Make Sure Employees Can Meet Set Standard: Court Crunches Numbers on Bags of Chips

Financial Post: 20 July 2005 All Rights Reserved.

Pepsi-Cola employees had to follow one unshakeable rule: No consumer must ever see a stale-dated product on any store shelf.

Donald Chester, a 20-year route sales representative, delivered Hostess Frito Lay products (owned by Pepsi) to retail outlets. Pepsi expected Chester to ensure its products were removed from stores before their best-before dates expired. Most of the time Chester honored Pepsi’s “golden” rule. Occasionally, he slipped up.

Pepsi warned Chester, imposing progressive discipline, including suspensions, for repeated instances of failing to remove out-of-date products from the shelf. One written warning specifically included the necessary proviso that “any further poor work performance would result in his termination.” Pepsi made it clear — perfectly clear — what was expected and the consequences if Chester failed.

When his supervisors swooped in to perform their spot audits, they detected 39 bags of stale product. That was it for Chester.

Knowing that dismissal law often favours employees, Chester commenced a claim for wrongful dismissal. The Saskatchewan trial judge reviewed Pepsi’s expectations and found that the standard Pepsi expected of Chester was neither reasonable nor obtainable. Chester was awarded 14 months of severance plus his costs of suing.

Although Pepsi had provided the requisite warnings, it lost because it had not properly established that its standard was reasonably attainable. Although Chester handled about 9,500 individual items a week, Pepsi had detected only 39 out-of-date products. As the Court commented: “Perfection is a laudable goal but not likely attainable by many.”

Employers may believe Pepsi did all it could (or should). It clearly explained to employees what was expected of them; what it asked for (i.e. freshness) was objectively important; it informed its employees that they would be fired if they failed; and, it provided the requisite warnings — but it still lost!

Employers have to do more. They must establish that the average employee, performing the type of function in question, could reasonably accomplish what is asked.

Employers must allow for human error. Just as machines have allowable tolerances, employees will only be measured against a reasonable standard. If cause is too onerous an undertaking, the courts will not enforce it. The starting point is to have clear attainable standards of performance in place, and systems for tracking performance. Documented attained performance by your workforce is the best evidence that the standard is obtainable.

In order to establish standards of competence for a workforce, here are some steps an employer can take:

  1. Identify a reasonable standard of performance.
  2. Communicate it clearly in writing and have each employee sign off on it.
  3. Track performance for all employees so as to later establish that the standard was achievable by others. If many cannot, it will not be cause for dismissal for anyone.
  4. When an employee fails, provide a written warning noting specifically that the employee’s employment is in jeopardy.
  5. Ensure that records are kept of that employee’s failure to achieve the standard.
  6. Interview the employee to determine the explanation for the poor performance. The courts often make allowances for idiosyncratic circumstances, such as health.
  7. Before terminating for cause, review the evidence with counsel to determine whether you will be able to prove that your standard of performance is reasonably attainable.