Canada: Incompetence or Poor Performance — Just Cause for Dismissal?

Originally published in Blakes Bulletin on Labour & Employment – September 2005

Article by Abdul-Basit Khan and Robin Reinertson, ©2005, Blake, Cassels & Graydon LLP

In the employment context, just cause for dismissal means that the employer has an appropriate reason or "justification" for firing an employee. In such a situation, the employer is relieved of the obligation to provide notice of termination, or payment in lieu of such notice. Where just cause for termination of employment is present, the employer is entitled to summarily dismiss an employee and unilaterally end the employment relationship. The obvious and difficult question facing employers is when do they have just cause to dismiss an employee? More specifically, in what circumstances does incompetence or poor performance amount to just cause?

There are certain actions which will clearly constitute a sufficiently egregious violation of the employment relationship so as to establish just cause, i.e., if the employee shows continued and "wilful disobedience," steals from the workplace, or engages in conduct which is discriminatory or harmful to other employees, the employer is on firm ground in bringing the employment contract to an end.

The situation is less clear when an employer has to deal with an employee who is incompetent or simply does not perform his or her duties as required. Employers frequently find themselves faced, not with malevolent and malicious employees, but with employees who simply do not, or cannot, pull their own weight. Anecdotal stories abound of employers who have reshuffled, reorganized, redesigned and re-engineered the workplace in order to accommodate an employee who seems woefully unable to deal with the simplest of tasks. In these circumstances, is the employer entitled to terminate the employee for cause, or must a severance package be provided even to the poorly performing worker?

To establish just cause for dismissal as a result of poor performance, the employer must show more than mere dissatisfaction with the employee’s performance. Real incompetence must be demonstrated.

The notion of incompetence generally excludes the element of deliberate or wilful misconduct on the part of an employee. Wilful misconduct or disobedience, as stated previously, generally provides just cause for dismissal. In contrast, an employee’s carelessness or indifference is generally treated as non-culpable, provided that it does not amount to "gross" incompetence. If, however, an employee engages in conduct that reflects gross incompetence, then there is no requirement for the employer to warn the individual and provide an opportunity for improvement. In the context of gross incompetence, the employee may be summarily dismissed. Where, as is frequently the case, the incompetence is of a less serious nature, the employer must provide the employee with sufficient warnings and a reasonable opportunity to meet the standards set by the employer before considering dismissal for cause.

The distinction between incompetence and other forms of employee misconduct that give rise to just cause was addressed by Ritter J. of the Alberta Court of Queen’s Bench in the following passage from Bogden v. Purolator Courier Ltd.:

"Here, to a large extent, the employer bases its dismissal of the plaintiff on the plaintiff’s incompetence. In order to establish that an employee’s incompetence is grounds for dismissal, an employer must show more than mere dissatisfaction with the employee’s work and it is not enough to show that the employee was careless or indifferent. To establish cause on the basis of incompetence the employer must show: 1) the level of job performance that it required and that the level required was communicated to the employee; 2) that it gave suitable instruction to the employee to enable him to meet the standard; 3) the employee was incapable of meeting the standard; and 4) there had been a warning to the employee that failure to meet the standard would result in his dismissal."

In light of these criteria, if incompetence is alleged, the employer must demonstrate that the employee’s performance fell below an objective standard. And, although the employer’s subjective perception of poor performance might serve as useful evidence before a court, it will not, in and of itself, determine the issue. The difficulty in establishing incompetence or poor performance as grounds for dismissal lies in the establishment of this objective standard of performance.

Courts have found that an isolated instance of failure to meet objective standards will not justify discharge. Moreover, a court will consider any mitigating factors that might explain or justify the alleged incompetence. These factors include the circumstances of employment, the volume of business, and any extenuating circumstances in respect of the employee which might be relevant.

In Matheson v. Matheson International Trucks Ltd., the Court found that the fact that the employee was working to the best of his ability (though incompetently) was not a mitigating factor, i.e., the implied warranty of an employee is not that he or she will use his or her best efforts to learn how to perform the job, but that he or she is, at the point of hiring, reasonably competent to do the job.

Establishing that an employee has failed to meet an objective standard of performance is a necessary but not a sufficient criterion for the purpose of demonstrating just cause for dismissal. Employers are also required to issue a warning that dismissal will result in the event that a stipulated level of performance is not met. In Manning v. Surrey Memorial Hospital Society, a senior hospital administrator was shown to be somewhat inefficient in his supervision of the comptroller and his staff. As a result, he was dismissed for cause. The British Columbia Supreme Court concluded that despite the fact that the plaintiff failed to properly oversee the comptroller’s department, the plaintiff should have received some form of warning or advance notice that his dismissal would be forthcoming if he failed to rectify this internal problem.

Even after warning an employee that he or she has failed to meet the required standard, there are certain circumstances where a court will find that an employer must take additional steps before just cause for termination will be established. Quite often, "poor performance" issues arise when an employee is hired to do a job of a certain description, and she performs that job to the employer’s satisfaction, but the requirements of the job then change and the employee is unable or unwilling to modify and expand her skills to meet the changing work environment.

Although an employer is not under a duty to assist employees in learning new office procedures, its failure to do so may undermine a subsequent attempt to dismiss an employee for "incompetence." In Swanson v. Sternson Ltd., the plaintiff was dismissed for incompetence after 22 years of employment as a technical service representative/salesman. For the last five years of his employment, the plaintiff, then 55, was required to report to a general manager who had instituted "new regimens and protocols" for sales employees. Justice Stevenson held that the employer made no attempts to assist the plaintiff in adapting to the new regimens and protocols and, as a result, "While technically Mr. Swanson failed to comply with his employer’s directions, that failure arose because of the situation the employer had itself created. In those circumstances I cannot find that Sternson had cause to dismiss Mr. Swanson without either notice or compensation in lieu thereof."

Before poor performance can be relied upon as just cause for dismissal, an employer must do the following: 1) set out an objective standard of performance; 2) demonstrate that the employee cannot meet that standard; 3) warn the employee that his job is in jeopardy unless the standard is met; and 4) provide a reasonable amount of time for the employee to comply with the employer’s demands. Further, if the employee’s job description changes, the employer may have to demonstrate that it assisted the employee in adapting to the new environment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.