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Employment & Labour

Case shows transparency is key in assessing employee performance

A recent B.C. Supreme Court decision confirms that employers must be fair and transparent when assessing performance and dismissing employees — and failing to do so can result in severance liability and additional damages, Vancouver employment lawyer Richard Johnson writes in The Lawyer’s Daily.

The ruling awarded a spa worker — represented by Johnson, associate with Kent Employment Law — $15,000 in aggravated/bad faith damages for the manner in which she was treated by her employer after she was fired for alleged just cause after 11 years with the company.

As Johnson writes, when one of the managers left the company in early 2015, the senior management team looked to internal candidates to fill the vacancy. During the process, the company president was told that three employees, including the spa worker, were underperforming. Although the departing manager had not raised concerns about her performance, the spa issued the worker a “termination notice.”

In the notice, the spa worker was told that she had three months to improve her performance and show two “successful” months. During the assessment period, the employer provided the worker with three, one-hour coaching sessions with the new department head, says Johnson.

The employer’s yearly financial performance spreadsheet “confirmed that her performance did increase and she met the criteria for March/April and April/May of 2015. However, the spreadsheet noted that she was not ‘successful’ for those months,” writes Johnson.

At the end of the three months, the employer dismissed the spa worker, alleging just cause.

The trial judge held that the employer did not have cause to dismiss the worker as it failed to give her a fair and reasonable opportunity to meet the expectations set out in the “termination letter,” says Johnson.

“The letter set out ‘an unreasonable and unfair standard,’ and both it and the company’s policies and procedures failed to provide adequate guidance” to the employee, he says.

“Justice Harris noted that the coaching was performed by someone who knew management’s concerns in advance and who had no management experience or objective criteria to apply,” he adds.

As the worker’s improved performance contradicted the employer’s allegations about her poor attitude, lack of motivation, or complacency, the court found she was entitled to her contractual severance, in addition to the $15,000 in bad faith/aggravated damages as the company “breached its duty of good faith in the manner in which it dismissed her,” writes Johnson.

This includes the fact that the employer reviewed her personnel file and performance without any recent performance issues and it held her to standards not previously required and responded to perceived shortcomings disproportionately by dismissing her, he explains.

The case, says Johnson, illustrates that employers must give employees clear and unambiguous criteria to meet, and a fair opportunity to do so, and that employers will be bound to the actions or inaction of its managerial employees.

Also, he says, “employers must be candid, fair and transparent when assessing performance and dismissing employees. Failure to do so can result in severance liability and additional damages.”

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