Better safe than sorry – Best practice for dealing with poor performance issues

Here at Workplace Law, we regularly assist clients with unfair dismissal claims, which often involve disputes over performance management processes and meetings.

Performance issues can be some of the most difficult for employers to manage and when performance management results in disciplinary action, employers need to be on the front foot to protect their interests and ensure compliance with the Fair Work Act 2009 (Cth) (FW Act).

In our experience, preparation is key.

The simplest way to minimize the risk of litigation is to ensure you are at least taking the following steps:

  1. Be aware of minimum employment periods (commonly known as probation periods) and structure performance reviews around them.
  2. Carefully document performance management processes.
  3. When engaging in disciplinary action, provide letters to the employee as soon as practicable after each event.


Be aware of minimum employment periods

Under the FW Act, an employee is not protected from unfair dismissal if they have not satisfied the minimum employment period. These periods differ depending on the size of the business:

  1. For a small business (less than 15 employees), it is 12 months; and
  2. For businesses with 15 employees or more, it is 6 months.

Employers need to be aware of these dates and ensure reviews are scheduled to take into account the end of the minimum employment period.

For example, a small business might choose to conduct two reviews within the 12 month probation period – one at the three-month mark and again at the 9-month mark. This type of structure would enable an employer to make any decisions about the employment well within the minimum employment period.

Record performance management processes

If it is determined that performance management is required, the employer needs to record the process, even if it starts off informally.

This can be something as simple as notes of meetings but may develop into something more structured such as Performance Improvement Plans.

For small businesses, one of the jurisdictional objections to an unfair dismissal claim is satisfactory compliance with the Small Business Dismissal Code. The Code requires employers to demonstrate that they have given the employee a reasonable chance to rectify their performance issues. The easiest way to prove this is by having documented evidence that the employee has gone through a performance management process.

For larger businesses, performance management documentation is evidence that the employer has done all it reasonably can to assist an employee who cannot or will not perform to the required standard of the workplace.

Letters following up disciplinary action

One of the perennial disputes that the FWC often faces is whether an employee was aware that they were the subject of disciplinary action. There are many cases in which an employee has argued that they were not aware and were not warned about issues with their performance or that they were even being dismissed.

It is much easier to refute such a claim if the employer has contemporaneous and written evidence to confirm that performance management, warnings and dismissal did occur. 

As soon as practicable after each disciplinary meeting, it is crucial that a warning letter summarising what has happened is provided to the employee.

The same goes for notice of termination of employment – it was recently discussed in our blog Let me make one thing perfectly clear …”  FWC’s practical approach to notice of termination that written notice should be provided to the employee at the same time as, or as soon as practicable after, the verbal notice. This eliminates ambiguity about the termination.

Creating and keeping written evidence of these events, and providing written information or letters to the employee, is not only a good risk management exercise but may also be required under the FW Act (for example, written notice of termination).

These are not new concepts for employers but are definitely some of the most important to remember.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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