Poor performance not a blank cheque to fire employees

Employers must prove they had legitimate reasons and took the proper steps before termination

Being terminated for any reason is rough. Because employment forms such a strong part of a person’s identity, being unwanted by one’s employer is a bitter pill to swallow and a blow to self-esteem.

But being terminated for cause is even more difficult. Not only does the employee believe he is no longer wanted by the company, but there is a definite reason for the dismissal.

Too often, employers terminate employees for performance reasons merely because they believe poor performance gives them a blank cheque to terminate the employment relationship for cause. But terminating an employee for cause is not simple. After all, just cause is the capital punishment of employment law and courts will push employers to prove they had legitimate reasons, and have taken the proper steps, to terminate the employment relationship for cause.

Document performance issues

Documenting performance issues is critical. That’s the only way an employer can hope to convince a court the allegation is true, as a recent decision by the Alberta Court of Appeal illustrated.

In Henson v. Champion Feed Services Ltd., Walter Henson was employed as a shift foreman with production and regulation duties including quality control. Champion was in the business of acquiring and selling feed to farmers. It prepared feed for various livestock and poultry according to predetermined formulas.

Henson had been employed with Champion for seven years and had been subjected to five verbal warnings and one written warning regarding his performance. Despite this, Henson had also received a promotion, along with being remunerated accordingly, including annual pay increases and bonuses.

Henson was fired for improperly mixing a batch of seed for one customer. Champion said that alone would not have been cause for dismissal, but the fact he allegedly tried to cover up his mistake by hiding it was “totally unacceptable.” It fired him because of a “buildup of issues in his work history.”

At trial the judge found Henson’s original mistake amounted to just cause for his termination. But this decision was reversed on appeal.

The Alberta Court of Appeal found Champion could not use cumulative misconduct to prove just cause without having used clear and effective warnings and the progressive discipline approach.

What the employer must prove

In that regard, the Alberta Court of Appeal ruled the employer must prove:

•the employee was given express and clear warnings about performance;

•the employee was given a reasonable opportunity to improve performance after the warning was issued;

•that notwithstanding this reasonable opportunity, the employee failed to improve performance; and

•the cumulative failing of improving performance would prejudice the proper conduct of the employer’s business.

In Henson’s case, the court found that if he was such a careless employee, it was up to the employer to implement warnings and progressive discipline in order to rely on such misconduct. Given that Champion failed to do so, it found that the employee was entitled to reasonable notice. The court commented as follows:

“It is fatal to Champion’s case that it did not invoke a system of progressive discipline to deal with any concerns it had about Mr. Henson’s lack of fastidiousness attention to production issues. Mr. Henson was entitled to be warned not only that substandard performance was not acceptable, but that his job was on the line if he did not improve. He was entitled to have his failings clearly pointed out, to be given instruction as to expected standards of performance, and to be advised of the consequences if those standards were not met.”

The lack of a progressive discipline approach made it clear to the Court of Appeal that Champion could not rely on cause. Specifically, the court found Henson was never told he must “pick up his socks” nor was he advised of the steps he could and should take to rectify the shoddy performance and that he would be terminated for cause if he did not.

As demonstrated in Henson’s case, to be able to rely on documentation to prove cause, the documentation must contain certain elements. Not only must it show the problem and the symptoms surrounding it, but it must also advise of the company’s standards and what, if any, steps are to be taken to improve the performance. The employee must also be provided with a reasonable time within which to improve and given a warning that, if in fact he does not improve, he could be terminated for cause.

Reviews should indicate a problem

Annual performance reviews are helpful but they must clearly indicate if there are problems. Merely rating the employee as average will not assist in a cause allegation. The employer must take proper steps to note that the employee is completely incompetent or guilty of some offence.

The employee’s incompetence must also be brought to the employee’s attention and he must understand what to do to improve. Accordingly, it is helpful for employers to implement a progressive discipline plan to ensure the employee has sufficient time in which to improve. Not only will this provide the employee with the means to improve, but it will show the employer is fair and has taken steps to help that individual.

Natalie MacDonald is an associate with Grosman, Grosman and Gale, a Toronto-based law firm specializing in employment law. She can be reached at (416) 364-9599 or [email protected].

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