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“Can I Terminate a Poor Performing Employee?”

By April 21, 2016November 5th, 2019Employment Law

A common question with a complicated answer: “Can I terminate a poor performing employee?”

The short answer, as with many questions in employment law, is “it depends“.  

Let’s say you bought a dental practice 2 years ago.  The sale included the employment of an Office Manager hired 8 years before you purchased the practice. In the past three months, you have noticed that employees have been coming directly to you about vacation, sick days, refilling office supplies, office computer problems, and interpersonal issues within the office.  You are getting the feeling that your Office Manager is not fulfilling their role as an Office Manager.  You try talking to your office manager about the issue but the conversation does not end as you envisioned.  What do you do?

If Your Employee Has a Written Contract

If you have a written employment contract with your employee, you need to look to the contract first.  There likely is a Termination Clause in the contract.  You may want to have a Dental Lawyer review the termination clause before you act on it (if it’s a poorly drafted termination clause, it’s useless).  If the clause is good, then you could terminate the employee without cause based on the termination clause.  The contract would tell you how much notice or pay the employee would receive in that situation.  You would prepare a letter and the payment to the employee, complete the ROE within the appropriate time, and perhaps find a replacement.

If Your Employee Does Not Have a Written Contract

But what if there is no written contract, or a lawyer gives you advice that the termination clause is bad, what options do you have?  Well, there are two options.

1) Termination Without Cause

This is a less time-consuming way to terminate an employee. Generally speaking, employees who do not have a written contract are owed 1 month of working notice or pay in lieu of working notice for every year of service with an employer. So for example, a 12-year dental hygienist without a written contract can be immediately terminated if he or she is given 12 months of pay.

Sometimes, certain employees are entitled to more or less than a strict 1-for-1 calculation.

2) Termination With Cause

I normally advise Dentists NOT to terminate employees “for cause” due to poor performance.  In short, poor performance that you notice in the short term is generally not just cause for immediate termination without notice or pay in lieu of notice.

The Employment Standards Act’s Regulations gives us the statutory reasons you can terminate for cause:

An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.

You might be saying “Well, isn’t a poor-performing employee neglecting their duties? If I have spoken to them and they have not improved, isn’t that disobedience?”

You might be correct in theory, but in law and in practice there is more to consider with termination for cause.  The law has evolved now to allow employees time or notice to improve their performance before an employer can termination them without notice for their poor performance.

A common way to give notice to an employee that their performance is lacking is through a Performance Improvement Plan (aka a PIP).  There are a variety of ways a PIP can look – there is no set format in the law.  But a PIP would likely include all of the following:

  1. Giving the employee a clear statement about your practice’s expectations and policies (we always have this in our Office Policy Manuals);
  2. Advising the employee of their performance gaps and required improvements;
  3. Providing the employee with all necessary support so that they can improve their performance;
  4. Allowing the employee reasonable time to improve (and clearly stating your expectations); and
  5. Clearly notifying the employee that a lack of improvement may result in dismissal.

Michael Carabash has written about Just Cause Termination in three blogs posts herehere, and here. Check them out if you want more detail about just cause terminations.

DMC