Monday, 7 August 2017

Performance Management – How to Get it Right

Case Study – Robert Etienne and FMG Personnel Services

Robert Etienne was employed by FMG as an Inventory Controller. About a year after Mr Etienne commenced employment with FMG, it became clear to his supervisors that he was not satisfactorily performing in his role. From this time, FMG attempted to lift Mr Etienne’s performance and provided over 10 months of informal performance counselling, including one on one performance coaching and conducting an off-site training session tailored for Mr Etienne. During this time, Mr Etienne’s performance failed to improve and he became increasingly sensitive to constructive criticism. FMG then decided to escalate the process and indicated to Mr Etienne that he would be placed on a performance improvement plan (which he objected to). Soon after, when it was apparent that Mr Etienne’s performance had not improved and in light of Mr Etienne’s lack of engagement in the process, FMG made the decision to terminate his employment.

In bringing an unfair dismissal claim, Mr Etienne argued that he had not been formally performance managed, he had not been provided with any formal warnings, and any conversations about his performance were simply “ordinary workplace conversations”. In response, FMG said that there could be no doubt that it had been seeking to address concerns with Mr Etienne’s performance and that it had deliberately chosen an informal performance management plan as it believed it would be the most effective way to improve Mr Etienne’s performance. Although it was not formally documented in warnings or file notes, FMG was able to point to the extensive efforts made to address his underperformance.

The Commission found that in favour of FMG, as it had followed a procedurally fair process in terminating Mr Etienne’s employment. The Commission commented that while useful from an evidentiary perspective, performance management need not occur in a formal documented manner in order for an employer to rely on it as the basis for the termination of an employee’s employment for poor performance.

Interestingly, the Commission noted that the fact that FMG was a large organisation that has a dedicated internal human resource management and employment law expertise. This helped ensure procedural fairness for the employee, even though it had not followed a formal performance management process which may be expected of an employer of that size.

This case is being appealed by Mr Etienne. We will update you with any important developments.

Lessons for Employers

While this decision indicates some willingness on the part of the Commission to accept less formal performance management where an employer has made efforts to address an employee’s performance, this decision does not mean that employers can substitute informal communications for proper performance management, whether that is formal or informal.

There is no doubt however that employers who adopt a formal performance management process prior to dismissing employees are placed in a stronger position when defending an unfair dismissal claim.

HR Legal provides advice to clients managing employee performance. We are conducting seminars in September 2017 to provide employers with the tools to support managers in the performance management process. Please follow the links on our website to register your attendance at the “Performance Management: Risks and Tips” seminar.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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