebvre two weeks in lieu of notice. The termination occurred approximately six weeks into the term of the Contract.

At trial, the employer argued that it had terminated Ms. Lefebvre’s employment for cause, because her July 4, 2022, e-mail had irretrievably harmed the employment relationship. The employer argued in the alternative, that it had the right to terminate the Contract without cause prior to the end of the 18-month term.

Decision

The Court held that the employer did not have cause to dismiss Ms. Lefebvre and it’s response to Ms. Lefebvre’s e-mail had been disproportionate because: the e-mail did not rise to the level of insubordination that would support a for cause termination as it was not rude or unprofessional; Ms. Lefebvre had shared her concerns only with human resources; and she had not tried to undermine Ms. Teunissen’s authority by discussing the matter with other employees. The Court also noted that the employer had failed to consider the suitability of alternative disciplinary measures which included a failure to follow its own progressive disciplinary policy and a failure to warn Ms. Lefebvre that further conduct of this nature could lead to the termination of her employment.

In response to the employer’s argument that the Contract did not guarantee Ms. Lefebvre employment to the end of the 18-month term, the Court stated that the real issue was whether the Contract explicitly provided for an early termination without cause, which the Court found it did not.

Based on the above, the Court decided that it was appropriate to award Ms. Lefebvre contractual damages in the amount of $81,000, which was what Ms. Lefebvre would have earned had she worked to the end of the term.

Employer takeaways

  • The employer bears the burden of proving just cause.
  • Just cause is “employee behaviour that, viewed in all the circumstances, is seriously incompatible with the employee’s duties” and involves conduct “which goes to the root of the contract and fundamentally strikes at the employment relationship”.
  • Dismissal for just cause must be proportionate to the misconduct considering all of the relevant circumstances. While there are exceptions, it is prudent, and generally necessary, to follow progressive disciplinary steps prior to dismissing an employee for cause.
  • Pay attention to your own policies – if you have a progressive disciplinary policy, follow it unless the misconduct is so egregious that dismissal is the appropriate response because a continued employment relationship is impossible.
  • If using a fixed-term contract, ensure that it contains a clear and unambiguous termination clause that permits you to end the contract prior to the end of the term without cause. The clause should clearly state the amount of notice or pay in lieu that the employee is entitled to in this circumstance, to avoid having to pay the employee for the full term.