Performance management is a complicated area of employment that can be challenging for an employer, distressing for an employee and can give rise to potential claims by an employee.
A performance management process must be genuine, fair and reasonable. It is also critical that a performance management process comply with an employer’s contracts, policies, procedures and code of conduct, all of which should be clearly understood by employees.
Fair and reasonable performance management strategies could include counselling, warnings, performance reviews, training/re-training and mentoring. These strategies must allow an employee a reasonable opportunity to both respond to any concerns regarding their performance and demonstrate that they are improving their performance. Performance management should not be a formality designed to justify a decision to terminate an employee’s employment.
It is essential that an employer thoroughly document any performance management process as this will become the paper trail or evidence of the employer in defence to any claim by the employee.
If an employee fails to improve their performance after a fair and reasonable performance management process and it is necessary to terminate the employee’s employment, a confidential, sensitive and fair approach may mitigate against any potential claim by the employee.
The risks of an unreasonable or poorly implemented performance management process include:
- Unfair dismissal claims (if the termination of employment was harsh, unjust or unreasonable);
- Unlawful termination claims (if the employment was terminated for an invalid reason);
- Unpaid wages claims (if entitlements are underpaid or the employment contract does not contain a notice period);
- Bullying and harassment claims;
- Breach of employment contract claims;
- Workers compensation claims; and
- Discrimination claims.
Non legal consequences can also follow including resignations, disgruntled employees and grievances, all of which will likely result in a loss of productivity.
Even valid and justifiable performance management action can lead to a claim by an employee. The recent Fair Work Commission matter of Aly v Commonwealth Bank of Australia  FWC 2604, saw the Commonwealth Bank take performance management action against Aly for failing to reach his KPI’s and failing to adhere to the Bank’s policy to keep all confidential or sensitive information secure. Aly received a warning and was subsequently placed on a performance improvement plan after he continued to breach the Bank’s policy. Aly applied to the Fair Work Commission for an order that the Bank cease bulling him on the basis that the performance management action by the Bank was unreasonable micromanagement.
The Fair Work Act defines workplace bullying as repeat behaviour that is unreasonable and creates a risk to health and safety. Reasonable management action conducted in a reasonable manner is a defence to any claim of bullying and harassment. The Fair Work Commission held that the performance management process implemented by the Bank was both reasonable and conducted in a reasonable manner.
Miller Sockhill Lawyers can assist employers with drafting relevant policies and procedures, performance management of employees, termination of employment and determining termination entitlements.
Miller Sockhill Lawyers can also assist employees who have been the subject of unreasonable performance management.
Sunshine Coast Lawyers, Miller Sockhill Lawyers can assist with any litigation, court related or employment matters. Please contact Nicole Doyle Solicitor on 07 5444 4750.