How employers lose wrongful dismissal cases
Howard Levitt: Most employers lose because they made the right decision far too late — and with little documented evidence to justify it
The law rarely punishes employers for firing poor performers. It punishes them for pretending they never noticed the poor performance until the day they decided to act on it.
That distinction costs Canadian businesses hundreds of millions of dollars every year.
The pattern is almost always the same. A manager complains privately that an employee is missing deadlines, ignoring instructions or producing mediocre work. Everyone around the office knows there is a problem, yet no one tells the employee in clear terms.
Nothing meaningful is committed to writing. Annual performance reviews remain positive — or at least not sufficiently negative — because confrontation is unpleasant and the manager has to keep working day to day with the employee. Management convinces itself the performance will improve or there will be another opportunity to address it.
Until finally there isn't.
The employee is dismissed. A demand letter arrives. Management suddenly remembers every failure in vivid detail. Unfortunately, memories are not evidence.
Judges are understandably skeptical of employers who discover years of poor performance only after they receive a demand letter and retain counsel. They have seen too many cases where a termination letter or response to a demand letter became an exercise in creative writing rather than an accurate summary of what actually occurred.
The lawsuit is no longer about performance. It is about credibility.
And credibility belongs to the party with the better contemporaneous record.
Documentation is not bureaucratic busywork. It is proof that an employer acted honestly, reasonably and consistently.
A brief email identifying the problem, explaining what must improve and warning of the consequences of dismissal (for cause) if it does not is worth more than pages of lawyer's correspondence written months later. The least expensive legal advice is that obtained creating that email.
No termination letter can rescue a process that never existed. Yet many organizations continue to avoid an uncomfortable conversation today only to spend hundreds of thousands of dollars defending that avoidance tomorrow.
That is not prudent management. It is procrastination with legal fees attached.
The lesson applies equally to executives. When I assess a dismissal case, I spend less time reading the lawyer's letter than the employer's file. A file containing candid emails, contemporaneous notes and clear performance warnings tells one story. A file assembled after the dismissal tells another. One reflects management. The other reflects damage control.
By the time counsel is retained, the outcome of most dismissal cases has already been largely determined — not by what the lawyer says, but by what management did (or failed to do) months earlier.
Employers frequently ask me what the most important document is in a wrongful dismissal case. The answer is invariably the one that should have been written long before anyone contemplated termination.
Howard Levitt is senior partner of Levitt LLP, leading his teams of labour lawyers in Ontario, Alberta and British Columbia. Howard has appeared in more Supreme Court employment law cases and provincial appeals than any lawyer in Canadian history. A bestselling author, he discusses current workplace issues on the podcast, At Work with Howard Levitt.