Performance Management: Ensure its Effectiveness to Avoid Adverse Action

As Principal, you are delegated authority (at least in part) to manage the performance of staff at your school. In this capacity, it is likely that you will be required to manage the performance of a staff member at some point in time. Accordingly, to ensure that you avoid falling foul of the employee protections that exist in the Fair Work Act 2009 (Cth) (FW Act) and at common law, it is prudent to understand your obligations as employer before embarking on the performance management process. Failure to adhere to the proper process can expose the School to potential adverse action by aggrieved employees.

Employee Rights and Protections

All people working in Australia under relevant Commonwealth workplace laws are entitled to general workplace protections. The FW Act provides protections of certain rights which include:

workplace rights
the right to engage in industrial activities
the right to be free from unlawful discrimination

The term ‘workplace right’ is broadly defined under the FW Act, and includes:

receiving a benefit or having a role or responsibility under a workplace law (such as the Fair Work Act 2009), a workplace instrument (such as a modern award or enterprise agreement), or an order made by an industrial body (such as an order made by the Commission)
commencing or participating in a process or proceeding under a workplace law or instrument, such as taking court action
being able to make a complaint or inquiry about their employment

What is adverse action?

These rights are protected from certain adverse action taken by an employer. Adverse action taken by a person includes doing, threatening, or organising any of the following:

An employer dismissing an employee, injuring them in their employment, altering their position to their detriment, or discriminating between them and other employees.
An employer refusing to employ a prospective employee or discriminating against them in the terms and conditions the employer offers.
A principal terminating a contract with an independent contractor, injuring them or altering their position to their detriment, refusing to use their services or to supply goods and services to them, or discriminating against them in the terms and conditions the principal offers to engage them on.
An employee or independent contractor taking industrial action against their employer or principal.

Accordingly, improper performance management that does not comply with the requirements of an applicable enterprise agreement, including the Victorian Catholic Education Multi Enterprise Agreement, would likely amount to adverse action for the purposes of the FW Act.

Case Example

The recent Federal Circuit Court decision in Pezzimenti v Rotary International [2019] FCCA 1854 highlights the need for employers to follow appropriate and prescribed performance management processes for their employees.

Mr Pezzimenti was employed in a managerial position at Rotary from March 2016. His supervisor during his employment was Mr Huerta. During the course of the employment, Mr Huerta had concerns about Mr Pezzimenti’s job performance. Accordingly, Mr Huerta placed him him on a four month Performance Improvement Plan (PIP).

During the currency of the PIP, Mr Pezzimenti made a bullying complaint against Mr Huerta for the way he was managing the PIP process but little was made of it at that time.

Toward the end of the PIP period, Mr Huerta and Mr Pezzimenti met to discuss the progress of the PIP. During the meeting, Mr Huerta suggested that three of the four objectives had been satisfactorily completed, with one to be met.

The parties met again in April 2017, but Mr Huerta’s position and approach was drastically different. Mr Huerta stated that he was unable to assess the progress of one of the performance objectives and that Mr Pezzimenti had failed to achieve the other three, thereby failing the PIP. Mr Pezzimenti shortly thereafter commenced proceedings in the Federal Circuit Court for breaches of the general protections provisions under the FW Act to prevent Rotary from dismissing him. In response, Rotary immediately began to investigate Pezzimenti’s leave records, emails and attendance records, resulting in three further allegations regarding his performance. Rotary issued two notices to Mr Pezzimenti requiring him to attend a meeting to “show cause” as to why his employment should not be terminated.

The Court stated that employers must not take ‘adverse action’ against an employee because that person has exercised a workplace right. In this case, Mr Pezzimenti exercised a workplace right by making a complaint about the PIP and by taking court action under the FWA. The Court accepted that Mr Pezzimenti had shown that his employer had taken adverse action for a prohibited reason. Accordingly, the onus shifted to Rotary to establish that the dismissal was justified.While acknowledging that Rotary’s concerns about Pezzimenti were justified and that the PIP was warranted, Rotary ultimately failed to provide sufficient reasons for his dismissal. Although the outcome of the PIP could have been the eventual redundancy of Pezzimenti’s position, or his managed exit, it became clear that the decision to terminate was likely accelerated based on the exercise of his workplace right to complain. Also, and quite importantly, Mr Huerta’s approach to the PIP appeared to change following the commencement of the proceedings by Mr Pezzimenti. Additionally, the Court accepted that the further concerns leading to the show cause notices were simply Rotary looking for additional reasons to dismiss Pezzimenti, which had “the air of artificiality” to them.

Lessons from the case

All employees must be afforded sufficient procedural fairness during the performance management and dismissal process in order to ensure that the employer is not exposed to costly claims. Performance improvement action is legitimate and necessary to monitor and improve performance of some employees, but it is vital that the performance improvement action is implemented carefully. Adverse action occurred in this case even though it was legitimate to have put Mr Pezzimenti on a PIP.

When managing the performance of an employee, the Fair Work Ombudsman recommends that employers:

Identify the problem – clearly state the specific areas that need improvement
Assess the problem – How serious is the problem? How long has the problem existed? How much improvement is required?
Meet with the employee to discuss the problem – explain the problem in specific terms. From this conversation, the employee should be able to clearly understand what the problem is, why it is problem, how it impacts on the workplace and what steps and support are going to be put in place to improve the employee’s performance.
Jointly devise a solution – explore, with the employee, options for improving the performance and the training and support required.
Ensure a clear and appropriate plan and timeline is created – set dates for further review
Explain what will happen if the employee’s performance does not improve
Ensure both parties sign and keep a copy of the plan
Proactively monitor and review the employee’s performance while the plan is in place – continue to provide feedback and encouragement
More serious action may need to be taken if the employee’s performance does not improve – this may include further training, formal warnings and dismissal if the problem cannot be resolved.

How can Brennan Law Partners assist?

If you have any concerns about what steps need to be taken to comply with your employer obligations surrounding performance management, including compliance with the Victorian Catholic Education Multi Enterprise Agreement, it is important to seek legal advice as soon as possible. Managing an employee’s performance must be handled correctly from the start to ensure minimum exposure for an employer. Keeping proper records of the poor performance, improvement plans implemented and feedback and training provided to the employee are vital throughout the process.

If you have any questions regarding any information in this BLP Brief, we welcome you to contact us at any time.

This is meant as a guide only and should not be taken as legal advice.