The former CFO at Ace Mechanical and EFP Engineering — who was dismissed during her probationary period after missing meetings and failing to complete year-end financial statements — is entitled to the unpaid portion of her signing bonus, the Small Claims Court of Nova Scotia has ruled.
But it denied her bid for three months’ salary continuance.
S.F., who began her role on Jan. 9, 2023, was terminated on April 3, 2023, 84 days into her 90-day probationary period. She had moved from Alberta to Nova Scotia to take the role.
She claimed $25,000, the maximum amount claimable in Small Claims Court, for unpaid salary continuance and the unpaid balance of her signing and entry bonus.
The central issue revolved around the interpretation of the probationary clause in S.F.’s employment contract, which stated that in the event of termination without cause during the probationary period, she would be entitled to three months’ salary continuance.
S.F. argued that this clause meant she was entitled to the salary continuance since she was terminated without just cause. The defendants countered that her termination was based on suitability, a standard applicable to probationary employees, and therefore did not warrant salary continuance.
Probationary employment and suitability standard
The court upheld the defendants’ position, emphasizing the common law principle that probationary status enables an employer to terminate an employee without notice if the employee is deemed unsuitable for permanent employment.
The court cited several precedents, including the Ontario Court of Appeal’s decision in Nagribianko v. Select Wine Merchants Limited, which affirmed that suitability is the standard for probationary dismissals.
“The status of a probationary employee has acquired a clear meaning at common law. Unless the employment contract specifies otherwise, probationary status enables an employee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for permanent employment,” the Ontario Court of Appeal said.
S.F.’s claim for three months’ salary continuance was dismissed on the grounds that the employment contract’s probationary period clause was effectively rendered meaningless if her interpretation was accepted. The court found that the probationary status and its suitability standard applied during the initial three-month period, while the salary continuance provision would apply post-probation.
Evaluation of suitability
The defendants successfully demonstrated that S.F. was unsuitable for the position, citing several issues, including her failure to complete the year-end financial statements for external auditors, tardiness, missing important meetings, and not responding to emails from senior management.
S.F. was given written and oral instructions outlining expectations, but she failed to meet the critical obligation of preparing the year-end financial statements. An independent accountant completed the work in 35 hours, which Frampton could not finish in two months.
“The Claimant did not meet this most essential obligation of her position. And, I regret to say, by quite a significant measure did not meet it,” the court said.
Just cause consideration
The court also addressed S.F.’s argument that her termination lacked just cause since she was not warned about her job being in jeopardy.
The court referenced the Supreme Court of Canada’s decision in McKinley v. BC Tel, which requires an assessment of whether the employee’s conduct led to a breakdown in the employment relationship.
The court found her failure to meet essential job obligations, coupled with her tardiness and absenteeism from crucial meetings, justified the defendants’ claim of just cause.
“The inability of the Claimant to fulfill this essential obligation satisfies the Defendant’s burden to establish just cause,” the court said.
Signing and entry bonus
The court awarded S.F. the unpaid portion of her signing and entry bonus, totalling $10,000. The defendants had argued that since she did not complete the probationary period, she was not entitled to the bonus. However, the court found no basis to imply such a term in the contract.
The bonus was deemed an “entry bonus,” providing S.F. with some security and motivation to move from Alberta to Nova Scotia for the position.
“It seems to me that this signing and entry bonus on its wording is payable whether or not the candidate completes the probationary period,” the court said.
The court ordered Ace Mechanical Limited and EFP Engineering Limited to pay her $10,000, subject to any statutory withholding requirements. No costs were awarded to either party.
For more information, see Frampton v. Ace Mechanical Ltd., 2024 NSSM 37 (CanLII).
