The end of an employment relationship, particularly via a dismissal, is a nerve wracking time for a business.  The decision to terminate the employment of a staff member is never an easy one, even when there is clear cause, and businesses are rightly concerned about “getting it right”.  This weeks HR Highlight will look at the tips for ensuring a fair and compliant performance management process.

Three Strikes?

It is a common misconception that a business must give an employee three written warnings before termination.  This is not true.  What is required is that the businesses response to the breaches is appropriate and that, where appropriate the employee is given an opportunity to improve their behaviour and performance.

Performance Based Breaches

Where there are performance breaches, such as uniform breaches, tasks not completed, or tasks completed incorrectly, failure to meet customer service standards etc, it is an appropriate response to discuss these breaches with the employee in the context of a Performance Management Meeting, clarify the businesses expectations, seek understanding and commitment of the employee to improved performance and compliance in the future, issue a warning confirming the discussions, expectations and commitments and then to monitor the performance in the short and medium term.

As an example, Joe has been found to be making small but mounting errors at work.  His managers are concerned that his performance is not up to the standard it needs to be.  So what should be done…

A Performance Management Meeting is called with notice – it is not FAIR to ambush an employee with a discussion about their performance – employees have a right to have a Support Person in attendance at performance meetings as a witness, and as such surprise Performance Management Meetings, or meetings called without notice are likely to be a reason that any ultimate dismissal would be considered UNFAIR, even if there was a valid reason for the dismissal.  Joes Manager calls him (or emails) and lets him know that they need to have a meeting to discuss his performance and some errors that have been happening at work, and he outlines that Joe can have a Support Person attend the meeting as a witness if he would like.  Joes Manager makes sure that, wherever possible, the Performance Management Meeting is called for Joes normal work time, at Joes normal work location and with at least 24 hour notice (so that Joe can arrange a Support Person to be present if he would like).

At the Performance Management Meeting Joes Manager thanks Joe for coming, outlines the errors that the business has been seeing and the concern around performance levels, Joes Manager invites Joe to make comments and to discuss any issues that may be effecting his performance (lack of training, increased workload etc) and these comments are noted.  Joes Manager clarifies the expectations of the business (and if appropriate details any additional training or retraining or modifications that are required) and thanks Joe for coming and lets him know that the business will be forwarding a letter outlining the discussions, and that it is important that Joes performance rise to the standard required as future breaches could result in termination of his employment.

After the Performance Management Meeting Joe is sent a letter that outlines; that there was a Performance Management Meeting held, what date it was held, that it was called with notice, who was in attendance (including Support Persons if appropriate), that the Meeting was called to discuss errors (the details of these errors should be clearly included in the letter), that the business clarified its expectations in these areas and that Joes comments were sought (and what they amounted to), that further training/support/monitoring etc has been ordered/effected, that the business is keen to see Joe return to star performance but that this letter amounts to a Formal Warning for Poor Performance and that further such breaches of expectations may result in termination of Joes employment.

In our example if Joe goes on to “pull his socks up” and return to star performance then the Performance Management Process is a success – the clarification of expectations and the discussion of any hurdles has resulted in increased performance.  However, if Joe continues to show performance issues, even after having expectations clarified and training etc provided, then the business will need to address the continued breaches as a matter of importance.  Another Performance Management Meeting should be called with notice, and discussion held with Joe over his continued poor performance, despite formal warnings and opportunity to improve performance.  Depending on the breaches and the responses of Joe he may be given another warning, or the business may decide to terminate employment. 

If another Warning is the decision the letter should be drafted as with the first, but should also acknowledge that “Further to the Performance Management Meeting on [date of first meeting] and Formal Warning of [date for first warning] and the Performance Management Meeting of [date of second meeting] it is disappointing to the business to be issuing this further Formal Warning for Poor Performance…” This second Formal Warning should clearly identify that this is part of a series of meetings and warnings and should sign off with “further breaches are likely to result in termination of employment”.

