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February 18, 2014

Terminating an Incompetent Employee for Cause (Yes, it can be done)

Author Hendrik Nieuwland

Every employer has one. Whether it is the salesman who can’t meet quotas, the employee who continues to receive terrible performance reviews, the editor who misses and prints "tpyos", or the manager whose branch consistently loses money; every employer has that incompetent employee that they could do without. However, as any employment lawyer will tell you, terminating this employee for just cause is not a simple matter and proper steps must be followed in order to successfully defend a claim for wrongful dismissal.

The recent case of Crystal Parent v. Spielo Manufacturing Inc., 2013 NBQB 394 (“Parent”) out of New Brunswick provides a great example of an employer that took these “proper steps”.

In Parent, the employee was a Quality Tester who had worked for her employer for 5 years. By all accounts, Mrs. Parent was a great employee during the beginning of the employment relationship. However, on June 15, 2009, Mrs. Parent took an unpaid leave from work, and when she returned on July 15, 2010, it soon became clear to her employer that she could not perform her duties competently.

In December 2010, Mrs. Parent scored a 2.94 out of 5 on her performance review. She met with her supervisor where it was explained that she was below the “three point mark”, a mark that she knew was required to meet expectations. At this meeting, a performance improvement plan for a three-month period was discussed with a review to be done after its completion. As planned, another performance review was completed and Mrs. Parent, again, did not meet the performance standards. She was given a written notice dated May 2, 2011 which outlined her performance improvement plan again. Importantly, the plan contained objective standards of performance such as ensuring she quality tested at least 20 units/day or 100 units/week. This time the performance improvement plan gave her 30 days to correct performance, following which there would be another review.

On June 9, 2011, Mrs. Parent was given another written notice regarding the performance improvement plan that reflected her continued underperformance, and on June 21, 2011 she was given a warning which stated as follows:

As a result of the above issued, I feel that I must now emphasize in writing how important it is for you to understand and address these issues. This is not something I do lightly or without a considerable amount of thought.

Immediate improvement is required and you will be expected to maintain the improvement in the above-mentioned areas, or you will be subject to further corrective action, including possible termination of employment. During the next 60 days we will meet once a month to discuss your progress related to these issues. You will maintain a daily activity log that will be emailed to me at the end of each work week (Friday’s at 5:00 pm).

On August 24, 2011, Mrs. Parent was, once again, given notice in writing that emphasized the need for improvement and that failure to do so could result in disciplinary action. At year’s end she did another performance review. She scored 2.78 out of 5. Mrs. Parent was notified of her score and was then informed that she was being dismissed, effectively immediately, for incompetence.

What may be most striking about this decision is the context in which it happened. The leave that Mrs. Parent took from June 15, 2009 to June 15, 2010 was due to the birth of her child – a child that was born with serious health issues. Upon her return to work, Mrs. Parent, a single parent, was spending a lot of time in hospitals (as much as five times a week). Since, Mrs. Parent’s performance reviews only began to drop after the birth of her child, putting her on an aggressive performance review exposed the employer to allegations of failing to accommodate Mrs. Parent’s family status.

However, the Court concluded that the employer “tried the best it could to accommodate” and that “the evidence does not, in any way, support Mrs. Parent’s personal issue, such as her son’s illness, as having been a consideration or a concern to Spielo in her dismissal.” In the end the Court upheld the dismissal on the basis of incompetence.

What can an employer with an incompetent employee learn from the employer in this case?

1. The onus is on the employer to establish just cause.

Just cause on the basis of incompetence is no different than establishing just cause for any other ground such as insubordination or sexual harassment. In this case, the employer proved on a balance of probabilities that there was just cause for termination.

2. Level of incompetence

The employer must go beyond proving displeasure with the employee’s performance. “Incompetence” means that the employee is incapable of performing the job, or, that the employee is possibly capable of doing so, but consistently failing to meet a reasonable standard of performance. Here, the employer proved the latter.

3. The level of job performance must be communicated to the employee

The employer clearly made known to the employee the requisite standards it wanted its employees to meet in the numerous reviews, notices and warnings it gave to Mrs. Parent. It was also made clear to Mrs. Parent what she was failing to do and, importantly, her employer had all of this in writing.

4. The employee is incapable of meeting the standard

Employers must give the employee a reasonable amount of time to try and bring themselves up to the standard in order to determine whether they are incapable. What a reasonable amount of time is will depend on the unique circumstances of each case. Here, the employer gave Mrs. Parent a year and a half to work at getting back up to the standard it expected of its employees. Importantly, the employer sat down with Mrs. Parent on multiple occasions to discuss alternative measures to meet the standard; it didn’t just sit on its hands and watch her fail.

5. Warning of dismissal

There must be a clear and unambiguous warning that the employee’s job is in peril and that he or she will be terminated, not may, if results do not improve. The employer should ensure that it does not condone the incompetent behaviour.

6. It can be done

Any employer can terminate an incompetent employee if it is willing to pay. However, the Parent case proves that, even with a “high risk” employee, if the proper process is followed a just cause argument on the basis of substandard performance and/or incompetence can be made successfully.

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