HR cited in unfair performance review

B.C. company charged $20,000 for acting in bad faith.
By Marcia McDougall and Laura Cassiani
|Canadian HR Reporter|Last Updated: 04/08/2003

A performance review designed to deny a British Columbia salesman a bonus and that ultimately led to his dismissal has cost his employer $20,000.

In its judgment, the British Columbia Supreme Court singled out the human resources department of the company.

“A substantial company such as Ashland with a human resources department and substantial profits...should be expected to refrain from the kind of employment practices it pursued in relation to Marlowe.”

The court found the actions of Ashland Canada Inc., which markets automotive products, to be a “reprehensible and substantial departure from the conduct and practices reasonably expected of an employer such as (Ashland).”

The court assessed punitive damages against Ashland in the sum of $20,000 to remind it of its obligation to deal with employees in good faith.

“Employers are bound to deal with matters of employment fairly and in good faith,” said the court.

A court rarely awards punitive damages and certainly not amounts as high as in this recent case, said Vancouver-based employment lawyer Paul Pulver.

“It happens but it is rare. I think it happened in this case because the judge was put off by the actions of the company and people involved,” said Pulver, senior associate with Schiller, Coutts, Weiler & Gibson. In an earlier B.C. case, a judge awarded $5,000 in punitive damages.

Donald Marlowe worked as a territory manager, selling automotive products for Ashland. He had always exceeded sales goals and during the four years he worked with Ashland, increased sales in his territory by about 500 per cent.

Three years ago, Marlowe was informed by Ashland’s national sales manager that his expense claims and discounts he was offering customers violated company policy and procedures. At a performance review a month later, the manager gave him an “unacceptable performance” — the lowest possible rating — as his overall individual rating. This despite the fact that he had more than exceeded his sales goals. Marlowe’s entitlement to a bonus rested partially on a good review.

Despite the poor review, Marlowe continued to work for Ashland. Two months after his review, he was informed that he was being fired for cause. According to Ashland, there continued to be “issues around unacceptable performance” and that Marlowe was unwilling to follow company procedures.

Immediately following his dismissal, Marlowe found another job and was offered employment on the condition that the new company could get a favourable reference from Ashland.

The new employer contacted Ashland. It then called Marlowe and told him the offer was withdrawn on the basis of what Ashland had said about him. The new employer had been told about Marlowe’s alleged poor performance.

In spite of this setback, Marlowe was soon offered another job, which he accepted. However, the pay was less than he would have received from the employer who made the first offer.

Ashland later admitted that it did not have cause to fire Marlowe.

Malicious conduct

Justice Pitfield of the British Columbia Supreme Court found that most of the allegations around Marlowe’s performance had been fabricated with the exception that he had in fact removed product from the warehouse for use in trade show on one occasion without a work order. He found that the performance appraisal rating was “unwarranted and undeserved.”

As for the performance review, the court found that, “…(the national sales manager’s) conduct in relation to the ... performance review … was harsh, vindictive, malicious and reprehensible.”

Pulver said that while it’s difficult for HR to follow every manager around making sure each is doing the right thing, HR departments do need to be diligent in instructing managers well when it comes to administering performance reviews.

“I think it’s difficult for HR departments to always keep tabs on every manager but the best thing they can do is make sure managers are equipped properly and understand how to conduct a performance review. They should also know what the ramifications are for doing it wrong,” said Pulver.

In awarding damages, the court considered Marlowe’s claim for punitive damages for breach of contract before and in the course of dismissal. It determined that the performance review had three adverse effects on Marlowe:

•it deprived Marlowe of a bonus;

•it caused others to whom Marlowe reported directly to recommend his dismissal; and,

•it permitted inaccurate information pertaining to Marlowe to be imparted to a prospective employer.

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