Probationary Employee Given Three Months’ Severance

Written on behalf of Peter McSherry

A recent decision of the Court of Appeal of P.E.I.[1] awarded a probationary employee three months’ severance. The case revolved around the wording of an employment agreement, which was drafted awkwardly to the advantage of the employee.

The plaintiff was hired in the position of Marketing and Communications Manager. The employment agreement contained the following paragraph dealing with the issue of probation and the obligations of the employer on termination:

Your employment will be probationary for the first 3 months… 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.

Within the three month probationary period, the employer elected to terminate Pound’s employment. The letter of termination failed to address the reason for termination as referenced in the contract. It read as follows:

I regret to advise that we do not wish to continue beyond your three-month probationary period and your employment with iWave Information Systems Inc. (iWave”) is terminated, effective today… Please sign this letter and return it to me within seven days.

Pound’s initial case at trial was unsuccessful.[2] The Court of Appeal saw otherwise, set aside the trial decision and awarded him three months’ severance. The logic behind this decision was that the company had failed to provide reasons for termination.

Pound’s case benefited from a poorly written termination clause. The “reasons for termination” clause were likely not intended by the employer to apply to a probationary employee.

Get Advice and Know Your Rights

This case is a good example of the benefit of taking legal advice. The plaintiff recovered $15,000 for the three month severance period. A simple reading of the contract would not necessarily have led to the same decision as was found by the Court of Appeal. Get advice. Know your rights. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation

[1] Pound v. iWave

[2] Pound v iWave trial