Handling employees who display subpar behaviour and performance can pose a significant challenge for nonprofit organizations. It can be particularly unclear whether to pursue performance improvement, disciplinary measures, or termination to effectively address these issues. But fret not, because we’re here to break it all down for you. In this article, we’ll demystify the complex world of managing terminations, progressive discipline, and employee performance in nonprofits. 

As always, we’re throwing in a set of valuable resources straight from this article: 

  • Written Record of First Verbal Warning
  • Termination Letter Without Cause Template
  • Termination Policy Template
  • Performance Improvement Plan
  • Employment Agreement/Contract Checklist
  • Webinar Recording – Performance Management 
  • Webinar Presentation (PPT) – Performance Management 
  • Q&A Recording – Progressive Discipline and Termination

Performance management

Performance management is the systematic process of planning, monitoring, developing, and assessing an employee’s work to ensure it aligns with the organization’s goals and expectations. It involves setting clear objectives, providing feedback, and fostering an environment that encourages employees to reach their full potential.

Despite the importance of performance management, many nonprofits do not have an effective employee performance assessment process in place. Some common challenges they face include:

Caring Culture: Nonprofits often have a nurturing culture that may make it difficult to differentiate talent and raise the bar on performance.

Limited Resources: Many nonprofit HR departments are small and have limited time and budget for training front-line managers and designing performance management systems.

Mission-Driven Focus: Measuring employee performance in nonprofits can be challenging when profits are not the primary goal. It requires aligning individual goals with the organization’s mission and values.

However, nonprofits can take steps to improve their employee performance assessment process:

  • Make performance assessment a part of the organization’s culture.
  • Implement continuous performance management processes that involve regular feedback and coaching, rather than relying solely on a once-a-year review.
  • Include recognition and rewards programs that use the performance management process as criteria for promotions, bonuses, and other incentives.

Common mistakes with performance management systems

Several common mistakes can hinder the effectiveness of performance management systems in nonprofits:

  • Lack of Differentiation: Supervisors and managers may not be trained to differentiate between employee performance levels, leading to inaccurate assessments.
  • Halo/Horns Effect: This bias occurs when an employee is rated highly or poorly in all areas based on their performance in one area.
  • Personal Bias/Favouritism: Personal biases can impact assessments, leading to unfair evaluations.
  • Inaccurate Information or Preparation: Incomplete or inaccurate information can lead to misjudgments during performance assessments.
  • Lack of Consistency: Inconsistent application of performance standards and evaluations can create confusion and frustration among employees.
  • Lack of Training: Insufficient training for supervisors and managers can result in ineffective performance evaluations.

Watch the webinar recording on Performance Management by veteran HR Consultant Darcy Michaud, VP of HR Services, HR Covered.

Essentials of a successful performance management system

To build an effective performance management system, nonprofits should consider these key elements:

    • Clear Expectations and Job Descriptions: Ensure that employees understand their roles and responsibilities.
      Download well-drafted job descriptions and other useful HR document templates from our Free HR Library!
      Download now! 
    • Development of Goals: Set clear, specific, measurable, attainable, relevant, and time-bound (SMART) goals for employees.
  • Performance Reviews: Conduct regular performance reviews to provide feedback and assess progress toward goals.
  • Coaching: Offer coaching and support to help employees improve their performance.

Performance Improvement Plan

A Performance Improvement Plan (PIP) is typically used when an employee’s performance falls below what is required or when specific performance issues need to be addressed. A well-structured PIP includes:

  • A description of the performance discrepancy or gap.
  • Clear expectations for sustained or consistent performance.
  • Timelines for achieving improvement.
  • Support needed and committed to by the organization.
  • Consequences if goals outlined in the PIP are not met.

It’s important to note that a Performance Improvement Plan is not inherently a disciplinary measure, although it can be a precursor to disciplinary actions if the employee fails to make the necessary improvements.  The context and circumstances surrounding a PIP, including the type and severity of unsatisfactory performance, prior warnings, and the employee’s willingness to improve, are crucial considerations. The primary goal of a PIP is to give the employee a chance to enhance their performance and continue their employment successfully.