If termination is the decision the letter should similarly acknowledge all of the meetings, warnings, breaches, opportunity to improve and the comments received by Joe in the last meeting.  The letter should outline that the business considered those comments and should explain why termination was the decision that was reached – eg “while the business notes that you commented that these most recent breaches were due to forgetfulness, the business does not find this explanation comforting or compelling, particularly given the extensive discussions over the importance of achieving compliance in these areas that we had as part of the first Performance Management Meeting and the subsequent training and Warnings provided.  As such at this time the business has lost faith in your capacity to discharge your duties to the level required and is as such terminating your employment for reason of Poor Performance”.

If termination is the decision the letter should also deal with key areas of when the termination is effective, what notice will be provided, as well as accrued entitlements and company property. 

  • Notice – A termination can be “effective immediately with payment in lieu of notice” or “effective from [date], being [x] weeks notice”.  Notice requirements change based on the employees status and age – see:  https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/notice-of-termination-and-redundancy-pay.  Notice will be required to be provided or paid in lieu when there is a termination for poor performance.
  • Accrued Entitlements – All accrued entitlements are to be paid out to an employee on termination and reference to this should be included in the letter.  Entitlements will depend on the employee status, length of service and entitlements actually accrued.  It should be noted that personal and carers leave (sick leave) is not payable on termination, but that all annual leave accrued is.  Long Service Leave may also be payable depending on the State and the length of service.
  • Company Property – the termination letter should indicate what should be done with company property, and the withholding of termination payments or entitlements can not be done based on employees not returning company property – if there is a dispute about company property it must be addressed separately – employee entitlements are entitlements and can not be reduced for company property reasons.

Was it Fair, Just and Reasonable?

This approach outlined in Joes case above is important when determining if a dismissal was fair, just and reasonable. 

In any unfair dismissal that involves poor performance the Commission will be asked to determine;

  • If the employee was aware of the expectations of the business (policies and task instructions are great for this)
  • If the employee was aware BEFORE the termination, that their performance was not meeting the businesses expectations (which is the key point of the Performance Management Meeting)
  • If the employee was aware BEFORE the termination, that continued breaches were likely to result in termination of employment and were they warned (this is why Warnings should be issued and include repercussions outlined for further breaches)
  • If the employee was given an opportunity to understand and comment on the breaches BEFORE a final decision to terminate was made (which is why further Performance Management Meetings and careful consideration of the employee comments are required)
  • If the employee was given notice of the performance Management Meetings and allowed to have a Support Person present at any meetings
  • If the employee was provided with information on the reason for termination (which is why the termination letter is important)
  • If the employee was provided with appropriate notice of termination (or payment in lieu of notice)
  • If the business had a valid reason for termination (and this is the reason that the employee had understood, been given an opportunity to comment and improve on as appropriate – can not “change or conflate” reasons)
  • If the business genuinely considered the employees comments BEFORE making a decision and considered if further training or support could address the performance problem

Each case will be different, however, it is clear that there are a series of elements that the Commission will look at in detail that can rule a dismissal to be UNFAIR, even if there was a valid reason, all because the employee was not offered the appropriate opportunities for engagement and improvement.

Misconduct and Serious Misconduct

The case of Joe and his performance issues is a lot less complicated than the case of Misconduct and Serious Misconduct.  Where the behaviour of the employee is such that there is an overwhelming breakdown in trust in the employment relationship and termination is likely simply on the facts of the matter.

For and extreme example lets look at Jane.  Jane punched another staff member in the face in a completely unprovoked attack.  Clearly this is unacceptable behaviour and it would be a risk to the other staff to allow Jane back into the workplace with an opportunity to ”improve behaviour”.  However, it would be equally inappropriate to simply issue a Termination Letter to Jane.

