Canadian Employment Law Today

Canadian HR Reporter, a Thomson Reuters business 2017 Canadian Employment Law Today | 7 More Cases Change in performance expectation not grounds for cause dismissal Employee showed improvement after warning under new system, but was terminated at the deadline anyway BY RONALD MINKEN POOR PERFORMANCE at work is not always grounds for termination for cause. In Cottrill v. Utopia Day Spas and Salons Ltd. the British Columbia Supreme Court found that Utopia Day Spas and Salons wrongfully dismissed Jennifer Cottrill over alleged per- formance issues after Utopia had changed her performance expectations. e Supreme Court of Canada case of McKinley v. BC Tel concluded that a "contex- tual approach" must be taken when an indi- vidual is to be terminated for cause, mean- ing the court needs to look at all the relevant facts and circumstances that led to a "break- down of the employment relationship." e court in Utopia needed to determine whether the employee's misconduct was enough to cause a breakdown in the em- ployment relationship or if it is irreconcil- able with the continuation of that relation- ship. e decision cited Hennessy v. Excell Railing Systems Ltd., which held that where the employee is terminated for cause based on poor performance, the employer needs to show that: • It has established reasonable and objec- tive standards of performance • e employee has failed to meet those standards • e employee has had warning that she has failed to meet those standards and the employee's position will be in jeopardy if she continues to fail to meet them • e employee has been given reasonable time to correct the situation. Jennifer Cottrill worked at Utopia for 11 years as a skincare therapist before her employment was terminated. In 2005, Uto- pia introduced a new compensation and evaluation system called the "level system" where there were platinum, gold, silver, and bronze levels. When Cottrill returned from maternity leave, she remained in the old system for compensation. However, she was placed into the level system for perfor- mance expectations. Cottrill was under the impression that the level system perfor- mance standards did not apply to her. In 2015, the skin care department head and direct supervisor of Cottrill left the company. is is when Utopia's owner, regional manager, and general manager looked at Cottrill's fi le and determined she had been underperforming. e past department head had not been applying the level system to Cottrill's performance evaluation. On March 13, 2015, the two se- nior managers had a meeting with Cottrill and gave her a letter advising her of her per- formance defi ciencies and stating that she was not performing at the "platinum" level. ey also informed her that she had three months to show improvement by having two out of three "successful" months in the platinum level or her employment would be terminated on June 12. On June 12, Cottrill was told it was her last day. She had signifi cantly improved her performance, meeting the criteria on the performance spreadsheet for March/ April and April/May, but her employment was terminated for cause anyway. Utopia claimed Cottrill did not have two success- ful months due to her poor attitude during the mandatory monthly meetings sched- uled to track her process over the past three months. Cottrill was never provided with a written termination letter or severance. Utopia stated that the March letter was her termination letter so she had already re- ceived more notice than to which she was entitled. e court held that Utopia did not es- tablish it had cause to dismiss Cottrill. Utopia unreasonably sought to hold Cot- trill to performance standards which it has not previously required of her and failed to provide her with a fair and reasonable assessment of her performance. e com- pany did not give any meaningful attention to the improvements for which they were looking. While an opportunity was given to Cottrill to improve, the company had al- ready made up its mind to terminate her for cause. Utopia did not provide Cottrill with an explanation of why her attitude was defi - cient or why Utopia believed it had cause for her termination. Cottrill also did not have a reasonable opportunity to respond to Uto- pia's conclusions before she was dismissed, and the company did not demonstrate that there was "serious or gross incompetence" such that it could be said that Cottrill repu- diated the contract, said the court. e court held that it was not enough for Utopia to assert Cottrill had a bad attitude. Utopia had to establish that, viewed objec- tively, the employee had manifested related behaviour in the workplace and that dis- missal is a proportionate response. Lessons for employers If you wish to terminate an employee for cause based on performance you must fol- low the appropriate steps, otherwise, they could be entitled to notice under employ- ment standards legislation and common law notice. Lessons for employees ere are steps employers need to follow if they need to terminate an employee for cause based on performance. Employees who have been terminated for cause or are threatened with being terminated for cause should ensure they have been given suffi - cient opportunity to save their employment. For more information see: • Cottrill v. Utopia Day Spas and Salons Ltd., 2017 CarswellBC 1144 (B.C. S.C.). • McKinley v. BC Tel, 2001 CarswellBC 1335 (S.C.C.). • Hennessy v. Excel Railing Systems Ltd., 2005 CarswellBC 1164 (B.C. S.C.).. ABOUT THE AUTHOR RONALD S. MINKEN Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in Markham, Ont. He can be reached at www.MinkenEmploymentLawyers.ca. Ron gratefully acknowledges Aneesha Lewis for her assistance in preparation of this article.

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