Can company terminate based on performance?

Many employers consider poor performance to be just cause to terminate an employee. And while this is technically correct, the threshold for just cause for poor performance under the Employment Standards Act is higher than you might think.

If the terminated employee sues the employer for wrongful dismissal, and the judge finds that the employer in fact did not have just cause, then the employer may be ordered to pay damages to that employee.

Defining poor performance

In order to justify terminating an employee for poor performance, the employer must show that the employee has failed to perform the essential duties of their job. This must also be an ongoing pattern of behaviour and not one or two isolated incidents.

For the termination to be justified in court, the employer must be able to show objectively that the employee was unable or unwilling to meet the requirements of their position. Furthermore, the court will also take mitigating factors into account such as workload, training, etc.

Steps that should be taken before termination for poor performance

Before an employer terminates an employee for cause for poor performance, they must take reasonable steps to help the employee improve. This may include additional training if needed. It should also include written warnings which outline the areas in which the employee needs to improve along with the consequences of what will happen if improvement is not made within a given timeframe, being termination of employment for cause. Seldom though do courts uphold terminations for cause based on poor performance unless there are additional factors.

By taking these steps, the employer creates an objective standard which will be more likely to be viewed favourably by the court, should the employer find themselves being sued for wrongful termination.

Sample case

In 2019, in Cottrill vs. Utopia Day Spa and Salons Ltd., a skin care specialist was fired for poor performance. Prior to her termination, the salon had warned her of her poor performance and had set performance targets for her to achieve within the following three months. Despite the plaintiff’s increasing her sales however, the salon fired her anyway stating that she had not met all of the performance standards and that she exhibited a bad attitude.

The Court ruled however that failure to meet all performance standards did not constitute just cause in this case. Further, they noted that the employer was relying only on vague statements of poor attitude.

Ultimately, the Court ruled that the plaintiff did in fact meet the necessary performance standards when she increased her sales and that her employer did not have just cause for terminating her. This resulted in the salon being ordered to pay the defendant damages in lieu of notice as well as aggravated damages for the salons breach of their duty of good faith.

Contact Minken Employer Lawyers today

Are you considering terminating an employee for poor performance? Before you do, contact Minken Employment Lawyers to ensure that you have taken the necessary steps for your decision to hold up in court. And if you are an employee who has been terminated for poor performance and wish to challenge this decision, you can also contact our legal team for help.

Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. If you have any questions, please contact us or call us at 905-477-7011. Sign up for our newsletter to receive up-to-date Employment Law information, including new legislation and Court decisions impacting your workplace.

Please note that this article is for informational purposes only and does not constitute legal advice.

Severing an employee from the payroll is never an easy task for business owners or HR professionals.

It can be even more challenging when the employee is being let go for performance issues. Despite (hopefully) repeated attempts to correct the problem, the staffer just doesn’t get it or isn’t interested in trying to turn their performance around. For business owners, the only viable option is to let them go.

In too many cases, employers puts off releasing an employee who isn’t performing up to standards.

They may cringe at the mere thought of firing someone, worry the employee will have a difficult time finding other work, or in many cases, just keep ignoring the problem in the hopes it will get better.

It’s a mistake to avoid firing a poor performer for 2 reasons.

1) It’s unfair to other staff members 

By allowing an underperforming employee to continue their ways, you’re sending a message to your other employers that you value each of them the same. That can quickly take a toll on morale and engagement.

2) The employee isn’t right for the job

They know they’re not cutting it – and wonder when others will notice and decide to do something about it. This may lead to stress which will only further exacerbate the problem. An underperforming employee needs to be in a position where they can thrive: yours simply isn’t the right fit.

If the best days are when this employee calls in sick, the problem needs to be addressed. Consider how much better work will be performed and the team will benefit if a replacement is made that can get the job done. The problem of an underperforming employee doesn’t go away, no matter how long you ignore it. It’s a best practice to deal with it quickly and effectively and move on – for everyone’s benefit.

