Should an employer disclose issues contributing to termination even if not the main reason?
Question: When summarily terminating an employee who has performance issues, is it acceptable to not say anything regarding the nature of the reasons for being terminated and just say the company has decided to go in another direction? Should we disclose some of the issues even if they aren't the main reason for termination?
Answer: I will address the specific question first. I will then add some cautionary advice regarding dismissing an employee for cause based upon performance issues.
Historically, courts have said employers do not have to provide reasons for the dismissal of an employee. With some exceptions, that approach has been accepted in the context of dismissals both with and without just cause. That said, the Wallace v. United Grain Growers case raises a question about whether it is still advisable to let an employee go without telling them why. That is because the Wallace case, in which the Supreme Court of Canada set out the employer’s duty to act in good faith at the time of termination, specifically held as follows:
“The obligation of good faith and fair dealing is incapable of precise definition. However, at a minimum, I believe that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.”
Consciously withholding the reason for termination would, arguably, be contrary to the requirement that the employer be candid and forthright.
At this point, then, it is unclear as to whether there is a duty to tell the employee why they have been dismissed. However, I would definitely recommend against misleading the individual by giving reasons that are not the real basis for the dismissal, such as “going in another direction.” If I understand the question correctly, the intention is to dismiss the employee for cause. “Going in another direction” would certainly not be just cause, so it would be contradictory to put that forward as the reason for the dismissal.
A common practice is to meet with the individual and discuss, in a general way, the reason why the company has decided to dismiss her. Presumably, the employee will already be aware of the employer’s concerns, and will have been warned in the past that a failure to address them will lead to dismissal. At the end of the meeting, a letter can be given to the employee which says something along the lines of “Further to our discussion this afternoon, ABC Co. has decided to terminate your employment on a for cause basis.” No specifics need be provided in the letter itself.
That said, it should be noted that dismissal for cause, based upon performance issues, is difficult and risky. While I am not among the naysayers who contend that an employee can never be fired based on performance issues alone, I would be remiss if I did not caution to proceed very carefully.
Generally speaking, it will be almost impossible to dismiss someone for poor performance based upon a single incident. In order to justify a dismissal for performance issues, employers will typically have to prove:
• the level of performance required;
• the standard was explicitly communicated to the employee;
• the employer gave appropriate instructions and supervision in order to enable the employee to meet the standard;
• the employee did not meet the standard after being given reasonable time in order to improve; and
• the employee was clearly warned a failure to meet the applicable standard would lead to dismissal.
In many cases, it will be the employer’s failure to communicate properly with the individual that will lead to a refusal on the part of a court or tribunal to find just cause.
Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672.
Answer: I will address the specific question first. I will then add some cautionary advice regarding dismissing an employee for cause based upon performance issues.
Historically, courts have said employers do not have to provide reasons for the dismissal of an employee. With some exceptions, that approach has been accepted in the context of dismissals both with and without just cause. That said, the Wallace v. United Grain Growers case raises a question about whether it is still advisable to let an employee go without telling them why. That is because the Wallace case, in which the Supreme Court of Canada set out the employer’s duty to act in good faith at the time of termination, specifically held as follows:
“The obligation of good faith and fair dealing is incapable of precise definition. However, at a minimum, I believe that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.”
Consciously withholding the reason for termination would, arguably, be contrary to the requirement that the employer be candid and forthright.
At this point, then, it is unclear as to whether there is a duty to tell the employee why they have been dismissed. However, I would definitely recommend against misleading the individual by giving reasons that are not the real basis for the dismissal, such as “going in another direction.” If I understand the question correctly, the intention is to dismiss the employee for cause. “Going in another direction” would certainly not be just cause, so it would be contradictory to put that forward as the reason for the dismissal.
A common practice is to meet with the individual and discuss, in a general way, the reason why the company has decided to dismiss her. Presumably, the employee will already be aware of the employer’s concerns, and will have been warned in the past that a failure to address them will lead to dismissal. At the end of the meeting, a letter can be given to the employee which says something along the lines of “Further to our discussion this afternoon, ABC Co. has decided to terminate your employment on a for cause basis.” No specifics need be provided in the letter itself.
That said, it should be noted that dismissal for cause, based upon performance issues, is difficult and risky. While I am not among the naysayers who contend that an employee can never be fired based on performance issues alone, I would be remiss if I did not caution to proceed very carefully.
Generally speaking, it will be almost impossible to dismiss someone for poor performance based upon a single incident. In order to justify a dismissal for performance issues, employers will typically have to prove:
• the level of performance required;
• the standard was explicitly communicated to the employee;
• the employer gave appropriate instructions and supervision in order to enable the employee to meet the standard;
• the employee did not meet the standard after being given reasonable time in order to improve; and
• the employee was clearly warned a failure to meet the applicable standard would lead to dismissal.
In many cases, it will be the employer’s failure to communicate properly with the individual that will lead to a refusal on the part of a court or tribunal to find just cause.
Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672.
