Performance reviews aren’t legally required, but employers have legal responsibilities and liabilities if they conduct them
Performance evaluations continue to be a staple process in Canadian workplaces, but a persistent myth still trips up employers: the idea that a poor review, or even a string of them, gives an employer the right to dismiss an employee without notice or severance (for “just cause”). As 2026 unfolds, that myth is getting more expensive to believe and, therefore, in this edition of our blog we focus on what you need to know to use performance reviews effectively while maximizing their utility and minimizing legal liability.
Nothing in Canadian employment law obliges an employer to conduct formal performance reviews; annually or at all. Reviews are used because they're good management practice, not because a statute demands them. They are also becoming increasingly requested by employees who want feedback and metrics with which to assess their performance and career trajectory.
While not a legal requirement, once an employer chooses to use performance reviews and relies on them as the basis for discipline or termination, the reviews themselves become evidence, and courts and adjudicators will scrutinize them closely. Thus, they need to be carried out fairly, consistently, and in good faith.
The bar for ‘just cause’ based on performance remains extremely high
This is the single most important take-home message for HR professionals: a bad performance review, on its own, is not just cause for termination anywhere in Canada. At common law, and under the various provincial employment standards regimes, dismissal without notice or severance requires something close to wilful misconduct; not mere underperformance, negligence, or an isolated lapse in judgment. The Regulations under Ontario's Employment Standards Act, 2000, for example, sets the bar for just cause at “…wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” Ordinary performance shortfalls almost never meet that test. British Columbia permits just cause dismissals in circumstances which are similar to Ontario but not set out in one, crystalized test.
Before an employer can even argue that chronic underperformance amounts to just cause, it typically needs to show that it communicated clear, objective performance standards, gave the employee genuine warnings that their job was at risk, provided a reasonable opportunity to improve (often through a documented performance improvement plan, additional training, or coaching), and only terminated after that opportunity was exhausted. Termination has to be a last resort, not a first response to a disappointing quarter. Employers who skip these steps and terminate "for just cause" after a single bad review, or without any documented improvement process, routinely lose that argument and end up owing full reasonable notice or pay in lieu, and potentially additional damages for asserting cause in less than arguable circumstances.
Why performance review documentation still matters, even when just cause isn't the aim
Most performance-related dismissals are, essentially, without-cause terminations dressed up in performance language. That's not a criticism of employers dealing with often incredibly frustrating situations. Rather, this is intended to reflect a very common outcome sometimes after expense and prolonged litigation. The candid and legally sound approach when performance is involved is most often to pay the required notice or severance and part ways cleanly.
Even then, however, a well-documented performance history is not wasted effort. The documentation can protect against allegations that the dismissal was discriminatory in some way, as opposed to legitimately based on poor performance, economic factors, or legitimate reorganizations.
AI is entering the performance conversation, and the rules are still playing catch-up
Ontario's recent Working for Workers legislation now requires that employers disclose when artificial intelligence (AI) is used to screen or assess job applicants, but that obligation is currently aimed at hiring, not ongoing performance management. Employers are moving quickly toward algorithmic monitoring, scoring, and productivity tracking tools for existing staff, and workplace law counsel are urging caution about potential discrimination which may be baked into the AI algorithms as well as the privacy concerns that accompany attempts to engage in workplace surveillance.
Employers using or considering AI performance management tools should not wait for legislation to catch up before building internal governance around transparency, human oversight, and privacy. At the end of the day, a more frequent human approach to interacting with staff and engaging in two-way feedback is best.
The practical takeaways
While employers continue to use performance assessments as a means of ensuring staff continue to be effective, employees are also in need of feedback and asking for it proactively. As such, it is important to develop and use a genuinely defensible performance management process with clear standards, honest and timely feedback, real improvement opportunities, and accommodation where warranted.
Rather than holding the “one-and-done” annual performance meeting where HR downloads feedback to staff, we encourage managers to hold more frequent, two-way sessions on a quarterly or even monthly basis if possible.
Lastly, performance management and assessment should be viewed as a means of ensuring effective staff and team performance rather than an opportunity to develop grounds for just cause or discipline. By creating a solid assessment foundation, both the organization and individual employees benefit through increased feedback, all the while laying a foundation of legal protection for your organization.
Richard B. Johnson is a co-founder and partner at Ascent Employment Law in Vancouver.
