8 March, 2016
Todd Allan Rooney v Pickles Auctions Pty Ltd [2016] FWC 858
What you need to know
What you need to do
- Underperformance and misconduct are distinct concepts and should be managed differently.
- Where an employee is suspected of having engaged in misconduct, an investigation is usually required to determine whether disciplinary action is necessary. By contrast, performance management is focused on identifying and addressing performance issues.
- Treating underperformance as misconduct or failing to follow a sound performance management process may expose employers to legal risks. Such risks may include unfair dismissal, adverse action, breach of contract and bullying claims.
- Understand the distinction between employee underperformance, including behavioural underperformance, and misconduct.
- Separate the investigation of misconduct allegations from the management of performance issues.
- Develop clear and distinct policies for performance management and workplace investigations.
- Train supervisors and managers to effectively performance manage and to conduct workplace investigations into allegations of misconduct, in line with company policies.
- Minimise the chance of issues arising by creating and fostering a work environment where performance and behavioural expectations are clear.
Does your organisation have clear and separate processes for investigating allegations of misconduct and managing performance issues? Could procedural flaws expose your business to risk of a successful claim?
Continuing performance issues and employee misconduct can both form a legitimate basis for dismissing an employee. However, it's important to appreciate the differences between performance and misconduct issues and the different management processes which should apply.
Whilst the Fair Work Commission has provided much guidance on the "do's and don'ts" of investigating allegations of employee misconduct, performance cases very rarely make it to hearing.
A recent decision of the Fair Work Commission provides some rare commentary in relation to a dismissal involving performance issues.
Rooney v Pickles Auctions
In Todd Allan Rooney v Pickles Auctions Pty Ltd [2016] FWC 858, the Fair Work Commission commended the process followed by an employer in dismissing an employee for his repeated failure to attend work on time.
The applicant employee was a car detailer, who was habitually late to work and had received both written and verbal warnings regarding his tardiness. On the morning of 17 June 2015, the employee slept through his alarm and arrived at work an hour late.
That afternoon the employer convened a meeting with the employee, seeking an explanation for his lateness and failure to notify his supervisor. The employee was told that his employment was at risk because of his continued poor attendance. The employee was given a chance to make further comments, but was not able to provide a satisfactory explanation for his lateness. The meeting was then adjourned to allow the employer to consider the employee's ongoing employment.
During the adjournment, the employer consulted with its employee relations staff, considered the employee's explanation for his lateness and considered his work history. This included the prior warnings relating to his late attendance and other warnings which related to instances of misconduct. Ultimately, the employer decided to terminate the applicant's employment.
The employer reconvened the meeting and advised the employee of his dismissal verbally and in writing. The letter setting out the reasons for his dismissal referred to the previous warnings and the fact that the employee had been given an opportunity to improve his attendance but there had been no adequate improvement.
Commissioner Cambridge noted that, to the extent the applicant's failure to attend for work on time represented unsatisfactory performance, there was ample evidence that the employer had warned the employee. The Commissioner held that the employee’s persistent tardiness was a valid reason for dismissal and the employer's approach to dealing with the applicant's dismissal "should be properly recognised as commendable".
Underperformance ≠ misconduct
In the Rooney case the employee was given multiple opportunities to improve his behaviour but did not do so, resulting in his dismissal.
Whilst employers are familiar with outcomes based underperformance – where an employee’s quality or quantity of work is not meeting expectations – behavioural underperformance tends to receive less attention and can be easily confused with misconduct.
Behavioural underperformance may include an unsatisfactory attitude to work (such as tardiness) or inappropriate behaviour towards colleagues. Repeated but minor breaches of workplace policies may also be part of a broader behavioural problem as opposed to an instance of misconduct.
Why does the distinction matter?
So why is it important to distinguish underperformance from misconduct?
Firstly, a performance management process should look very different to a disciplinary investigation into alleged misconduct, due to the different objectives involved.
The performance management process should be genuinely focused on lifting work or behavioural standards, not investigating and determining whether misconduct has occurred.
Secondly, in determining whether a dismissal on performance grounds is unfair, the Fair Work Commission is required to consider whether the employer warned the employee about the unsatisfactory performance before dismissing the person. An employee who is not given a chance to improve their performance before being dismissed is likely to succeed in unfair dismissal proceedings.
Managing poor performance
A good performance management process typically involves:
- setting clear performance standards from the outset
- identifying areas of underperformance
- discussing the areas of underperformance with the employee in specific terms
- ensuring performance reviews and appraisals reflect the employee's actual performance
- assessing factors that are contributing to the underperformance
- setting targets and timelines for improving performance
- monitoring performance and providing feedback to the employee; and
- ensuring the employee understands that continued underperformance may have consequences for their employment.
Investigating employee misconduct
By contrast, where an employee is suspected of having engaged in misconduct, an investigation should be undertaken to understand what has happened and assess whether disciplinary action is required.
A workplace investigation will typically involve:
- understanding and analysing the complaint
- planning and preparing for the investigation
- interviewing those involved and gathering other evidence
- reviewing the evidence
- evaluating the evidence and making findings of fact; and
- preparing a report detailing the findings of the investigation (if required).
Legal risk arises if an employer terminates an employee’s employment for misconduct, but the employee’s behaviour is more accurately characterised as poor performance. If the employee has not received warnings and been given an opportunity to improve, they are more likely to be able to establish that their dismissal was harsh, unjust or unreasonable.
Failure to follow a sound performance management process can also expose employers to adverse action, breach of contract and bullying claims.
Having a well-defined framework for addressing employee underperformance is essential in assisting an employee to take the steps needed to lift their performance to the expected standard. A clear performance management process also assists when disciplinary action, including termination of employment, is taken as a result of an employee’s poor performance and the employer is asked to demonstrate why that action was fair in the circumstances.
By contrast, in the context of a workplace investigation, procedural fairness requires putting the relevant allegations to the employee and affording them the opportunity to respond. If the allegations are ultimately substantiated, then disciplinary action will generally follow. Any action taken should be proportionate to the conclusion reached in the investigation.
Employers can minimise their exposure to claims directed at procedural deficiencies if the distinction between underperformance and misconduct is understood and the processes to be applied in managing each are clearly defined.
MAKING THE CASE: Insights from Geoff Giudice
The goal of performance management should be to improve employee performance. Unfortunately, there will be cases in which the employee does not respond and disciplinary action is necessary. Where underperformance is persistent, the employer may have no practical recourse but to terminate the employment. If the employee challenges the basis for the termination it will be necessary for the employer to demonstrate to the satisfaction of a court or tribunal that it pointed out the areas of underperformance to the employee and gave the employee reasonable opportunities to improve.
Of course the employee is likely to dispute the employer's version so the employer should have proper documentary evidence to back up its verbal evidence. Whenever an employer is managing an employee for unsatisfactory performance notes should be kept of counselling sessions and warnings should be in writing, or at least diarised and independently verified. Other objective evidence, such as attendance registers and sales performance, should also be maintained. A thorough performance management program may be of little use if the employer does not have the documentary materials to prove it. In the case dealt with in this Employment Alert, the employer's documentary record enabled the Commissioner to be confident that the employer had managed the employee's performance issues in an exemplary way.
Most employers have separate processes for managing performance, as opposed to misconduct. Although the difference between poor performance and misconduct can sometimes be a question of degree, dealing with misconduct usually involves investigation and disciplinary action. It does not require counselling sessions and action plans prior to disciplinary action.
For further information, please contact:
Vince Rogers, Partner, Ashurst
vince.rogers@ashurst.com
