poorly executed performance improvement plans

How poorly executed performance improvement plans can impact the dismissal process

15 December 2017

When an employee is struggling with meeting company expectations, often a performance improvement plan (PIP) is implemented as an opportunity for the employee to rectify unsatisfactory performance and/or problematic behaviours. Unfortunately this process is not always successful, and in some cases a disciplinary process will commence and dismissal may result.

During this time, following correct procedures and recording each step is of immense importance to ensure that employers do not leave themselves open to successful unfair dismissal claims, as evidenced in Robert Etienne v FMG Personnel Services Pty Ltd [2017] FWCFB 3864.

The case

Mr Etienne was employed by FMG Personnel Services Pty Ltd (FMG) in September 2014 working as an inventory controller at a LinFox distribution centre and had been experiencing issues with meeting performance expectations. After informal performance management for twelve months, a formal performance management process commenced regarding his competencies and ability to form working relationships. Etienne was terminated one week into the formal six week performance management process. FMG had decided that Etienne had not engaged with the PIP, its performance management of Etienne had been unsuccessful and further efforts to improve his performance would be futile.

In large part it appears the Group GM of Procurement, Mr Fewster had reached this conclusion because Etienne sent a message the week after the PIP which stated:

I was very surprised for this meeting to actually be relating to a PIP as I’ve never been issued with any performance plans in my career. I fail to understand why a PIP has been raised…

In the PIP report its states “Your behaviour is always relevant when evaluating performance. A PIP can be commenced when your behaviour is contrary to our Fortescue Values or Code of Conduct”… I vigorously disagree! I have worked extra hours to ensure the efficiencies are met, incurred a workplace injury under instruction by my Line Manager to meet a deadline etc … I live by FMG’s Vision and Values being Family, Empowerment, Enthusiasm, Frugility (sic), Integrity Generating Ideas, Determination and set yourself stretch targets. I take umbrage that this paragraph is present as I’m a loyal and professional employee.

As an employee I believe I have done all that is expected.

Following his dismissal Etienne filed an unfair dismissal claim, which was heard in the Fair Work Commission by Deputy President Binet. The Deputy President took into account the consistency of the employer’s contemporaneous evidence and statements from its three witnesses. Deputy President Binet found that there were reasonable grounds for determining that further informal or formal performance management would be unlikely to be successful and that there were valid reasons for the dismissal.

The Appeal

On appeal, the Full Bench assessed whether the alleged errors of fact or law and public interest, warranted allowing the appeal. It considered the Deputy President’s failure to reference the fact the witnesses had read each other’s statements during the writing process, in circumstances where the consistency between the statements was a significant factor in her decision. This meant there was an arguable case that this consultation between witnesses was a material consideration, and it had been an error of fact to fail to take it into account.

In addition, the decision maker, Mr Fewster had not been made aware that during the PIP meeting, Etienne had agreed to achieve the objectives outlined in the PIP (he had nodded throughout the meeting) and that he had negotiated a longer time frame for one of the tasks. In cross examination Mr Fewster had admitted that if he had been aware of Etienne’s conduct in the meeting, he might have made a different decision about whether Etienne had engaged in the process and therefore, Etienne’s termination. The Deputy President did not mention this in her decision and it was the Full Bench’s view that it can be considered an error of fact if relevant matters are not taken into account. The Deputy President’s finding that he was ‘oblivious’ to his performance deficiencies and had not engaged in the PIP process, in these circumstances could constitute an error of fact.

Although the Full Bench did not consider this to be a case of manifest injustice, it did consider that the outcome was counterintuitive in light of the errors of fact and the matter engaged the public interest. It went on to say it would not always be necessary for an employer to finish a PIP once it has been commenced, and each case would turn on its own facts.

Permission to appeal was granted.

Key messages for employers:

  • Records are crucial (practically and legally), detailed contemporaneous written evidence is best.
  • When preparing witness statements, witnesses should not ‘compare’ statements during development.
  • A performance improvement plan (including its length and requirements) needs to be tailored to the individual employee.
  • The decision maker needs to be made aware of all relevant facts, delivering only a selection of facts to the decision maker compromises the process.
  • If you would like advice or assistance with any performance management issues, please contact a member of our Workplace Relations team.


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