Employers can no longer count on mandatory retirement to get rid of under-performing employees
Question: I have an employee who is on a performance improvement plan but has not been successful. The employee is planning to retire in two years. What should we do?
Answer: This question raises an interesting issue, the answer to which combines legal and practical concerns. It is not unlike the situation many employers faced prior to the abolition of mandatory retirement.
In that case, workers approaching the age of retirement often slowed down and their employers saw their performance deteriorate over time. However, employers were also mindful of the fact these workers would be retiring in the not-too-distant future. As a result, many, if not most, employers in those situation chose to turn a blind eye to the deteriorating performance, allowing the employee to continue in her position and retire with dignity.
Unfortunately, the abolition of mandatory retirement has forced many organizations to confront issues around the declining performance of more senior workers. They are no longer able to wait until a fixed retirement date. In many cases, they must coach and discipline the workers, and even consider dismissal if the situation is untenable.
In the reader’s question, the employee has been through a performance improvement plan and, apparently, not been successful. What the question does not indicate is how the plan was structured, how it was followed and how it failed. In many cases, employers put performance improvement plans in place with detailed strategies, requirements and timelines.
Unfortunately, in many other cases, the introduction of a performance improvement plan is the last action taken prior to dismissal. Those tasked with working with the individual and helping her improve are too busy to follow through with their responsibilities, and the matter falls by the wayside.
To dismiss an individual for cause as a result of performance concerns, an employer must satisfy the court of the following:
• it has established reasonable, objective standards of performance
• the employee has failed to meet those standards
• the employee has had warning she has failed to meet those standards and her job will be in jeopardy if she continues to fail to meet those standards
• the employee has had a reasonable opportunity to correct the situation.
The employer has a duty to work with the individual to help her meet the stated objectives, which must be reasonable and attainable. This can involve training, shadowing and similar hands-on efforts to assist the employee. If the employer simply leaves the employee to flounder, it will be hard-pressed to satisfy a court it should then be allowed to summarily dismiss the individual.
Given the above, an employer that feels as though an individual has failed to improve should sit down and realistically assess whether it could demonstrate to a court it has met its obligations prior to dismissing the employee.
The second aspect of the reader’s question is the anticipated retirement. In this case, there is no indication as to why the individual is planning on retiring in two years, or whether this has been agreed upon or simply discussed in passing.
If it is fairly certain the employee will retire, the employer will have to assess whether it can live with the employee for the next two years and allow her to retire at that point, rather than going down the road of dismissal, with or without cause. If it can accept two more years, it may be easier and less costly to do so. However, in most cases, it is impossible to force an individual to retire if she changes her mind. As a result, there is always the risk the employee will be around longer than two years.
Stuart Rudner is a partner in Miller Thomson’s labour and employment group in Toronto. He can be reached at (416) 595-8672 or [email protected].
