A recent unfair dismissal decision of the Fair Work Commission highlights that it is never enough to merely establish that an employer had a reasonable belief that a performance-based termination was for a “valid reason”. Rather, the Commission still needs to make a finding on the balance of probabilities that the performance was, in fact, unsatisfactory. Naturally, this assessment requires the Commission to look closely at the performance measures used by the employer to assess performance or productivity.

Summary

In this particular case, Deputy President Saunders held that the employer (an IT company based in Canberra) relied on a “vague” task list to assess productivity in dismissing one of its software developers for “gross poor performance”.

Amongst other things, DP Saunders found that the task list ought to have been broken down into smaller items and that this likely contributed to the “perception” on the part of the IT company that the developer was not working productively.

Whilst the IT company still would have gone down in this case for failing to meet other ‘procedural fairness’ requirements (including not notifying the employee of the reason for termination and not giving the employee an opportunity to respond), it would have been interesting to see if the Commission’s assessment on the ‘valid reason’ elements might have been decided differently had the task list actually been broken down into smaller items with more specificity.

The important takeouts

Apart from ensuring that targets or periods are reasonably attainable during performance management, the key take out for employers is definitely to always be as specific as possible when it comes to setting performance measures and to avoid merely relying on vague or nebulous measures to assess performance or productivity.

The decision is also a great reminder to tech and new economy business that the law still applies to you! A bit of old school learning will never go astray in steering your new economy business through this old-world minefield.

For those interested in reading the full decision, you can view it here. It’s a worthwhile refresher on what is required to comply with our longstanding unfair dismissal laws when managing under-performing employees.