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Untitled Document
Many employers hold the belief that it is difficult, if not impossible, to terminate incompetent or underperforming employees for cause. As a result, employers often allow such employees to remain in the workplace for months or years or provide separation packages when the decision is made to finally terminate the employee. Neither of these approaches benefit the employer since they can detrimentally affect the morale or performance of other employees or encourage them to adopt what they perceive to be a lower standard of performance tolerated by the employer, or motivate them to perform poorly in the hope that they too will be rewarded with a financial payout to leave the organization.
However, a recent Saskatchewan Court of Appeal decision reminds employers that incompetence can be grounds to terminate an employee for cause. When done properly, the termination of an incompetent employee for cause, as well as the performance management process that allows the employer to do so, can serve as powerful tools to assist employers of any size to effectively manage their workforce.
In Radio CJVR Ltd. v. Schutte, Mr. Schutte was hired to work as a program director and an on-air morning show co-host. At the same time, the radio station also engaged the services of a consultant to monitor Mr. Schutte’s performance. The consultant produced a number of written reports that were critical of Mr. Schutte’s performance. These reports were discussed with Mr. Schutte, and each resulted in a plan of action. The criticisms included: not meeting with staff frequently to provide leadership and guidance; giving insufficient attention to programming details; neglecting to meet with his co-host to plan his morning show prior to going on air; and failing to implement specific suggestions for improvement. Less than two years after his hiring, Mr. Schutte’s employment with the station was terminated for just cause.
In upholding the employer’s decision to terminate Mr. Schutte for cause, the Court of Appeal examined the relationship between the complaints and the employee’s job performance, and noted that the standard of deficiency necessary to constitute just cause to terminate is less stringent where the employer applied a thorough performance management process before terminating the employee for cause.
The Court of Appeal set out the following essential steps that an employer must undertake before an incompetent employee can be terminated for cause:
- the employer must provide reasonable, objective performance standards in a clear and understandable manner;
- the employer must be able to show that the employee failed to meet the performance standards;
- the employer must bring the deficiency to the attention of the employee; and
- the employer must give the employee clear and unequivocal warning that he or she will be terminated if he or she fails to meet the required performance standards within a reasonable time.
Employers should keep in mind, however, that the primary objective of performance management process should be to rehabilitate an underperforming employee and result in the employee performing at or above the expected standard. Nevertheless, when the employee fails to maintain performance at the required standards and is terminated for cause, the following practical tips may assist employers to reduce the risk that the termination will be challenged:
- Detailed records of the employee’s deficiencies and well-drafted correspondence documenting the various stages in the performance management process can be effective tools in persuading either the employee’s lawyer that the employer had just cause to reduce the risk of litigation, or the court of the same conclusion, if litigation does ensue.
- Provide the employee with the necessary assistance to give him or her every opportunity to meet the required performance standards. Alternatively, include a standing invitation to have the employee speak with management for further guidance or assistance if needed by the employee. Include details of the assistance provided or the standing invitation in the written correspondence to the employee.
- Identify the dates for follow-up and achievement of the required standard, and observe those dates. The strength of an employer’s case that the employee was incompetent may be undermined if the employer is deficient in how it managed the performance of the employee.
- Since litigation or the threat of litigation is a possibility whenever an employee is terminated for cause, employers should consult with their legal counsel as early in the process as possible so all of the legal issues can be properly identified and addressed.
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Daniel Wong is a senior associate in the Employment and Labour Group in the Toronto office of Osler, Hoskin & Harcourt LLP. Daniel advises employers on all aspects of employment and labour law and has appeared before the Ontario court and various administrative tribunals on behalf of employers. Daniel can be reached at (416) 862-5995 or dwong@osler.com.
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