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Not meeting standards? You are still entitle to severance if dismissed.

Henney worked for a franchise of a large restaurant chain in Newfoundland for 13 years before she moved to Ottawa in 1999. She found work with a new franchise owner of the same chain there. Because of her previous experience in Newfoundland, she was treated as if she had 7 years of seniority with the new employer when she arrived.
 
This franchise owner had a number of locations and through the years Henney worked in a number of different jobs. Eventually she rose to the position of store manager. At the wrongful dismissal trial, all of her performance reviews were put into evidence. Year after year she received praise and accolades and was rated as excellent. The judge quoted from them for over two pages of the decision. Henney was a hard working single mother who was clearly considered an asset by her employer.
 
In the fall of 2011, at the age of 61, Henney got a surprise. For the first time in her career her performance review said she needed improvement. At the same time as Henney was told that she needed improvement, she was transferred to a small location that had been struggling with sales and high staff turnover for months. In short order she was put on a 3 month performance improvement plan when she was not able to immediately turn the store around. In order to try and save her career, Henney routinely began working 12 hour days and never asked for overtime.
 
Suddenly, the performance levels and standards that Henney had always achieved were not good enough. Among other things, she was told she had to receive a 90% from a mystery shopper. That was rather unfair given that the company’s own policy was that the standard was an 80% score. The employer told Henney that she had done badly on the assessment, but in fact, when all the paperwork had to be produced at trial, it turns out Henney had great results.
 
None of it seemed to matter to the employer. Even though Henney met the goals set for her, the boss told her that she could either take a demotion, which would involve losing some of her benefits and reporting to somebody she hired and trained, or leave.
 
Henney left.
 
She took the position that she had been constructively dismissed because of the loss of benefits and the humiliating demotion. The employer denied having constructively dismissed Henney, but claimed that if it did, it had just cause because of her bad performance.
 
The Judge found that Henney had been set up to fail from the beginning. The Judge decided that given the length of her employment and her loyal history of contributions to the organization, she was entitled to expect more assistance in overcoming her newly alleged shortcomings. The performance improvement plan, said the Judge, was not a way to help Henney, just to document new found deficiencies to justify an already planned demotion.
 
The employer had every right to terminate Henney if they wanted to, but in order to avoid having to provide pay in lieu of notice, they had to establish real incompetence or misconduct, not simple dissatisfaction with her performance. This employer came nowhere close to establishing just cause.
 
Henney was 62 years old at the time of her termination and made reasonable efforts to look for new employment without much success. Henney was awarded 20 months pay in lieu of notice and the tab for the employer was over $100,000 not including legal costs.
 
Employers are entitled to terminate non-unionized employees if they wish. There seems to be a misconception among many employers, however, about what constitutes just cause such that you don’t have to provide a severance package. No amount of documentation, paperwork, or disciplinary warnings will establish just cause in the absence of very significant incompetence or misconduct. This is especially the case for a 20 year employee with years of accolades under her belt. Not “meeting standards” does not warrant either a demotion or termination without severance.
 
Many employers feel that the system is stacked against them and that just cause is impossible to prove. Many employees feel that the laws don’t do enough to protect them from fickle terminations and demotions. Usually when people on both sides of the fence feel it is in the wrong place, it means the fence is exactly where it should be.
 
Ed Canning practices labour and employment law with Ross & McBride LLP, in Hamilton, representing both employers and employees. You can email him at ecanning@rossmcbride.com.
 
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com