Can You Terminate an Employee for Incompetence?

Terminate an Employee for Incompetence

As an employer, you will come to find that there are many different kinds of employees. Some are hardworking, reliable, trustworthy and dependable. Others are not. You might decide that your business would be better off without employees who are unreliable, untrustworthy, underperforming and thus not dependable – in other words, incompetent. Of course, in Ontario employers are entitled to terminate their employees for any reason provided they are given either reasonable notice of termination or pay in lieu of notice. But, if the incompetence of the employee establishes “just cause”, you can terminate them without that notice or pay in lieu of notice. For that reason, it is always better to terminate for cause.

The central question, therefore, is whether or not incompetence justifies summary dismissal for cause.

Can Incompetence Justify Summary Dismissal for Cause?

It is certainly possible for an employee’s incompetence or substandard performance to justify summary dismissal. However, it is a difficult standard to meet. The employer must show “gross incompetence”. Generally, the employer must also prove the following:

  • (1) That the employer has established reasonable objective standards of performance;
  • (2) That the employee failed to meet those reasonable objective standards;
  • (3) That the employee was clearly warned of their failure to meet those standards;
  • (4) That the employee understood that their employment would be at risk if they continued to fail to meet those standards; and
  • (5) That the employer has provided the employee with reasonable time to correct the performance. Failure to provide the employee with a reasonable time to correct their performance will preclude a finding of just cause for dismissal.

If the employer’s expected standards are not reasonable to begin with, courts will be very reluctant to find that an employee was incompetent in failing to meet those unreasonable standards. For instance, in the 1996 decision Gorman v. Westfair Foods Ltd., a Manitoba Court found it unreasonable for an employer to require an employee to consistently meet a specific benchmark where that benchmark is informed by factors beyond the employee’s control.

Cumulative Incompetence

Normally, a single incident of incompetence or carelessness will be insufficient. However, just cause may arise where there has been a number of incidents of incompetence that, although individually insufficient, taken together will cumulatively justify summary dismissal. In these cases, the employer must show that the employee was warned about and given an opportunity to correct their substandard performance and that the cumulative failings would prejudice the employer’s business.

In Ross v. Willards Chocolates Ltd., Justice Galt stated:

“I do not think it is necessary to rely upon such a single instance where the employee’s conduct shows a general laxity and disregard of instructions in a business requiring energy, accuracy of accounts, and strict adherence to instructions, such as this business required.” (emphasis added)

Important Takeaway for Employers

The above discussion should make it clear that it is no easy task to dismiss an employee for cause because of incompetence. If this is your goal, it is essential that you ensure you have reasonable objective standards in place, that you’ve communicated these standards to your employees, that you’ve provided them with warnings where they fail to meet these standards, and that you’ve provided them with a reasonable opportunity to correct their behaviour. Failing to take any of these necessary steps will likely preclude you from dismissing an employee summarily.

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