Deputy President Binet has refused the unfair dismissal claim of an employee who was subject only to ‘informal’ performance management steps, in a decision which signifies a substance over form approach to managing underperformance.

  • The decision is unusual because the employer in question is a large organisation with dedicated internal, and access to external, human resource management and employment law expertise. In some decisions of the Commission, employers have been found to have unfairly dismissed employees for underperformance, even where extensive formal performance management is undertaken.
  • In this case, the employee demonstrated an almost total lack of engagement in the day to day performance management the employer undertook. Partly for this reason, the employer was found to be justified in proceeding to a termination prior to the implementation of a formal performance improvement plan.
  • Whilst the decision does not diminish the importance of formal, documented performance improvement processes, it indicates a willingness on the part of the Commission to be satisfied by less official performance management in circumstances where the employee fails to show any recognition of, or improvement in, their work.

Background

The employee, Robert Etienne, was employed by FMG Personnel Services Pty Ltd (FMG) as an Inventory Controller in its Inventory Management Team. His role required him to co-ordinate and manage inventory at the Linfox Distribution Centre, as well as a shared inbox for any inventory related enquiries relating to his employer’s Perth distribution centre.

According to FMG, in September 2015 (around a year after Mr Etienne commenced employment), his supervisors formed the view that his performance was unsatisfactory, that he did not adequately understand the tasks central to his role and had failed to develop productive working relationships. At this time, FMG rearranged the seating within the Inventory Team so that Mr Etienne could sit next his supervisor and be provided with daily coaching. According to the supervisor, he worked closely with Mr Etienne to assist him in relation to all aspects of his work and delivered ‘informal’ performance management over a 10 month period. The supervisor gave evidence that he spent far more time with Mr Etienne than with other members of the Inventory Team, and that during this discussions Mr Etienne nodded his head but did not ask questions or seek clarification.

After Mr Etienne complained of feeling singled out as a consequence of the attention of his supervisor, FMG arranged an offsite training day for the whole Inventory Team, which was in fact targeted specifically at Mr Etienne. Following this, the supervisor continued to see no improvement in Mr Etienne’s performance. As a consequence, a decision was made to place Mr Etienne onto a formal performance improvement plan (PIP).

The implementation of the PIP was delayed by Mr Etienne incurring a workplace injury. A meeting was eventually convened at which the performance concerns were outlined to Mr Etienne and he was given a copy of the PIP. The following day, Mr Etienne emailed one of his supervisors and expressed surprise at being issued with the PIP, stating that he failed to see the reason why the PIP had been implemented and that “As an employee I believe I have done all that is expected”.

In the days following the receipt of Mr Etienne’s emails, his supervisors met with him to discuss his response to the PIP. During the meeting, concerns were expressed to Mr Etienne that he lacked self-awareness in relation to his work performance and appeared unwilling to participate in and cooperate with the PIP. One of the supervisors informed Mr Etienne that FMG considered there to be overwhelming evidence of his inability to carry out the standard processes and tasks in which he had been extensively trained. Mr Etienne was invited to provide a response, but did not do so. FMG then proceeded to inform Mr Etienne that his employment would be terminated effective immediately. Mr Etienne was also presented with a deed of release, offering him the opportunity to have the termination of his employment recorded as a resignation. He refused, and attended work in the following days asserting that he had rejected the offer of resignation and his employment was ongoing.

Decision

Deputy President Binet was satisfied that FMG had a valid reason for Mr Etienne’s dismissal, as evidenced by the long held performance concerns of his supervisors who gave evidence at the hearing.

In dealing with the issues of procedural fairness, the Deputy President took a substance over form approach. Notwithstanding FMG had terminated Mr Etienne’s employment before the PIP had commenced, the dismissal was not harsh unjust or unreasonable because FMG had, for many months, endeavoured to make clear to Mr Etienne its expectations and to assist him to improve his performance. During the hearing, Mr Etienne continue to deny any deficiencies in his work performance and denied that any performance deficiencies were raised with him at the PIP meeting or the subsequent termination meeting. The informal performance management had satisfied FMG’s obligation to make Mr Etienne aware of the performance concerns, the reasons why his termination was a possibility, in due course, and the reasons why it proposed to terminate his employment. Mr Etienne demonstrated an ongoing unwillingness to take advantage of the coaching and training he was provided with, and accordingly, the Commission was satisfied that Mr Etienne was in a position to respond to the reasons for the proposed dismissal had he decided to do so.

Mr Robert Etienne v FMG Personnel Services Pty Ltd [2017] FWC 1637