AREEA reviews a recent decision handed down by the Fair Work Commission (FWC) relating to an unfair dismissal appeal.
In a recent decision, the Fair Work Commission has found the dismissal of an employee for unsatisfactory work performance was not unfair, despite the lack of a formal warning.
This departs from a number of other cases where a failure to produce evidence of performance management has led to findings of unfairness.
The single-member decision, made by Deputy President Binet, found that the Inventory Controller was oblivious to both his deficiencies in performance and his employer’s efforts for remedy his shortcomings.
The employer submitted that in September 2015, members of its management team identified the employee lacked the necessary skills, capabilities and knowledge to adequately perform his role and that his manner and attitude to customers and internal personnel was unsatisfactory.
A period of 10 months was allocated to deliver “informal performance management” to the employee, however his performance did not improve.
Despite significant coaching, both one-on-one and in a team environment, the employee’s performance failed to improve.
On 27 July 2016, the employee was placed on a written performance improvement plan (PIP).
Only days later on 3 August 2016, a meeting took place between the employee and employer to discuss the PIP.
At the meeting, the employee failed to acknowledge any short comings in his performance and did not say anything to convince the employer that the employment relationship was workable.
It was decided that his employment was no longer viable and was terminated, effective that day.
The employee subsequently made an application for unfair dismissal.
Deputy President Binet found discrepancies between the employee’s perception and recollection of events and those of others present.
“I am satisfied that, over a period of nearly a year, (the employer) sought to clearly communicate to (the employee) what their performance expectations were,” Deputy President Binet stated.
Conceding that the employer had “diligently endeavored to assist” the employee, Deputy President Binet was also satisfied that there were reasonable grounds for the employer determining that further informal or formal performance management was unlikely to be successful.
The employee, conversely, regarded the process as ordinary workplace discussions and more in the nature of coaching and training which was in contrast to how the employer viewed them.
In this instance, the employer chose an informal method of performance improvement as that was initially felt to be the most effective method.
This was ultimately unsuccessful and then escalated when the employee was subsequently placed on a formal improvement plan (PIP).
The employee asserted that the lack of formal warnings and notes on his file was fatal to the employer’s claim that there was a valid reason for the dismissal and it was not unfair.
However, Deputy President Binet took a broader view on this issue and determined whilst such warnings or notes were useful from an evidentiary perspective, performance management did not need to occur in a formal documented way for an employer to rely on it as a basis for dismissal.
Deputy President Binet said, “it is clear from the employee correspondence following the PIP meeting that he was oblivious to both his deficiencies in performance and his employer’s efforts to correct those”.
Consequently, Deputy President Binet found that there were valid reasons for the employee’s dismissal.
In examining all other elements required by s387 of the Fair Work Act 2009, the Deputy President found that from a process perspective there was no other basis to make a finding that the dismissal was harsh, unjust or unreasonable.
AREEA advises caution for members considering following this decision as a general principle or precedent, as this case was decided on very specific circumstances.
In accordance with section 387(e) of the Fair Work Act 2009, the FWC’s decision on whether a dismissal is harsh, unjust or unreasonable must take into account whether an employee had been warned about the unsatisfactory performance.
While in this case the lack of formality in the issuing of warnings was not fatal, there has been a lack of consistency from the Commission on the intensity of performance management required.
The Deputy President found that the employer had actively turned its mind to the most effective method of performance improvement, which was shown to have occurred, both formally and informally over an extended period.
It is recommended AREEA members should undertake a systematic and professional performance improvement plan, culminating in an express warning that if performance does not improve, then further disciplinary action, including termination, will occur.
AREEA advises employers to ensure stringent processes are followed when dealing with performance issues, especially with respect to formal warnings.
The warning should be specific in nature and contain agreed actions and timelines.
In the event that the warning remedies the issue, parties should then meet as agreed and record those outcomes.
The employee should also be allowed the opportunity to respond to any concerns about performance, before determining an appropriate action, whether it be a formal warning or termination.
For more information, contact your local AREEA office.