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Wrongful Dismissal in Alberta: Can you get severance from probationary contracts?

A common provision in a contract of employment is to have a period of probation. These tend to be three months (this the amount allowed for in the Alberta Employment Standards Code). These clauses allow an employer to assess an employee's suitability for a position and, to terminate them without paying severance. Or at least that's the theory, however like so many legal issues it is not as clear cut as you would think.

In reality, if an employer terminates a probationary employee for improper reasons, that employer can be liable for damages. The test in Alberta is set out in the case Higginson v Rocky Credit Union Ltd,[1995] AJ No 384 (CA). The court said in that case:

To establish justification for the dismissal of a probationary employee, the employer need only establish that (1) he had given the probationary employee a reasonable opportunity to demonstrate his suitability for the job; (2) he decided that the employee was not suitable for the job; (3) that his decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance but character, judgment, compatibility, reliability, and future with the company.

If you don't have the right reason to terminate as set out above then you can be liable. So how much risk are employers looking at?

The Manitoba Court of Appeal in Kirby v Motor Coach Industries,81 CLLC 14 said at 70:

At the very least the plaintiff's probationary status has an effect on the length of notice. What constitutes reasonable notice for a probationary employee may well be insufficient for a regular employee. In the instant case probationary status is reflected in the magnitude of compensation in lieu of notice. Probationary status is one of the circumstances to take into account in assessing appropriate compensation.

Court have awarded amounts less than the probationary period, the same amount and more. Courts also have the ability to order aggravated damages in the event of a termination. If you have been wrongly terminated in a probationary period, or if you are looking at terminating an employee, please feel free to contact us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.

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