The business has a responsibility to;

  • Secure the safety of all staff (which in Janes case may mean standing her down and requiring her not to attend the business)
  • Investigate the facts of the misconduct
  • Call a Performance Management Meeting with notice to discuss Misconduct
  • Seek any mitigating explanation from Jane that may have impacted on the Misconduct (while it is hard to construct a mitigation for an unprovoked violent attack, there are potential medical conditions and treatments that may result in violent behaviour and it is important that the business explore and understand if any such conditions could have resulted in the Misconduct).
  • Consider all comments
  • Make a decision
  • Document that Decision

In cases of Misconduct and Serious Misconduct it is often advisable to ask employees to formally “Show Cause” as to why they should not be terminated for Misconduct/Serious Misconduct.  This request would be in the form of a letter that is presented at the Performance Management Meeting and outlines the breach, the seriousness of it, and asks the employee to respond in writing with reasons as to why their employment should not be terminated.  There is typically a 1 week response window.  Any response should be considered by the business before making a decision, and if there is no response the business will have to make the decision based on the information and comments already collected.  In the event of a “Show Cause” approach being taken the business should reflect the performance management meeting, the show cause letter and the show cause letter response in any termination letter issued.

Misconduct and Serious Misconduct can be slippery to define in practical terms, but there is a definition within the law.  The Fair Work Regulation (1.07) defines serious misconduct as; “conduct that is wilful or deliberate and that is inconsistent with the continuation of the employment contract.  It is also conduct that causes serious and imminent risk to the health and safety of a person or to the reputation, viability or profitability of the employer’s business.  Serious misconduct includes theft, fraud, assault, intoxication at work and the refusal to carry out lawful and reasonable instruction consistent with the employment contract.”

Where termination is occurring for Misconduct or Serious Misconduct the notice requirement is removed (and in some State there is an impact on Long Service Leave pro rata entitlements too).  Where a termination is effective immediately with no notice or payment in lieu of notice it is called a Summary Dismissal.

Even in case of Misconduct and Serious Misconduct the Commission, in determining it the dismissal was fair, just and reasonable will look closely at;

  • If the employee was aware of the expectations of the business (policies and task instructions are great for this)
  • If the employee was aware BEFORE the termination, of the nature of the misconduct alleged (which is the key point of the Performance Management Meeting)
  • If the employee was given an opportunity to understand and comment on the breaches BEFORE a final decision to terminate was made (which is why further Performance Management Meetings and even Show Cause Letters and careful consideration of the employee comments are required)
  • If the employee was given notice of the performance Management Meetings and allowed to have a Support Person present at any meetings
  • If the employee was provided with information on the reason for termination (which is why the termination letter is important)
  • If the business had a valid reason for termination (and this is the reason that the employee had understood, been given an opportunity to comment and improve on as appropriate – can not “change or conflate” reasons)
  • If the business genuinely considered the employees comments BEFORE making a decision and considered if further training or support could address the performance problem

Each case will be different, however, it is clear that there are a series of elements that the Commission will look at in detail that can rule a dismissal to be UNFAIR, even if there was a valid reason, all because the employee was not offered the appropriate opportunities for engagement and comment.

Learnings for all Businesses

It is important that all Managers understand the basics about performance management and incident response, in order to avoid procedural traps that could deem a dismissal to be unfair, even when there was a valid reason.  It is important that all managers understand the importance of not “ambushing” an employee into a performance management meeting, the importance of giving notice.  If a natural work conversation starts treading into the area of a performance management meeting, Managers should be empowered to say to staff “look we are getting into some detailed performance discussions now, which is great, that is how we all stay sharp, but lets park this until tomorrow and do it as a formal performance management meeting, Ill get some notes together and you can bring a support person if you like and we can go through this in detail tomorrow”.

It is also clear that it is important to take notes of all discussions with staff, and to ensure that all meetings are properly documented – including all of the important facts, dates, expectations, commitments and repercussions.

Here To Help

HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by  emailing employment@acapma.com.au to get in contact with one of ACAPMA Workplace Relations Professionals, its free for members. ACAPMA membership is affordable at only $880 per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts. Click here to learn more about ACAPMA membership.