How to terminate an employee for poor performance

You’ll want to be prepared with as much documentation and paperwork as possible. It’s best practice to write a termination guide. The easiest termination meetings are held when the prep has been done in advance. If there are records of warnings or write-ups that outline the issue, have them readily available. If the performance issue revolves around customer complaints, returns or errors, have that data at your fingertips as well.

You’ll want to have any COBRA information ready to issue to the employee, if they were covered under any of your benefits plans.

Finally, have a separation checklist ready: this lists any company property that will need to be returned (keys, uniforms, computers, etc.) at the separation meeting.

Schedule a meeting

It’s a cruel but not uncommon practice for a manager or business owner to notify the employee to stop by HR or the owner’s office at the end of the day.

The result: a day of stress and speculation about the meeting that will likely spill over to coworkers. The best way to manage scheduling is not to: when you’re ready to speak to the employee ask their manager to bring them to your office, or go collect them yourself.

They may cringe at the mere thought of firing someone, worry the employee will have a difficult time finding other work, or in many cases, just keep ignoring the problem in the hopes it will get better.

Hold the meeting in private immediately, going through the necessary notifications and paperwork and escort them off premises quickly, quietly and with dignity.

As tempting as it is to fire an employee over the phone or text message, it’s best to communicate face-to-face.

What to say when you’re terminating an employee for poor performance

Your termination meeting should be short and to the point: there’s no reason to beat around the bush. Let the employee know they’re being let go effective immediately because of poor performance.

You should specify: let them know multiple complaints have been received (if they’re from coworkers do NOT name names), or because of tardiness or substandard work, etc. Whatever the cause, it’s no longer acceptable.

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The employee may have questions, and it’s fine to respond, but don’t let the discussion get lengthy. Overall, a termination meeting should last about 20 minutes.

Don’t let an employee embarrass themselves with promises to reform or do better. Let them know the decision has been made and it’s not up for negotiation. Then move on to COBRA notifications and/or property checklists and let the employee collect their personal effects before they leave.

What not to say when you’re terminating an employee for poor performance

Don’t apologize

You may feel sorry for the employee, be sorry you hired them, or sorry they didn’t work out — but apologies infer you are sorry they’re being fired which undermines your position.

The employee should have been warned sufficiently to correct whatever behavior is causing their dismissal and was unable or chose not to do so. Or they should know that by violating a serious company policy they would be let go without notice or warning. Terminating an employee is a business decision — not an emotional exercise. Apologies are unnecessary and easily misinterpreted.

Don’t discuss personal traits or characteristics

Commenting on personal traits or characteristics of an employee can open you up to a wrongful discrimination lawsuit.

For example, if an employee can’t manage to lift the required amount specified by the job description (and they haven’t asked for an accommodation), then this could be grounds for dismissal because they couldn’t perform the work.

But if you say a man — or a younger person — could do the work better, faster, or more easily, you are opening yourself up to discrimination claim.

They’re being fired because they can’t meet the requirements of the job — nothing else will have factored into the decision.

Don’t compare them to other employees

What other workers does is irrelevant. They were hired to meet the expectations of the job and are being let go because they did not. Discussions about how Linda does it faster or James always gets to work on time are counter-productive.

They’ll only lead to excuses and justifications: she has been here longer, he doesn’t have to travel as far.

These discussions are immaterial — the employee isn’t meeting the expectations of the job description and is being let go. The performance of colleagues should not be part of the discussion.

What happens when emotions run high? 

If you suspect the employee may not be able to control themselves, be ready with security. Occasionally it’s the employee you least expect who gets irate: it might be a best practice to always have help at hand.

A second person, or a security guard outside the door when the meeting is being held, lets employees know that type of behavior is not welcome and will not be tolerated.

For most small to medium sized business owners, terminating an employee is the worst part of the job.

Instead of putting it off, consider how much easier work will be when the employee is no longer causing problems or disruptions.

Conducting a termination meeting professionally can make a difficult situation easier to manage and make your workplace more productive and pleasant in the future.

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