Imagine this: John Doe, a sales associate, has consistently failed to meet performance targets despite receiving training, coaching, and multiple performance improvement plans (PIPs). His manager has documented clear instances of missed deadlines, poor customer service feedback, and overall failure to achieve objectives outlined in his role.

When John is called into a meeting to discuss his performance, he hints at filing a lawsuit if hewas terminated, claiming that his recent struggles were due to his mental health and a lack of support from the company. HR and the management team are concerned that firing John could lead to a lawsuit.

Employers often face these difficult decisions when dealing with problematic or underperforming employees. A common concern is, “If we terminate this employee, could they sue us?” While legal risks exist, employers are not obligated to retain an employee solely out of fear of potential litigation.

Legal Considerations for Employers

1. Termination Without Cause
   Just as employees’ have rights under the law, employers equally have the right to terminate an employee without cause, provided they meet legal requirements such as providing the employee with adequate notice or pay in lieu of notice as per employment contracts and applicable employment laws. In Alberta, the governing law is theEmployment Standards Code. Termination without cause is lawful and can be implemented when performance or other non-discriminatory factors are at issue.
2. Termination for Cause
   If John’s behavior amounts to serious misconduct, gross incompetence, or willful neglect of duties, that the company cannot reasonably be expected to condone, the company may proceed with termination for cause. In such cases, the employer must demonstrate that the employee’s actions were severe enough to justify dismissal without notice or compensation.
3. Preventing Retaliatory Claims
   John’s threat to sue does not automatically mean he would be successful. However, to minimize risk, the company should ensure the following:
   1. Document Performance Issues: Maintain detailed records of John’s performance reviews, PIPs, and any disciplinary actions.
   2. Follow Policies: Adhere strictly to the company’s termination policies and ensure compliance with applicable employment laws.
   3. Seek Legal Counsel: Consult with an employment lawyer before proceeding to ensure the termination aligns with legal standards.

Employer’s Right to Act

An employer is not bound to retain an employee solely out of fear of a potential lawsuit. Retaining an underperforming employee may harm the organization’s productivity and morale. Instead, employers can:

• Act Proactively: Address performance issues early with clear communication and support.
• Implement Fair Practices: Ensure the termination process is objective, transparent, and consistent across the organization.
• Offer a Settlement: In some cases, offering a severance package or settlement agreement can prevent prolonged disputes and litigation.

Next Steps

While terminating an employee comes with potential legal risks, it is within an employer’s rights to make decisions that serve the best interests of the organization. With proper documentation, compliance, and legal guidance, employers can navigate these situations confidently and lawfully. If you are concerned about potential litigation when terminating an unproductive employee, we are here to help.

We guide employers through the process, helping them navigate the situation effectively, and achieve a positive outcome for their organization. Contact our office today to schedule a consultation and discuss your options. In nearly every case, we are committed to achieving significantly improved outcomes for our clients and without unnecessary delay.

Disclaimer: This is general information and not legal advice. Each case is unique, and results will vary based on individual circumstances.