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Failing to use performance and salary reviews properly

In order to be in a position to dismiss an employee for cause, it is critical that the employer have appropriate documentation. However, many managers and supervisors unwittingly place their employers in a weakened legal position by failing to use performance and salary reviews properly. It is not unusual to see an individual that is alleged to have “chronic performance or behavioural issues” emerge with unanimously positive reviews, along with a record of regular salary increases and bonuses. In those circumstances, it will be extremely difficult for an employer to demonstrate that summary dismissal is warranted based upon issues that have been ongoing.

From my observations, this issue is largely caused by human nature, the desire to avoid conflict and the reluctance to deliver negative commentary. Many managers, supervisors and others who are tasked with carrying out performance reviews are never trained sufficiently in that regard. They are never taught how to deliver negative news, and as a result, they avoid doing so by focusing on the positive. There is nothing wrong with highlighting an employee’s positive attributes in the review process, but it is critical to have any concerns clearly raised and discussed with the employee. In discussions and in written documents, sufficient details should be provided regarding any concerns or deficiencies. As appropriate, goals or targets should be set during the review process, in order to allow the employee to understand what is expected of them.

Once the annual review is over, that should not be the end of the discussion. Working with employees in order to help them improve their performance and ensure that they are meeting or exceeding expectations is an ongoing process. The review should not simply be signed and filed away, never to be seen again. Rather, the issues raised in the review should be addressed regularly, with detailed analysis of the employee’s performance. The employee should be included in this process, and kept abreast of any ongoing concerns. When it is time for the next formal review, previous reviews should be consulted and references made to any previously raised concerns. Subsequent reviews should specifically address those concerns, and reference whether the employee has successfully improved or whether concerns remain. In addition, the employer should not only raise these issues at the time of annual reviews; it should be an ongoing dialogue.

In addition to reviews, compensation is often directly or indirectly tied to performance. Employers should think twice about any salary increases, bonuses, or promotions if they are unhappy or concerned with the employee’s performance. Providing any of these “rewards” may well send the wrong message, and will certainly weaken a subsequent argument that there were ongoing concerns. It is certainly not unusual for plaintiff’s counsel, in a wrongful dismissal claim, to point to a history of positive reviews, salary increases and bonuses in order to refute any allegations of just cause.

All too often, performance reviews are considered to be a formality. Those tasked with implementing them not to spend adequate time doing so, and are often scared to address any real issues. As a result, the paper trail that is created is one suggesting that the employee performs at or above expectations, and that there were no issues or concerns.

Employers are well-advised to ensure that appropriate training is provided to those who will be preparing reviews, and that it is made clear that the reviews should include an honest and objective discussion of the employee’s performance, both positive and negative. Furthermore, and as set out above, employers should ensure that reviews do not become a “one-off” process, taking place once a year and quickly forgotten. Any issues should be dealt with on an ongoing basis and documented appropriately. Otherwise, employers may well lose any chance that they may have had of pursuing summary dismissal in otherwise appropriate circumstances.

Stuart Rudner
Miller Thomson LLP

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Rudner Law, Employment / HR Law & Mediation

Employment Lawyers and Mediators at Rudner Law
Rudner Law specializes in Canadian employment law and mediation. Rudner Law provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. Stuart Rudner is a leading HR Lawyer and founder of Rudner Law. Stuart and his team speak and write frequently on HR Law issues. Read more
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