Perhaps the most common situation which arises in the workplace, where an
employer has to contemplate the termination of an employee’s employment, relates
to perceived deficient performance. It is not uncommon for employers to adopt a
mind set that they should not have to pay severance, where performance is so
lacking that it reaches a level or threshold where termination of employment is
contemplated. It is, in fact, counter-intuitive, for many employers, to consider
paying severance to non-performers.

Other employers, perhaps, adopt a more practical view and accept the notion
that termination, even performance related termination, requires an appropriate
severance arrangement. These employers tend to consider providing a severance
package to be expedient, part of the cost of doing business, and an integral
part of the management prerogative to terminate employment, without dealing with
the necessary performance management steps which could, in the right
circumstances, lead an employer to terminate for cause, and without a severance

The following “rules of engagement” provide guidance as to when, or in what
circumstances, an employer may assert cause for termination in respect of
performance related issues, and avoid the obligation to pay an appropriate
severance arrangement:

      (1) Each case must be decided on its facts;

(2) An employer’s displeasure at an employee’s performance is not enough to
warrant dismissal. There must be some serious misconduct or substantial

(3) The onus of proving just cause rests with the employer;

(4) The performance of an employee must be gauged against an objective

(5) The employer must establish:

        (a) The level of the job performance required;

(b) That the standard was communicated to the employees;

(c) That suitable instruction and/or supervision was given to enable the
employee to meet the standard;

(d) The employee was unwilling to or incapable of meeting the standard;

(e) The employee was warned that failure to meet the standard would result in

(6) Where the employee’s performance is grossly deficient and the likelihood
of discharge should be obvious to the employee, warnings are not required;

(7) While the standard of incompetence to warrant discharge for cause is
severe, the threshold of incompetence necessary to warrant dismissal for cause
is significantly lower where dismissal is preceded by many warnings, indicating
unsatisfactory performance;

(8) An employer who has condoned an inadequate level of performance may not
later rely on such condoned behaviour as a ground for dismissal.

The net result is that employers may, in the right circumstances, terminated
without a severance package, for performance related deficiencies. In order to
do so, however, the employer must invest time, diligence, have strong procedures
and policies, and be able to present a well-documented case. The onus of
establishing cause for performance related deficiencies increases with the
length of service of the employee, as well.

As a result, and considering the substantial height of the legal bar required
to achieve performance related cause for termination, most employers default to
providing a severance package to employees whose performance was lacking. Only
those with strong performance management systems are up to the task of
attempting to establish just cause for termination.


Norman Grosman tackles your employment law dilemmas regularly on Workopolis.
More information about him and his legal services can be found on his website