When is incompetence cause for dismissal?

If establishing just cause for dismissal is considered to be a difficult task, then doing so on the basis of incompetence might be seen as almost impossible. It is certainly among the toughest of grounds to establish, particularly since it does not involve “misconduct.”

That said, the classic definition of just cause for dismissal explicitly recognizes incompetence and neglect of duty as appropriate reasons for dismissal:

If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right to summarily dismiss the delinquent employee. (U.S.W.A. vs. Port Arthur Shipbuilding Co.)

Our courts have confirmed that by entering into an employment relationship, employees implicitly warrant that they are reasonably competent to perform the duties of the job that they have signed on for. By extension, being incapable of performing their duties would constitute a breach of contract, or, in the context of this discussion, just cause for dismissal.

There is a heavy onus on employers who rely on incompetence to justify dismissal. One critical mistake that I see over and over again is the failure to have managers complete performance reviews honestly. I often receive calls from clients seeking to dismiss an employee that “has been a disaster since day one.” However, when I look at the performance reviews, they inevitably indicate that he is “meeting expectations” or performing adequately. Faced with years of average reviews and a history or routine pay increases, employers will have a hard time showing that the employee’s performance was so poor it can justify summary dismissal.

Where the employer alleges just cause based on incompetence, the employee’s quality of performance must demonstrably fall below the average level for the firm or business. Furthermore, in cases involving dismissal for incompetence or performance issues, the courts have held that the following corrective measures must normally be taken prior to invoking dismissal:

• The employer has clearly made known to the employee the requisite standards of job performance
• The employer has clearly warned the employee at the time exactly how she or he has failed to meet the requisite standard
• The warning has clearly and unambiguously indicated that the employee’s job is in jeopardy
• The employee has been clearly informed of what is required to constitute satisfactory performance and has been given a reasonable opportunity to improve pursuant to specified deadlines

As part of the obligation of providing a reasonable opportunity to improve, many courts have held that the employer must provide coaching, training or other assistance. The employer cannot simply tell the employee to “shape up within X months,” and then sit back and watch the employee fail. Reasonable assistance will usually be required.

Obviously, dismissing an employee due to performance issues is different than doing so for misconduct. Employers should approach such situations cautiously and ensure that they can establish a legitimate basis and that they have treated the employee fairly. Where they can, “just cause is not a lost cause.”

Stuart Rudner
Miller Thomson LLP