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Performance Management and
Potential Dismissal for Cause
Ross Ellison
October, 2011
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Why Can’t I Fire Him, He’s
Incompetent?
• This is one of the most frequently asked questions of
employment lawyers and in terms of frustration level, is
right up there with performance managed employees
going off on stress leave.
• As you are aware, just cause is like pregnancy – you
have it or you don’t and the uninitiated sometimes have
difficulty accepting that marginal performers get full
severance packages.
• In fact, they may get more severance than good
performers who are let go for organizational reasons.
• It is important to have your managers understand this
concept.

• Just cause termination for performance
reasons is by far the most difficult hurdle for
an employer to get over in employment cases.
• The law is that the employer must show that
the incompetence is so gross that the
employee is virtually incapable of performing
the job.

• Even before you can get to the hurdle of
whether the employee is that incompetent, the
employee must generally be warned, coached,
the standards set must be reasonable, and
only then do you get to try to establish that the
employee is “virtually incapable of doing the
job”.

• The following are three scenarios that I see
frequently and for those of you who are in
senior HR positions, I suspect you also see
them frequently.
• In each case the employee in question
invariably has been with the company more
than five years. Dealing with longer term
employees is much more difficult than the
shorter term employees, with whom the
company typically doesn’t have a benevolent
history.

• The scenarios are:
1) New increased standards of performance
imposed in today’s economic climate – “We
must do more with less, he must become more
efficient in today’s economy to outstrip our
competitors while keeping our costs down, I as
the business unit manager have been told to
get more out of less, if I don’t do it I will be
fired, why do I have to pay severance to
someone under me who can’t do it?”

2) The new younger manager trying to earn
his spurs by increasing efficiency. “I inherited
Joe from the previous manager of this
department, Harry. Harry was too soft, his
standards were too low, and because Joe was
a nice guy and a golfing buddy of Harry, he
always had raises and satisfactory evaluations
– my style of management is more modern,
more accountable and I can truly demonstrate
that he isn’t meeting the new standards.”

3) After failing in a couple of other
departments under a couple of other
managers, Joe has been moved yet again to a
new manager. The new manager, after seeing
his performance for some period of time, says
“He didn’t work out in two other departments, I
was asked to take him on, he is not working
out here, he cannot do the job, I can
demonstrate that and why do I have to pay him
severance which will come out of my
department’s bottom line?”

• All of these are very good questions and are
answered in one word: “condonation”.
• Your managers, whether they be new
managers inheriting older employees,
managers inheriting employees who have
come from successful stints in other
departments or managers who are managing in
the new economic reality must realize that it is
the employee’s history with the company and
not this latest manager that is important to a
Court.

• For the managers in those three positions,
changing the course of events to point towards
cause for a longer term employee can often be
like changing the course of the Queen Mary by
180 degrees in two miles.
• In order for the employer to succeed in a just
cause termination, the following must be
shown:
1) The level of job performance that was
required was communicated clearly to the
employee.

2) It was reasonable to require that level of
performance of the employee, i.e. it was doable
by that employee.
3) The employee was given a reasonable
period of time to meet those standards.
4) During that time, the employee was
coached and/or mentored regularly and given
feedback.

5) The employee had been given a warning
that he was failing to meet those standards.
6) Despite all of the above, it was clear that he
could not perform adequately.
7) The longer the period of time the employee
has been with you, the longer the period of
time is required to go through steps 1 through
6.

• The key issue for you and where you can add
real value to your organization is making the
judgment call as to whether, in the end, it is
worth going through steps 1 to 6, given the
employee’s history and the way he has been
managed and measuring that against the
likelihood of being able to establish just cause.
• The highest and best use of we “HR experts”
(you and I) is to “know when to hold them and
know when to fold them”.

• There is hope, however, if an employee is properly
managed from the start.
• Here are some suggestions for a discipline that can be
followed by executives, managers, supervisors and
others who manage performance:
1) The way to avoid a lot of this altogether is to have
severance provisions in letters of hire.
2) Always include a period of probation in letters of
hire – 6 months is a good period of time.

3) Make the hard call at or before expiry of the
probationary period.
4) If the person passes probation with some
reservations, set for yourself an outside date
by which a final decision will be made on
whether the employee is going to succeed (one
year?).
• If the employee passes probation with
reservation, point out what the reservations
are, put in place a coaching program and
follow that program, giving feedback.

• The shorter the term of employment, the
shorter the period of monitoring is required.
• If, after some months of coaching and
feedback, the employee is still not performing
satisfactorily, give a final warning.
• If a manager wants to terminate anyone for
incompetence, he or she should be able to
show you something like the attached series of
documents.

Termination for Performance
Reasons
To: Harry Smith
From: Joe Doakes
Date: June 21, 2011
Re: Your Performance
In a discussion on June 19 th , I told you of the need for improvement in your level of
performance with specific regards to (detailed reasons for the warning).
We believe that all of our employees are valuable resources to our business. Everyone is
needed to produce our quality products. You are part of the organization and we depend on
your expertise to meet our objectives.
Because of your failure to meet the expectations that were discussed during our meeting of
June 19 th , and for the reasons I communicated to you during that meeting, please consider
this a warning that improvement will be required in your performance.
Our commitment is to help you in achieving a satisfactory level of performance. To that end,
I will be reviewing your performance with you on a monthly basis over the next three
months. After our meetings at the end of July, August and September, I will be providing
you feedback as to whether you are performing at an acceptable level, if not, what is
expected of you.
Unfortunately, if you do not meet those satisfactory levels of performance at that time, then
your continued employment will be in jeopardy.

Termination for Performance
Reasons
October 7 , 2011
Harry Smith
Dear Mr. Smith:
In my memo of June 21, 2011, I advised you of the serious shortcomings in your
performance (summarize the details given on June 21).
As I promised in my memo of June 21, we met at the end of July, August and September to
review your performance and the company’s goals.
The detailed feedback that I gave you at each of the June, July and August
meetings, indicated that unfortunately there had been no improvement in your performance
and you acknowledged that fact.
Despite our best efforts, your performance still has not met the expectations that we set out
in our letter of June 21, 2011. For these reasons, it is my unfortunate duty to advise you
that your employment with the company is being terminated effective immediately for just
cause.
Good luck in your future endeavors.

• A possible middle ground – an “ex gratia
payment” in exchange for a Release.
• Only in cases where it has been managed well
and likely with shorter term employees.
• Be careful of the amount you offer ex gratia
lest you send the wrong message to a lawyer.

• Sample letters – Termination for cause and exgratia
payment
August 22, 2011
Harry Smith
Dear Mr. Smith:
Re: Termination of Employment
For the reasons that we discussed today, your employment with (Company) is
terminated immediately for cause.
Enclosed is a cheque for your pay to date and outstanding vacation pay.
Your Record of Employment will be sent to you in the next day. For issues
relating to your pension and benefits, please contact (name) at
(telephone number).
Good luck in your future endeavours.
Yours truly,

Aug 22, 2011
Without Prejudice
Mr. Smith
Dear Mr. Smith:
Your employment has been terminated for just cause and therefore
you are not entitled to severance.
Although we are under no obligation to do so, in order to assist you in your
transition to new employment, we are prepared to offer you the sum
of $5,000 on an ex gratia basis upon your signing the attached Release.
This offer is open for acceptance until Monday, September 5, 2011 at
which time it is revoked.
Yours truly