Ontario Municipal Human Resources Association

Performance issues are among the most common reasons Ontario employers consider ending an employment relationship. Performance issues also often become the downfall for employers when that relationship ends in litigation. The gap between the two usually comes down to whether the employee’s performance was managed in a documented and defensible way, before the employer proceeded to termination.

This article walks through the building blocks employers should have in place at each stage of the performance management process.

Setting Expectations Properly

Before any performance issues can be fairly raised, the employee must know what “good performance” looks like to the employer.

Expectations should be objective, measurable, communicated clearly to the employee in writing, and applied consistently across similarly situated employees. Expectations could be set out in a job description, performance review, or policy.

Communicating expectations that are vague, generic, or outdated could undermine an employer’s position later on. If an employer cannot point to a standard the employee was told about, it will be challenging to later argue that the employee failed to meet its standard for “good performance.”

Managing Performance in Real Time

Good performance management does not come from a single conversation, but rather it should be a process. A defensible approach to managing performance generally includes the following:

• Timely and specific feedback when an employee’s performance falls short.
• Formal performance improvement plans (PIP) to help the employee succeed. A PIP should be comprised of realistic timelines, measurable and achievable goals, and available supports, which may include training, mentorship, or other resources.
• Written documentation of each step in the process, including what was discussed, the expectations communicated, and the timelines set out.

Performance management may need to escalate into progressive discipline when an employee’s performance concerns persist. Depending on the circumstances this may involve a formal written warning, final warning, suspension without pay, or other disciplinary measures. The appropriate level of discipline will depend on the nature and severity of the issues, the employee’s disciplinary record, the employer’s policies and practices, and the prior performance management. The discipline should be proportionate to the circumstances and be consistently applied to similarly situation employees.

Progressive discipline is not a rigid checklist, and employers do not necessarily have to move through each step before termination. Rather, the objective is to give the employee a reasonable opportunity to correct the performance issues, while making the consequences of continued failure increasingly clear. This means it is crucial to provide clear warnings that an employee’s continued failure to meet the expectations set may result in discipline, up to and including termination of employment.

When Performance Management Fails

If the employee’s performance does not improve despite repeated performance management and progressive discipline, termination may be appropriate. At that point, there are two approaches an employer can take.

Termination without cause is the more common and lower risk approach, whereby the employer ends the relationship by providing notice, or pay in lieu thereof, in accordance with the Employment Standards Act, 2000, and the employment agreement, if any. This approach does not require the employer to prove that the employee’s performance was poor to defend the termination decision.

Conversely, termination for cause based on poor performance is a higher-risk approach. Such termination disentitles an employee to any notice of termination or pay in lieu thereof. For that reason, Ontario courts have set a high bar for employers to establish cause for termination. An employer must prove that its expectations were clear and communicated, the employee had sufficient opportunities to improve their performance with appropriate supports, the employee was expressly warned of the consequences of continued failure to meet its expectations, but despite all of that the employee continuously failed to do so in a manner that resulted in wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer.

When contemplating the termination decision, it is important that employers do not conflate an employee being a poor “fit” for the company with “cause” for termination. Rather, most performance-based terminations should be treated as without cause terminations.

Given the high standard set for employers to establish cause for termination, it is important that employers seek legal advice before proceeding with that approach. The consequences of getting this decision wrong may be significant for the employer, and could lead to additional damages awards if the matter proceeds to litigation.

Written by: Rebecca Feldman, Lawyer, Hicks Morley