The recent Ontario Superior Court of Justice decision in
Brake v. PJ-M2R Restaurant Inc. (2016 ONSC 1795) provides
a useful reminder to employers of how not to use performance
improvement plans ("PIPs"). It also demonstrates the
challenges employers face in dismissing long-service employees for
cause due to poor performance.
Esther Brake was a 20 year employee of PJ-M2R Restaurant Inc., a
McDonald's franchisee. Brake managed the employer's
McDonald's franchise in Kanata, Ontario from 2004 to 2011,
receiving very strong performance evaluations until 2011.
After receiving her first negative performance review in
November 2011, Brake was transferred to another of the
employer's franchises, a small, chronically underperforming
McDonald's restaurant located in a Wal-Mart. Three months after
Brake began managing the Wal-Mart location, she was put on a
Ultimately, the employer told Brake that she failed the PIP and
had to "take a demotion or go." Brake refused the
demotion and was dismissed for cause in August, three months after
being placed on the PIP.
No Cause for Dismissal
In its review of the facts, the Court did not provide any detail
on what the performance issues were and only stated that
"there was some evidence that [Brake] ran into some difficulty
in 2011 and 2012". However, the Court concluded that the
employer "set [Brake] up to fail" by imposing the PIP.
The Court found that the employer's measurement of Brake's
performance was arbitrary and unfair, noting that her goals under
the PIP were objectively more difficult than the standards by which
her performance had been judged in the past.
The Court therefore found that there was no cause for her
dismissal given her history of strong performance and the fact that
despite being set up to fail, her performance at the Wal-Mart
location was actually trending upward. Given Brake's
approximately 20 years of service and age (62), the Court awarded
her 20 months' notice, totalling $104,499.33 in damages.
What This Means for Employers
The employer in this case ran afoul of some fundamental
principles when trying to use PIPs to improve an employee's
vague, arbitrary and unreasonable standards: an employer cannot
expect an employee to become the best employee in the company, so
clear, reasonable and objective standards should be used in
determining the goals of the PIP.
failure to follow up: an employer should not impose a PIP and
then walk away; regular meetings should be held to discuss where
the employee is in relation to the objectives of the PIP.
lack of time: courts will typically not endorse a three-month
PIP for a 20 year employee, so consideration should be given as to
how long it might take for the employee to meet continued
The other fundamental issue that the employer had to overcome
was a demonstrated record of strong performance. Courts are likely
to question an employer's motives when it suddenly concludes
that an employee's performance is unacceptable when previous
performance reviews indicate strong performance. Moving too quickly
to a PIP can be questioned by a court or tribunal when there may
have been other ways to handle the performance issues before taking
that step (e.g. engaging in informal coaching and counselling
meetings, outside training being provided, etc.).
PIPs can be used effectively by an employer to improve an
employee's performance and that should remain the primary
objective of a PIP. If an employee responds poorly to the PIP,
either by demonstrating an insubordinate or belligerent attitude,
or by refusing to take steps to improve performance, the PIP
becomes connected with a course of discipline that can lead to a
cause termination. However, the PIP must be implemented and managed
carefully if it is going to achieve the goal of improved
performance or to show that the employee's reaction to the PIP
provided cause for dismissal.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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