When Should You Use a Performance Improvement Plan?

A PIP should be used when an employee’s performance falls below the expected standards. It provides a proactive approach to help employees overcome challenges and improve their performance, rather than jumping directly to disciplinary measures.

Progressive discipline

Progressive discipline is a method used to address performance or behavioural issues in a structured manner. It aims to provide employees with opportunities to correct their actions before resorting to termination. Unlike a PIP, progressive discipline involves a series of steps, typically starting with informal discussions and escalating to more formal measures if needed. The primary goal of progressive discipline is to:

  • Address and rectify performance or behavioural issues.
  • Encourage employees to understand and meet the organization’s expectations.
  • Provide a clear path for improvement. 

Progressive discipline process

Progressive discipline should be employed when an employee’s behaviour or performance issues persist despite initial interventions like coaching and feedback. It is used when there is a need to correct behaviours or performance through a systematic approach with a series of steps including:

  • Informal Discussion: The first step involves discussing the issue informally with the employee to identify the problem and explore solutions.
  • Verbal Warning: If the issue persists, a verbal warning is issued, clearly outlining the problem and the expected changes.
  • Written Warning: If the problem persists after the verbal warning, a written warning is given, detailing the issue, consequences of continued poor performance, and a plan for improvement.

  • Suspension: In severe cases, a suspension may be warranted, with clear terms and expectations for the employee’s return.
  • Termination: If all previous steps fail to resolve the issue, termination may be considered.

Documenting progressive discipline

In Canada, 80% of Terminations for Cause that followed the progressive discipline process failed and did not hold up in a court and the predominant reason was lack of proper documentation. Documentation is critcally important and here’s what you must have in every letter of discipline including first written warning, second written warning , suspension with or without pay, and termination:

  • The cause for discipline
  • The level of discipline being issued
  • Expectations and goals for improvement
  • Consequences of further discipline

Key considerations

1. Not all Infractions Call for Discipline

For example, being late to work by itself is not necessarily a disciplinary offence. Being late numerous times over a short period may warrant discipline. If you have questions about what falls under discipline and what doesn’t, book a free consultation with an HR expert here!

2. The Specificity of Progressive Discipline

There are three distinct paths to consider from an HR perspective: Progressive Discipline, Attendance Management, and Performance Management. The Progressive Discipline process is different from the other two as it follows a specific path, and it’s not a one-size-fits-all approach. It is really important that you recognize Progressive Discipline for what it is, as it is completely disciplinary, unlike that of Attendance and Performance Management. The key distinction lies in how they commence—either as non-punitive or punitive processes. When dealing with Attendance and Performance Management, it’s crucial to initiate them in a non-punitive manner. In contrast, Progressive Discipline emphasizes discipline right from the beginning. While it does involve some coaching, each stage beyond the initial counseling phase carries consequences.

Also Read: Managing Leaves of Absence, Accommodation and Requesting Medical Documentation: Best Practices for Canadian Nonprofits

3. Severity of Consequences

The employer reserves the right, rather has the responsibility, to issue a more severe discipline or may even terminate the employee. An example of an action that may warrant a more severe discipline, even termination, is workplace violence or sexual harassment.

4. Avoiding Leniency in Discipline

It is incredibly important that employers issue consequences befitting of the seriousness of the conduct. Issuing discipline that is too lenient could be considered the same as not issuing discipline at all or condoning a behaviour.

5. Liability and Consistency

Employers must handle the process carefully, as negligent or incorrect application of discipline can result in liability (i.e., fine for discipline not suiting the infraction). Employers must ensure consistency and equity in the issuance of discipline from one employee to another. Failure to provide for consistency may result in liability for the employer down the road.

Termination

As you know, Termination refers to the conclusion of an employment relationship, and there are various types of terminations, each governed by specific rules and circumstances:

  • Probation period
  • Termination without cause
  • Termination with cause
  • Constructive Dismissal, non-disciplinary termination, frustration of contract

Termination with cause

Termination with cause occurs when an employee’s actions or behaviour constitute a serious violation of their employment contract. Examples include theft, insubordination, or workplace harassment. In such cases, the employee can be terminated immediately without severance pay.

