When do Performance Concerns Justify Dismissal?

In a recent unfair dismissal application, the Fair Work Commission (FWC) found that the dismissal of a restaurant manager was unfair because the six performance concerns raised in the employee’s termination letter were not specific enough to constitute a valid reason for terminating his employment.

Under the Fair Work Act 2009 (Cth) (FW Act), when determining if a dismissal is unfair, the FWC must consider whether the dismissal was harsh, unjust or unreasonable based on various factors including:

• Whether there was a valid reason for the dismissal;
• Whether the employee was notified of that reason;
• Whether the employee was afforded procedural fairness, including being given an opportunity to respond to the concerns/allegations and having a support person present; and
• Where the dismissal relates to unsatisfactory performance, whether the employee had been warned about the performance prior to the dismissal.

Facts of the Case

Mr Goonewardena made an unfair dismissal application to the FWC alleging that his dismissal from his role as Floor Manager in a Japanese restaurant in Brisbane was harsh, unjust and/or unreasonable.

Mr Goonewardena’s termination letter identified six concerns with his performance in some detail, including:

1. “ongoing issues arising from a lack of knowledge and confusion within the team when the booking schedule is changed”;
2. “instances where relevant information has not been adequately shared among team members”;
3. “feedback from a guest expressing concern about [Mr Goonewardena’s] communication, which was perceived as inappropriate”
4. observations that Mr Goonewardena frequently sought assistance from others to resolve issues that should be within his scope;
5. concerns raised from other team members about “the level of trust”; and
6. feedback from guests about late service and as the manager, Mr Goonewardena was responsible for resolving these issues.

The employer had raised similar concerns with Mr Goonewardena’s performance via email on two previous occasions.

Findings

The FWC held that while a previous email sent to Mr Goonewardena contained specific examples and particulars about performance concerns, the subsequent email and termination letter did not have the same level of specificity, despite relating to “extremely similar” performance concerns. Importantly, the email lacked the “degree of specificity that would be required to constitute a ‘warning’” for the purposes of the FW Act.

When asked about the performance concerns during the proceedings, the employer was unable to provide any specific examples.

The FWC ultimately found that:

• The concerns did not constitute a valid reason for dismissal as there was a lack of evidence to support them, both at the time of the dismissal and during the proceedings;
• Even if the concerns could be proven, they were not “overly serious” to warrant dismissal; and
• If there was a valid reason for the dismissal, it would still have been harsh and unjust on the basis that Mr Goonewardena was not adequately notified of the reasons for his dismissal nor provided with an opportunity to respond.

On the basis that reinstatement would be inappropriate and having regard to the anticipated period of employment had Mr Goonewardena not been dismissed, the FWC ordered the employer pay Mr Goonewardena $7,694.98 plus superannuation in compensation.

Lessons for Employers

While ongoing unsatisfactory performance can still constitute a valid reason for dismissal, employers should ensure they provide employees with sufficient details about their performance concerns at the time of dismissal. This is irrespective of whether the employer has previously provided specific detail about the performance concerns.

In these circumstances, despite holding the same or similar performance concerns for a period of at least 4 months, the employer failed to explain how Mr Goonewardena continued to fail to meet their expectations.

This is a useful reminder that, where employees have been notified of similar performance concerns, the termination letter should acknowledge this and address how the concerns have not improved despite the efforts to informally or formally address the performance with the employee.

Please contact HR Legal if you require any assistance with understanding your legal requirements relating to managing employees who are not meeting performance expectations.

Case reference: Guy Goonewardena v Komeyui Management Pty Ltd [2024] FWC 1445