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Employee Incompetence -What Employers Need to Know

The 2023 case of Chu v. China Southern Airlines Company Limited, 2023 BCSC 21 serves as a lesson to employers on what is required to fire an employee for incompetence. In this case, the employer acted in a flagrantly misguided manner by manufacturing a just cause case against an elderly employee. The employer asserted that the employee was incompetent and that it did not have to provide reasonable notice. The court disagreed and found that the rich corporate Defendant, an airline with a market cap of $25 billion, had engaged in a course of bad faith and abusive conduct that included demoting the Plaintiff to entry-level positions and unfairly disciplining him before firing him for just cause. The court awarded the Plaintiff with 20 months of reasonable notice, $50,000 in aggravated damages, and $100,000 in punitive damages.

FACTS

The Plaintiff began working for the Defendant, China Southern Airlines (“CSA”), in 2008. The Defendant was a major Chinese airline headquartered in China. In 2008, CSA’s General Manager, approached the Plaintiff and asked him to help set up a Vancouver office. The Plaintiff’s background was in the airline and tourism industry. From 2008 to 2011 the Plaintiff worked as an independent contractor to help CSA garner business. In February 2011 he was offered full-time employment as a Marketing and Business Development Manager. He accepted the role and began working full-time from April 2011 to January 2018. 

As a Marketing and Business Development Manager, the Plaintiff’s work focused on establishing and building CSA’s book of business in Canada. The role required him to have a good working relationship with CSA’s General Manager (GM) who he worked closely with. The Plaintiff got along well with the GM. However, in January 2018, the old GM went back to China. She was replaced by the new GM from CSA’s Toronto office. 

The old GM and the new GM did not get along. Unfortunately for the Plaintiff, the bad blood between the new GM and the old GM spelled the demise of the Plaintiff’s employment. The new GM set out on a campaign to manufacture just cause against the Plaintiff and, in doing so, created a work environment so poisoned that he would be induced to leave. 

UNFAIR DISCIPLINE 

Prior to the new GM’s arrival, the Plaintiff had an unblemished work history. However, the new GM began to unfairly criticize the Plaintiff’s work. He was issued reprimands and threatened with dismissal. The new GM self-servingly documented the disciplinary measures against the Plaintiff to create a paper trail that would later justify his just cause dismissal. For example, in February 2018, the Plaintiff was formally disciplined for attending industry events he normally attended in the past because he allegedly was not approved as an attendee.

DEMOTIONS

In March 2018, the Plaintiff was demoted to a customer service position and his pay was cut by 25%. In early October 2018, the Plaintiff was demoted again. This time he was assigned to work at the Vancouver International Airport (“YFR”) as an airport services worker, another front-line service position. The role was completely foreign to him as he had no prior work experience in the role. 

TERMINATION

At a meeting that took place on January 2019, the Plaintiff was told that he was not performing up to standards. He was told that he would be put under probation for three months and he would receive further training under another airport station worker. 

CSA prepared “minutes” of the meeting which were a total sham. The minutes indicated that the Plaintiff requested training of his own accord and that he promised that if his test results did not meet CSA’s requirements after one month, that he would voluntarily resign. 

The Plaintiff denied ever making such a promise to CSA. He agreed that he would receive further training and that he would be tested again between February 16 and 18, 2019. 

The employer broke its promise to provide further training. The Plaintiff was dismissed on February 1, 2019 at the age of 68 years old.

At the time of trial, the Plaintiff was 71 years old. He still had not found comparable employment. He worked for Door Dash as a delivery driver. 

Analysis

The judge found overwhelmingly in favour of the Plaintiff and rejected all of the Defendant’s assertions regarding the Plaintiff’s “work performance issues.” Instead, the judge found that that the Plaintiff had persevered in the role even when he was demoted to entry-level positions that were humiliating given his prior role and experience. In spite of the Defendant’s obvious efforts to set him up, the Plaintiff made “sincere efforts” to live up to the employer’s unreasonable demands. The Defendant then fired him before providing him with the opportunity to improve. 

The case law makes it clear that it is very difficult for an employer to prove just cause based on incompetence, especially in cases involving a long-term employee with a good record of performance. Minor or isolated instances of poor performance are insufficient to prove incompetence. Incompetence can only provide a basis for a finding of just cause if it meets the threshold of serious or gross incompetence: Renwick v. MacMillan Bloedel Ltd., [1995] B.C.J. No. 198, 1995 CanLII 1487, at para. 24 (S.C.) The court noted that many of the allegations relied upon by the employer for just cause were brought up for the first time in the pleadings and not mentioned in the termination letter. 

What an Employer Must Show to Prove Incompetence

An employer must show the following to successfully prove just cause on the grounds of incompetence:

  1. the employer established an objectively reasonable, attainable standard of performance;
  2. the standard was communicated to the employee;
  3. suitable training was given to enable the employee to meet the standard;
  4. the employee was given a reasonable time to meet the standard;
  5. the employee was warned that failure to meet the standard would result in dismissal; and
  6. the employee was incapable of meeting the standard. 

Here are some tips that employers should keep in mind if they believe that an employee is struggling with performance issues. 

1. Do not set the employee up to fail. 

An employer must not set an unreasonable standard and then rely on the employer’s failure to meet that standard as proof of incompetence. The employer in this case knew that when they assigned the Plaintiff to work as an airport operations worker that it was unsuitable given the time pressure and physical demands. The airport work was very hectic and fast paced. The Plaintiff was 67 tears old at the time. Predictably, the Plaintiff was not up to the task as he had no relevant work experience and he received minimal training. As part of his duties, he was required to learn a new and completely unfamiliar set of codes for airport operations. The Plaintiff was not technologically savvy and struggled with the computer work. 

