Giving a warning without a chance to improve 'is effectively not a warning at all,' says lawyer
“A warning without an opportunity to improve is effectively not a warning at all - if an employer issues a verbal or written warning, or a final warning, there has to be a meaningful opportunity for the employee to actually take action.”
So says Wilson Chan, an employment and labour lawyer at Mathews Dinsdale in Calgary, after an Alberta court ruled that an employer didn’t have just cause to fire a worker for poor performance, dishonesty, or insubordination without warnings or giving the worker an opportunity to correct his ways.
Zimco Instrumentation is a small company that distributes instrumentation products such as valves, gauges, transmitters and pumps to customers in the oil and gas industry. The worker, now 43, was hired in 2010 to be a product specialist, processing quotes for potential customers and answering customer inquiries and purchase orders.
In June 2017, Zimco issued the worker a written warning about unsatisfactory performance and a failure to complete work assignments in a reasonable amount of time. The warning stated that the corrective action would be monthly meetings with management to review his progress.
The worker had a performance review in March 2021 that identified three areas to improve – significantly increase order volumes to team averages, significantly increase quotation volume, and discuss daily task prioritization with his supervisor. However, there were no specific quote or purchase order targets indicated and there was no indication that his employment would be terminated if he didn’t improve.
The worker had a few prioritization meetings with his supervisor, but they didn’t continue regularly as they couldn’t agree on scheduling.
Worker’s performance issues continued
According to Zimco, the worker’s sales remained significantly below everyone else and his performance in 2021 was “dismal.” However, there were no documents after the March performance review outlining his progress.
On June 21, Zimco was doing a presentation for one of its clients when the client said it was still waiting on a pump quote it requested from the worker the previous month. Zimco management was embarrassed and the company ultimately lost the order, which it said was worth $244,000. The worker admitted that his failure to respond to the client was a mistake and said it was due to the pressure of his workload.
Later that month, a client followed up with the worker regarding an order to which the worker hadn’t responded. According to the worker, he had been in contact with the client all day. However, the client said that it had attempted to contact the worker and the worker had avoided all calls and emails. According to Zimco, the client was angered and the relationship was damaged.
On Aug. 12, the worker emailed management about his performance concerns, noting that he had been diagnosed with attention deficit disorder as a child and suggested it as a possible reason. His supervisor told him to seek medical advice, but made no further inquiries.
In early September, Zimco informed its employees that it would be implementing a vaccination policy on Oct. 1. Unvaccinated employees wouldn’t be allowed to work in the office but would be set up to work remotely. The worker wasn’t vaccinated and started working remotely on Oct. 1.
Termination of employment
The worker’s supervisor prepared notes about the worker’s performance in a quarterly report. After reviewing the report in late September, management decided to terminate the worker’s employment.
On Oct. 22, Zimco terminated the worker’s employment. The termination letter stated that the company had tried to improve his performance through “many performance reviews” and training, but he “demonstrated little to no desire or effort to improve.” The letter listed performance issues, poor attitude, problems with co-workers, a failure to be forthright, and his failure to follow the vaccination policy as reasons.
Zimco also referred to a restrictive covenant it had emailed to the worker in April 2021 that prohibited employment or association with Zimco’s competitors for 12 months.
The worker sued for wrongful dismissal. Zimco maintained that his employment was terminated for consistently poor performance, dishonesty, and insubordination – the latter stemming from the worker coming into the office on Oct. 4 without proof of vaccination and having products couriered to his home when he started working remotely, both contrary to clear instructions. The company also filed a $500,000 counterclaim for business losses resulting from the worker’s performance. It later limited the counterclaim to the Alberta Court of Justice’s financial jurisdiction of $100,000.
The court outlined the legal principles governing termination for cause, citing the need for clear communication of performance standards, suitable instruction, express warnings, and a reasonable opportunity for the employee to improve. In addition, termination must be proportionate to the performance issues or alleged misconduct, the court said.
Warnings from employer lacking
The court found that while performance issues were identified in the March 2021 performance review, there wasn’t any express warning that the workers’s employment was at risk if his performance didn’t improve. The worker also wasn’t given specific targets that would indicate what was acceptable to the company, the court said.
The court also found no evidence that the worker received any verbal warning that his employment was in jeopardy before his termination. Even if a warning had been given, the worker wasn’t given a reasonable opportunity to improve, said the court.
As for Zimco’s claims of dishonesty, the court found that the worker had misled the company about being in contact all day with the client in June 2021, but determined it was a singular incident that didn’t warrant summary dismissal. A warning or reprimand would have been more appropriate, said the court.
“In some cases, an instance of dishonesty can lead to termination, but it depends on how serious it is,” says Chan. “In this case, the court didn't find that that one instance was serious enough and that there wasn't any pattern of it continuing that could irreparably damage the employment relationship.”
On the issue of insubordination, the court examined the two alleged incidents: the worker’s attendance at the office while unvaccinated and the couriering of products to his home. The court found that these incidents didn’t constitute willful or flagrant defiance and should have warranted a reprimand rather than summary dismissal. In addition, the decision to terminate had already been made by the time these incidents happened, the court said.
Intentional misconduct vs. poor performance
There are generally two types of misconduct that can lead to dismissal - serious, intentional misconduct such as fraud, theft, sexual harassment, or workplace violence; and performance and competency issues that are more pervasive and cumulative, says Chan.
“The first category could be so serious that contextually it gives rise to a termination for cause for a one-off incident,” he says. “But the second category is a bit trickier because it's not just a one-off, and courts want to see two things - a warning and a meaningful or reasonable opportunity to correct their behavior or performance.”
“Most employers should have steps of progressive discipline - verbal warnings, written warnings, and potentially final warnings - before they terminate the employee, and have it all documented so that the warnings are abundantly clear,” adds Chan.
The court noted the worker’s age of 39 at the time of dismissal, his length of service (11.5 years), position, and the restrictive effect of the non-competition clause. It found that 10 months’ reasonable notice was appropriate.
The court dismissed Zimco’s counterclaim, finding that the evidence didn’t establish willful or reckless misconduct by the worker and noting that employees generally aren’t held liable for losses incurred from negligence in the course of their employment, unless there is willful or reckless misconduct.
Zimco was ordered to pay the worker $58,445.20 in wrongful dismissal damages.
Termination should be last resort: lawyer
Termination is the capital punishment of employment law, so it should be the last resort because that's the end of the relationship, says Chan.
“The courts have said is that an employee’s conduct has to be so bad that it has irreparably damaged the employment relationship that it can't continue or that it’s incompatible with continued employment,” he says.
“And the onus is on the employer to prove that - to get to that capital punishment, you have to show that you've done almost everything you can and that you can't continue to employ this employee due to a breach of trust or ongoing safety concerns - or if it's performance issues, you've documented it so that you can show that their performance would have never improved and their competency doesn't meet the expected level for continued employment.”