What is Just Cause? 

Just cause refers to serious employee misconduct during the employment relationship that fundamentally undermines the employment contract to the point where it cannot continue or be repaired. The threshold for establishing just cause must be met in most jurisdictions, except Ontario.

What is Willful Misconduct? 

Willful misconduct refers to an act or series of acts that are both egregious and intentional or deliberate. To prove willful misconduct, it’s not necessary to determine the employee’s intent in Ontario. However, reaching the bar of just cause under common law does not necessarily mean meeting the bar for willful misconduct under the Employment Standards Act.

The requirement to show intent means that the employee was aware their actions were wrong at every step, given clear expectations, and most importantly, specific and clear consequences at every step. In simpler terms, it means behaving badly on purpose. The employer must show that the employee purposefully engaged in conduct that they knew to be serious misconduct. 

The Concept of Near Cause

It’s important to note that there is no concept of ‘near cause.’ Either you have enough evidence to meet the bar of just cause and/or willful misconduct, or you don’t. If you decide to terminate without cause, you cannot use reasons that “might” be worthy of termination as an argument.

Watch the recording of an insightful, interactive session with seasoned HR expert Darcy Michaud on the topic “Progressive Discipline and Termination.”

Termination without cause

Termination without cause occurs when an employer decides to end an employee’s employment without any specific wrongdoing on the part of the employee. As long as you do not violate employment standards or human rights laws, you can terminate an employee without cause at any point, for any reason. In these situations, the employee is typically entitled to notice or severance pay as per employment standards or their employment contract.

(Note: Providing a reason for termination without cause only raises liability for the employer.)

Key Considerations for Notice and Severance

  • Upon termination, providing working notice or pay in lieu of notice is required.
  • Continuation of employment terms is required in Ontario and the Northwest Territories. 
  • Ontario and federal law also require the payment of severance pay in certain circumstances. 
  • Additionally, common law principles apply, which generally aim to provide the employee with enough paid time to find comparable employment. Common law is not employment legislation or subject to jurisdiction. Common law exists in all jurisdictions except Quebec.

Employers can mitigate their liability with a well-crafted termination clause as part of the original employment agreement. If employment agreements, specifically the termination clause, have not been updated in the last year or two, they may not be enforceable.

Along with the termination clause there are 58 additional key considerations you must refer to while reviewing or drafting your employment agreement. Download the comprehensive Employment Agreement Checklist prepared by employment lawyers of HRC Law Professional Corporation.

Also read: Enforceable Employment Contracts for Nonprofits (Includes FREE Employment Contract Template)

Termination process

The termination process in Canadian nonprofits, like in other sectors, should be conducted with fairness and in compliance with applicable employment laws. It is essential to:

  • Notify the employee in writing.
  • Provide notice or severance pay as required by law or the employment contract.
  • Respect any collective bargaining agreements in unionized nonprofits.

DISCLAIMER:

The information provided in this article is intended for general informational purposes only and should not be considered as legal advice. Employment laws and regulations can vary significantly between provinces and territories, and the specific circumstances of each employer-employee relationship may impact the application of these laws.

We strongly recommend consulting an HR expert or lawyer to ensure compliance with local employment laws and to address the unique aspects of your particular situation.

Free consultation: Get your questions answered

We understand that you might have questions about the topics discussed in the article. Book a free consultation with our HR expert and get tailored solutions for your organization.

Missed our earlier articles from this year? Explore them all right here (And don’t forget to grab your complimentary resources from each one!)

About HR Covered: At HR Covered, we have a deep understanding of the critical organizational needs and processes specific to Canadian nonprofits. We ‘get’ your culture, your goals, and what drives you, too. Our unparalleled responsiveness and impeccable service have helped more than 200 nonprofits in Canada to focus on their core activities. We provide a plethora of services including HR Compliance, Legislative Training, HR Documentation, Health & Safety Compliance, HR Legal, HR Consulting and Outsourcing. For more info visit our website: www.hrcovered.com or call us at +1 866-606-0149.