The Plaintiff was criticized for not being able to run to the gate to help with onboarding and other urgent matters. He was criticized for being too slow. His trainers watched him perform tasks while holding a timer, a scenario which caused him (and anyone) stress. Interestingly, a memo written by one of the Plaintiff’s trainers proved that the Defendant knew he could not handle the job.

2. Do not make false allegations against the employee in the termination letter.

An employer has a duty of good faith and fair dealing when dismissing an employee. A breach of that duty occurs if the employer attacks an employee’s reputation by making unfounded declarations against them at the time of dismissal. In this case, the Defendant’s termination letter made allegations of “time theft” and “completely unacceptable performance.” These allegations were found to be completely without merit by the court. 

3. Do not make false allegations against the employee in the pleadings.

In the Defendant’s Response to Civil Claim (“RTCC”), the Defendant made a series of false and inflammatory allegations against the Plaintiff not raised in its termination letter. It alleged that he was guilty of sexual harassment against a female supervisor and other female employees. It accused him of stealing several large model airplanes and engaging in dishonesty with respect to CSA’s procedures with respect to timesheets, leave policies, and job descriptions. It also alleged that the Plaintiff and the former GM conspired with one another to deceive and defraud the Defendant. The Defendant maintained these allegations all throughout the litigation and only abandoned them before the hearing. The court found that this Defendant had acted in a manner that was “harsh, vindictive, reprehensible and malicious.” It denounced this conduct by awarding the Plaintiff with $100,000.00 in punitive damages. 

4. Do not make unsupported allegations of incompetence.

In its pleadings, CSA alleged that the Plaintiff was incapable of fulfilling the requirements of his job role in the customer service position at its Vancouver office. The court found that the Defendant did not establish this. The only evidence that the Defendant adduced was an affidavit from a customer service co-worker stating that the Plaintiff could not handle the tasks he was given. It attached a single customer complaint. The judge found that the complaint was hearsay and a single complaint from one customer was of no consequence. 

The court accepted that the Plaintiff did his best despite not having the training or qualifications for the customer service position. If the Plaintiff did make mistakes, it was not intentional. It was to be expected that he would make minor errors given that it would be difficult for anyone without the relevant experience to learn CSA’s complex ticketing system. 

The employer did not meet the test for incompetence as it did not establish that the Plaintiff failed to meet an objectively reasonable standard of performance, clearly communicated to him, and for which he was given suitable training, reasonable time to meet the standard, warnings, or that he was not capable of meeting the standard.

5. Do not unfairly discipline.

Unfairly disciplining an employee can backfire in cases where the impugned conduct is minor. In this case, the Defendant used examples that were trivial and in no way harmed CSA’s reputation. Far from proving its case, the “mistakes” raised by the Defendant only served to highlight the employer’s intent to invent a reason for just cause. For example, the Plaintiff was disciplined for attending a CBSA event that fell within the scope of his normal duties. The Plaintiff’s evidence was that the previous GM had approved his attendance and that CSA paid for his flight. The Defendant publicly reprimanded him for attending the event. Notably, the Defendant relied on two sets of minutes of the meeting in which he was reprimanded which differed materially in several aspects. 

Later that month he was reprimanded for attending a Lunar New Year’s celebration, allegedly without authorization. This was also an event that he normally attended. The new GM and other CSA employees were present at the event. The new GM was so furious that the Plaintiff had attended that she yelled at him in front of two other staff members and threw a computer mouse at him. The Defendant also blamed the Plaintiff for failing to complete a task that did not fall within his normal job responsibilities. In the past, it was a duty that was completed by the lawyers. However, CSA fired the lawyer normally did it. Once the Plaintiff was made aware of the task, he completed it on time with no adverse consequences to the Defendant. However, the new GM still documented the incident as an example of his poor performance.

The court found that CSA was grasping at straws to find any reason to discipline the Plaintiff: “CSA’s conduct bears the hallmarks of an employer attempting to manufacture and document a basis for allegations of cause, where none existed.”

Outcome

The Plaintiff was awarded a notice period equivalent to 20 months which was equivalent to $58,800.00. The judge determined that the notice period should be based on his salary at the time of his dismissal and not on his previous salary as the Business and Development Manager. The court found that the Plaintiff had accepted these demotions and therefore it could not award a reasonable notice period based on his previous salary as a manager. 

What is interesting about this decision is that the damages for the reasonable notice period was the lowest head of damages in the total amount of the award. The Defendant’s conduct was considered to be egregious in this case in light of the demotions and the humiliating and callous manner that the Plaintiff was treated while working at the customer service position and later at the airport terminal. The manner in which the Defendant conducted itself post-termination throughout the litigation process also played into the damages award. Together, the aggravated damages and punitive damages award totalled $150,000.00. Clearly, the employer would have been further ahead if it had complied with its obligation to deal with a dismissed employee fairly and in good faith. 

Takeway

The employer in this case clearly did not save itself any money by manufacturing a just cause case based on a bogus claim of incompetence. To the contrary, the court found that only the rebuke represented by a substantial monetary award would have the required “sting” to deter this type of conduct. Although this is a BC decision, the Chu decision has implications for Ontario employers who should take notes as the decision serves as a how-to manual on what not to do when you have a long-term, elderly employee with a positive record of performance. In a highly ill-considered move, CSA chose to self-represent for the trial which likely cost them thousands of dollars. 

This blog post is for informational purposes only. If you think that your employer has unfairly terminated you on the grounds of incompetence, it is best to speak to an employment lawyer. Ana Kraljevic is a skilled lawyer who has represented many clients in wrongful dismissal actions. Kraljevic Law is based in Etobicoke but we help employers and employees all across Ontario. Fill out our contact form should you have any questions. 

 

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