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 .
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