When running a business, hiring an employee can be a lot of work. There are both cost and time considerations that come with new hires. It may be tempting to cut out some of the work associated with hiring. But as one employer recently learned in a Prince Edward Island Court of Appeal decision, problems could arise when policies that seem standard are put into place without management fully understanding what they mean, or checking to see if they comply with other policies.

Hired, and quickly fired

The employer hired the employee as its Marketing & Communications Manager on November 10, 2014. It was a permanent position with the provisio that the employment was probationary for the first three months. The employee was terminated on January 15, prior to the expiration of the probationary period.

The employee sued the employer for damages representing pay and benefits during the period of reasonable notice as well as aggravated damages due to the way in which he was fired. Meanwhile, the employer denied liability, taking the position that it acted properly and within its contractual rights when terminating the employee’s probationary employment.

The employee’s claim was dismissed at trial. The trial judge found that while permanent employees would be eligible to go through the employer’s policy for Coaching and Improved Performance, that avenue was not available to a probationary period. The trial judge found the employer’s onus ended at justifying the termination, which the trial judge determined the employer had done. The employer stated they had found the employee unsuitable for the position, and said they talked to him about his performance issues on a number of occasions without success.

The employee appealed on a number of grounds, but the Court of Appeal focused on three, which were:

1. Finding that the termination letter complied with the contract
2. Finding that the Coaching for Improved Performance provisions of the Policies & Guidelines did not apply to probationary periods, including (the employee); and
3. Failing to interpret any contract ambiguity against the drafter of the contract

The termination letter

The trial judge determined the termination letter met the requirements of the written contract of employment. However, the court did not agree. The employer’s termination policy stated “When a termination of employment is necessary, the employee will be given a letter detailing the reason for termination. This letter will also detail the process (return of equipment, payout of commissions, etc.) that will be followed as part of the termination.” But the letter of termination did not detail any reasons, simply stating “I regret to advise that we do not wish to continue beyond your 3 month probationary period and your employment with (the employer) is terminated, effective today.”

The court found “upon reading the words of the contract and the letter on the context of the factual matrix, it is clear that the letter does not comply with the contract. Neither (the employee) nor anyone else would know from that letter the reason for termination.”

Coaching for Improved Feedback

As mentioned earlier, the employer had a Coaching and Improved Performance policy, but the trial judge sided with the employer in finding it did not apply to probationary employees. However, the court pointed out that there was nothing in the contract or the policy stating the policy did not apply to probationary employees. At trial, it came out that the employer had adopted this policy from another company and had inserted it into their own policies without being careful to ensure it said what they intended it to say. The court wrote “The trial judge did not rely on any principle of contract interpretation or on anything in the evidence that could form part of the factual matrix; he relied only on his view that it was simply unreasonable in the circumstances that those provisions would or should be applied to a probationary employee like (the employee).”

The court held that the policy, which should have applied to the employee, was not followed. The third ground of appeal did not have to be considered since there was no ambiguity found in the contract. The employee was awarded three month’s reasonable notice, amounting to $15,625. The employer was also ordered to pay costs totaling $27,000.

At HMC Lawyers we represent both employees and employers in matters of employment law. Our dedicated staff of experienced litigators has over 130 years of combined experience. Our responsive, thoughtful legal advice helps both employees and employers make informed decisions around their rights and obligations while keeping their ultimate goals front of mind. Please call us at 403-269-7220 or contact us online if you have an employment