Perhaps the most common situation which arises in the workplace, where an employer has to contemplate the termination of an employee’s employment, relates to perceived deficient performance. It is not uncommon for employers to adopt a mind set that they should not have to pay severance, where performance is so lacking that it reaches a level or threshold where termination of employment is contemplated. It is, in fact, counter-intuitive, for many employers, to consider paying severance to non-performers.
Other employers, perhaps, adopt a more practical view and accept the notion that termination, even performance related termination, requires an appropriate severance arrangement. These employers tend to consider providing a severance package to be expedient, part of the cost of doing business, and an integral part of the management prerogative to terminate employment, without dealing with the necessary performance management steps which could, in the right circumstances, lead an employer to terminate for cause, and without a severance arrangement.
The following “rules of engagement” provide guidance as to when, or in what circumstances, an employer may assert cause for termination in respect of performance related issues, and avoid the obligation to pay an appropriate severance arrangement:
(1) Each case must be decided on its facts;
(2) An employer’s displeasure at an employee’s performance is not enough to warrant dismissal. There must be some serious misconduct or substantial incompetence;
(3) The onus of proving just cause rests with the employer;
(4) The performance of an employee must be gauged against an objective standard;
(5) The employer must establish:
(a) The level of the job performance required;
(b) That the standard was communicated to the employees;
(c) That suitable instruction and/or supervision was given to enable the employee to meet the standard;
(d) The employee was unwilling to or incapable of meeting the standard; and
(e) The employee was warned that failure to meet the standard would result in dismissal;
(6) Where the employee’s performance is grossly deficient and the likelihood of discharge should be obvious to the employee, warnings are not required;
(7) While the standard of incompetence to warrant discharge for cause is severe, the threshold of incompetence necessary to warrant dismissal for cause is significantly lower where dismissal is preceded by many warnings, indicating unsatisfactory performance;
(8) An employer who has condoned an inadequate level of performance may not later rely on such condoned behaviour as a ground for dismissal.
The net result is that employers may, in the right circumstances, terminated without a severance package, for performance related deficiencies. In order to do so, however, the employer must invest time, diligence, have strong procedures and policies, and be able to present a well-documented case. The onus of establishing cause for performance related deficiencies increases with the length of service of the employee, as well.
As a result, and considering the substantial height of the legal bar required to achieve performance related cause for termination, most employers default to providing a severance package to employees whose performance was lacking. Only those with strong performance management systems are up to the task of attempting to establish just cause for termination.
Norman Grosman tackles your employment law dilemmas regularly on Workopolis. More information about him and his legal services can be found on his website grosman.com