Do you have an under-performing employee?

01 FEB 2019

 

An examination of the traps and tips of managing an underperforming employee 

The recent Fair Work Commission appeal decision of Adam Miller (employee) v Urban Pedaler (employer) [2018] FWCFB 4166, has sent a powerful reminder to all employers when they decide to raise and address performance issues against an employee.

Summary Background

For about eleven months from 5 September 2016 till the end of 2017, Mr Miller was employed as a full-time Workshop Manager at Urban Pedaler (a bicycle retail store).

During his employment, Mr Miller was sent a number of brief emails by his employer regarding his poor job performance and poor sales records.

On 16 November 2017, Mr Miller was provided with a warning letter via email regarding his poor job performance and advising him that his employment was at risk. Mr Miller’s employment was suspended once that letter was sent to him.

On 20 November 2017, Mr Miller had a meeting with his employer to discuss his performance.

On 22 November 2017, Mr Miller’s employment was terminated. The termination letter provided to Mr Miller referenced only performance issues that had been raised in the warning letter on 16 November 2017.

Mr Miller, following his termination, lodged an Unfair Dismissal application in the Fair Work Commission alleging that his termination from Urban Pedaler was harsh, unjust and/or unreasonable. Mr Miller alleged the brief emails that he received from his employer prior to the warning letter on 16 November 2017, did not advise him that his employment was at risk of being terminated. He said he was only given notice of this in the warning letter, following which he was not given a timely opportunity to improve his performance.

Outcome of the Case

Initially, when the case was first heard by one single Commissioner in the Fair Work Commission, it was found that Urban Pedelar as a small business employer (who employed less than 14 staff) had complied with the ‘Small Business Dismissal Code’ and therefore Mr Miller’s dismissal was not unfair.

Mr Miller appealed the decision in the Fair Work Commission based on an error of law, being the ‘Small Business Dismissal Code’ was not interpreted by the Commissioner correctly.

On appeal, the case was re-heard by a Full Bench (several Commissioners) of the Fair Work Commission.

The Full Bench found in favour of Mr Miller. They held:

  1. Whilst the emails from his employer put him on notice that his performance was being monitored, he was not told that his employment was at risk of being terminated until he received the warning letter on 16 November 2017. Therefore, Mr Miller was only given 4 days to improve his performance before the termination, which he could not have done given that he was suspended.
  2. Mr Miller was therefore not provided with a fair warning or a reasonable chance to rectify the issues.

Take Away Message

This case is an important reminder that if any business wishes to terminate an employee for poor performance, amongst many other factors it should also consider the following questions (but subject to the facts existing at the time – each case is different and depends on its own unique set of facts):

  1. Have you provided the employee with a warning (preferably in writing) of the issues and clearly stated that their employment is at risk if there is no improvement in their performance?; and
  2. Have you given the employee a reasonable opportunity to respond to the warning, improve their performance and rectify the problem?

Along with the above, there are several additional factors (not addressed in this general article) that an employer should consider when performance managing an employee. If your business requires discrete assistance in performance management of an employee or advice regarding terminating of any employee, please contact Grant Butterfield or Simon Kumar (contact details below) to have an initial discussion with comps.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

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