Since the 2005 Quebec Court of Appeal decision in Costco Wholesale Canada Ltd. v. Laplante[1] (the "Costco Decision"), tribunals in Quebec have regularly applied a five step analysis in termination cases for incompetence. However, recently, the Superior Court of Quebec confirmed an arbitration decision that added an additional step that employers must accomplish before dismissing an employee for incompetence. Indeed, according to the Superior Court in Commission scolaire Kativik v. Ménard[2], employers must also verify whether another more suitable position is available for the employee within the organization before proceeding with termination for incompetence.

The Facts

The employer, a school board, dismissed an employee for incompetence. The employee in question had productivity and efficiency issues and handed in work riddled with errors. In order to try and resolve the situation, the employer asked the employee to sign and participate in a Performance Improvement Plan. However, the employee's performance never improved. Before terminating the employee's employment, the employer offered the employee a position as a receptionist. The employer asked the employee to provide an answer within three days, although the position was posted for other employees for a longer period. The employee declined the offer. Considering that the employee declined the offer and was unable to improve his performance, the employer terminated his employment. The union filed a grievance on the employee's behalf to contest the employer's decision.

The Decisions

Arbitrator Jean Ménard allowed the grievance. The arbitrator acknowledged that the employee was unable to adequately perform his duties despite the employer's support. However, the arbitrator was of the opinion that the employer terminated the employee's employment in an abusive manner mainly because it should have considered a reasonable alternative to terminating the employee's employment. The arbitrator considered that it was unreasonable for the employer to only give the employee three days to consider the alternative employment offer. The employer applied for judicial review of the arbitrator's decision.

The employer alleged that the arbitrator should have followed the criteria established in the Costco Decision, which do not include the duty for an employer to attempt to find a suitable position for the employee within the business. Those criteria are:

  • The employee must be made aware of the company's policies and expectations;
  • The employee's performance issues must be brought to his/her attention;
  • The employee must be provided with adequate support to correct his/her performance;
  • The employee must be given a reasonable delay to correct his/her performance; and
  • The employee must be made aware that in the event that his/her performance does not improve, he/she may be dismissed.

The Superior Court dismissed the employer's application for judicial review and confirmed the arbitration decision. Their rationale was mainly based on the arbitral decision in Edith Cavell Private Hospital v. Hospital Employees' Union, Local 180,[3] which was rendered in 1982 in British Columbia. In that case it was decided that, in such circumstances, the employer must also demonstrate that "reasonable efforts were made to find alternative employment within the competence of the employee". Furthermore, in 2004, the Supreme Court of Canada confirmed a decision from Alberta that applied the principles of the Edith Cavell case.

Therefore, despite the fact that these decisions were not rendered in Quebec and that in 2005 the Court of Appeal in the Costco Decision did not apply this criterion, the Superior Court was of the opinion that it should apply in Quebec. It reasoned that it would be illogical that the rules in Quebec on dismissal for incompetence differ from those in other provinces.

The employer recently filed an application for leave to appeal with the Quebec Court of Appeal.

Other Jurisdictions

In British Columbia, the Edith Cavell case continues to be frequently cited. It has been found to be fatal to the employer's decision to terminate an employee's employment for incompetence where alternative available employment has not been offered. That being said, deciders do not always reinstate the employee in the event that the employer failed to demonstrate that "reasonable efforts were made to find alternative employment within the competence of the employee".[4]

However, the Ontario courts, arbitration and labour boards, do not consider the aforementioned criterion and apply a test similar to the one developed in the Costco Decision.

Conclusion

In the event that the Court of Appeal grants the employer's application for leave to appeal, it will be interesting to see whether it will ultimately add this additional criterion to the ones it applied in 2005 in the Costco Decision. If it does, this will impose a new significant, and somewhat uncertain, obligation on Quebec employers who wish to terminate an employee for incompetence. Also, if the Court of Appeal confirms the Superior Court's decision, it will be interesting to follow how arbitrators, courts and labour boards will apply this additional criterion and to see whether the Court of Appeal's decision will influence the state of the law in other provinces that have been applying a test similar to the one in the Costco Decision. We will keep you informed of any developments regarding this important case.