Given the risks, why do employers like Meta feel the need to publicly justify terminations?

In Canada, dismissing an employee for performance is generally “without cause,” as there is such a high threshold to establish “cause” to terminate for performance without severance. Whether or not employers classify terminations as with or without “cause,” firing based on performance raises critical questions about employee rights, the legality of performance-based layoffs and risks for employers.

Aside from the legal risks, publicly announcing poor performance as a reason for termination is contentious, as it invites potential backlash, especially in the age of social media. Meta, for instance, has already faced criticism from employees claiming the company’s actions were cruel and indifferent to their well-being.

First, for employees affected by performance-based layoffs, the stigma can be damaging, as seen with former Meta workers claiming they have been branded with a “scarlet letter” in the job market. Courts have regularly awarded additional damages when employers publicly criticize employees’ performance thereby harming an individual’s reputation or causing them mental distress.

Further, employees who believe that performance concerns have created a toxic work environment or that they are being unfairly targeted or harassed might pursue constructive dismissal claims. Most employees will be unsuccessful in bringing a claim for constructive dismissal based solely on the argument that their employer’s performance management methods and the looming threat of termination created a toxic or harassing work environment.

However, these claims may be viable in certain circumstances when the employer’s performance management techniques have more tangible impacts on the employee’s terms of employment. For example, if newly established performance metrics and ranking systems adversely impact employee compensation. In such cases, employers could potentially face liability to employees who were not subject to the previous rounds of performance-based terminations.

Last, but certainly not least, employers must be wary of potential human rights violations associated with performance-based firings if their ranking system can be proven to disproportionately impact a legally protected group. Employers have faced discrimination lawsuits related to performance-ranking systems in the past. Take, for example, the following American lawsuits from 2001:

1. African American employees sued Microsoft in two class action lawsuits, claiming its stack-ranking system discriminated based on race and gender.
2. Ford employees filed two class-action lawsuits claiming the system targeted older, white workers.

Ford ended up paying US$10.5 million to settle its class action lawsuits, highlighting the importance of care and legal compliance in implementing performance-based terminations.

Discrimination is not limited to race, gender and age. It is highly likely that the uptick in performance-based firing will intersect with the increasing trend of employers requiring their employees to return to the office. Employers must exercise caution when using benchmarks such as absenteeism and time spent in the office to form part of their ranking system. While employers have the right to manage their workplace as they see fit, including whether employees can work remotely, there are caveats. The most glaring being that an employer’s right to manage the workplace, including the implementation of return to office policies, does not trump their obligations under human rights legislation.

These policies are highly likely to engage human rights grounds related to family status and disability. If an employee has a disability that prevents them from commuting to the office, or must work from home at times due to family care obligations, then a performance-based ranking system that includes a criteria for time spent in the office would disproportionately and adversely impact these protected groups.

Employers can set expectations that employees return to the office, but they must be careful to respect valid human rights and privacy accommodations and ensure that those employees are not reprised against or adversely impacted.

To mitigate legal risks, employers should follow these steps:

1. Documentation and transparency

Keep thorough records of performance reviews and written warnings to demonstrate the employee had opportunities to improve.

2. Develop objective criteria

Ensure performance metrics are fair and do not disproportionately impact protected groups. Provide accommodations where necessary.

3. Enforceable contracts

Regularly update contracts to limit severance pay and notice entitlements, reducing the risk of costly lawsuits.

Given the risks, why do employers like Meta feel the need to publicly justify terminations? Transparency serves to remind employees of the consequences of poor performance, creating competition and driving productivity. While it’s a risky approach, Meta and other companies have made the business decision to go ahead, regardless of the consequences. Only time will tell how these policies unfold, and whether the benefits ultimately outweigh the risks.