Canadian Employment Law Today

6 | February 3, 2016 Canadian HR Reporter, a Thomson Reuters business 2016 Cases and Trends was much larger and had poor relations be- tween management and staff, due partly to an unsuccessful union-organizing drive, which also caused divisions among the staff. e payroll budget was also too high and the facility's conveyer system was experiencing problems. In addition, there was a short- age of storage space after a new mezzanine area was built at the distribution centre but couldn't be used until municipal approvals were given in July 2010. Carquest began a process of converting distribution centres from a paper-based in- ventory control system to electronic systems based on digital scanning, called DCMS. e technology allowed distribution centres to control inventory more efficiently and sim- plify the job of locating and retrieving auto parts to send to retail stores. e Rexdale facility converted to the DCMS system over a few months from Oc- tober 2009 to February 2010. Kurtz had no prior experience with the new system, since his distribution centre in California hadn't converted before it closed. New position inherited existing long-term problems In 2009, Kurtz was given a passing score in the company's performance management process, as the facility's problems were deemed beyond his control when he ar- rived. However, the facility continued to op- erate below company standards and Kurtz was given coaching and assistance from managers. e company established a baseline for performance of the distribution centre un- der Kurtz's leadership for 2009 and gave it a "fail" with a list of areas needing improve- ment. Kurtz was also given a notice of per- formance counselling in April 2010 identify- ing specific concerns from the performance review. It was called a "final warning," though he hadn't received any prior warning under the company's progressive discipline policy — which stipulated an initial coaching ses- sion should be given, followed by two coun- selling sessions before termination was con- sidered. Carquest issued Kurtz a performance management process notice in July 2010 noting the Rexdale facility wasn't meeting corporate requirements, but the notice wasn't considered a disciplinary document. However, a little over one month later, Kurtz was given a corrective counselling form indicating there were "multiple per- formance items that have still not improved and others that are new and contributing to the downward performance of this dis- tribution centre." e form indicated "this serves as a final written warning for perfor- mance… e above-mentioned items re- quire immediate attention and remarkable improvement as soon as possible, failure to do so will result in immediate termination." e notice was followed up by upper man- agement, who told Kurtz to "do what you know you have to do." Between June and December 2010, Kurtz received several emails from upper man- agement indicating Carquest's unhappiness with the performance of the distribution centre. By September, the company was ac- tively searching for a replacement director of operations, which it hired in December. By the end of 2010, the Rexdale facility was still performing poorly and had actually gotten worse in every metric except for one that had already been bad. On Jan. 10, 2011, Carquest terminated Kurtz's employment for poor performance and failing to meet its company-wide "gold standards," of which Kurtz and all operations managers had been made aware. Kurtz sued for wrongful dismissal. e court found Carquest "had a valid business reason" to dismiss Kurtz — hiring another director of operations that could improve the Rexdale facility performance — and its gold standards were reasonable and applied objectively across the company. However, it also found Carquest didn't prop- erly warn Kurtz that his substandard perfor- mance could result in dismissal, nor did the company give him reasonable time to fix the problems. It was a fact that the Rexdale facility was in poor shape when he took it over, with "sig- nificant ongoing problems" already existing and "indicative of long-term problems that needed time, care and attention to resolve." When the April 2010 notice was named a final warning, it was "obviously inaccurate and misleading" and expecting significant improvement of long-standing issues with- out further assistance was unreasonable, said the court. Following that notice, the four months before Carquest began looking for a replace- ment wasn't enough time to see if things could improve and was "an indication that the company had written off Mr. Kurtz as a Carquest asset and had no interest in as- sisting him in solving the existing problems," the court added. As a result, the court found Kurtz was wrongfully dismissed. Kurtz was 50 years old at the time of dis- missal with five-and-one-half years of ser- vice in a senior management position, so the court found Kurtz was entitled to eight months' notice including salary, benefits, car allowance, vacation pay and Canadian taxes. e court denied Kurtz' claim for punitive and moral damages, determining that Car- quest's conduct and the manner of dismissal, though resulting in wrongful dismissal, was not egregious or in bad faith. Minus an amount Carquest successfully counterclaimed for taxes it paid to offset the difference in Canadian and U.S. taxes while Kurtz received a refund, the total amount Carquest was ordered to pay Kurtz was $83,168.34. For more information see: • Kurtz v. Carquest Canada Ltd., 2015 Car- swellOnt 19564 (Ont. S.C.J.). Company didn't provide adquate time for improvement « from LEGITIMATE on page 1 WEBINARS Interested in learning more about employment law issues directly from the experts? Check out the Carswell Professional Development Centre's live and on-demand webinars discussing topics such as employee off-duty conduct, preventing workplace bullying and violence, social media in the workplace, and biometrics. To view the webinar catalogue, visit cpdcentre.ca/hrreporter. The employer didn't properly warn the employee that his substandard performance could result in dismissal, nor did it give him time to fix the problems

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