The objective of a Performance Improvement Plan (PIP) is to help an employee identify and correct weaknesses in their performance. Nevertheless, employers are not always motivated by sincere intentions when implementing PIPs. Employers frequently use PIPs as a tool to protect themselves against wrongful dismissal claims by creating a paper trail that appears to justify termination. In other words, PIPs are often used to disguise an employee’s imminent termination. A decision by the Ontario Court of Appeal in Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402 offers some protection to employees who have been terminated due to poor performance under a PIP. This decision confirms that a failure to properly implement a fair PIP can result in wrongful dismissal.

The Case

Facts:

Esther Brakes was a manager at McDonalds for over 20 years.  She managed a branch in Kanata, Ontario from 2004 to 2011 and consistently received excellent performance reviews. However, following her first negative performance review in 2011, she was transferred to an under-performing Walmart location. Within three months she was placed on a PIP and given 90 days to achieve a lofty set of goals established by her employer. Unfortunately, she was unable to achieve these goals, and at the end of the PIP term she was told to choose between a demotion to “first assistant” or termination. She refused the demotion and was terminated on August 10, 2012.

Decision:

The Court ruled that the PIP was not properly implemented since her employer’s goals were “arbitrary and unfair”. For example, as part of her PIP, Ms. Brakes was expected to reduce her location’s customer service opportunity (CSO) score to 0% despite its consistently poor score of 35% in previous years. The Court also ruled that the employer’s goals were objectively more onerous than other standards that had been set over the course of her employment. Ultimately, Ms. Brakes had not been given a “clear and reasonable opportunity” to correct her performance issues. The PIP was used as an instrument to justify her termination, a decision that had already been made before she was placed on the PIP.

The Court ruled that Ms. Brakes had been constructively dismissed.

Lesson for employees: PIPs are not always implemented properly by employers. It is important to obtain legal advice to determine whether your employer has complied with the appropriate steps.

If you have been terminated because of poor performance under a Performance Improvement Plan, MacLeod Law Firm can assist you. Please contact us at inquiry@macleodlawfirm.ca  or 647-204-8107.