Recent court cases puts spotlight on best practices, legal considerations of performance improvement plans
Recently, the Industrial Court of Queensland dealt with the application of a worker who felt her employer’s decision to implement a performance management plan (PMP) was unreasonable.
For employers, there are many steps in the process and if an employer is unsure of an employee’s fit for an organisation, a PMP might be the right course of action to determine suitability.
But there are a few tips to keep in mind.
“PMPs need to be focused on the duties and behaviours expected of the employee,” Jo Alilovic, director, 3D HR Legal, said.
“This is why it is so valuable for employers to have job descriptions and a code of conduct in place because they clearly set the expectations and provide an objective written document against which an employee can be measured.”
The PMP needs to clearly outline what the employee is required to do, she said, “using strong measurable detail to indicate where the employee is not meeting the standard required, stipulate what support the employer will provide to assist the employee to meet the standard, and include clear timeframes for compliance.
“It must also clearly inform the employee what will happen if the PMP requirements are not met.”
Focus on improvement, not punishment
While the Industrial Court of Queensland ruled in favour of the employer in the recent case, there are limits to what an employer can expect an employee to do.
“Performance management plans, or as I prefer to call them, performance improvement plans, are intended to help improve an individual employee’s performance at work,” Alilovic said.
“Performance management plans have a bad reputation as being a ‘tick the box’ exercise that employers need to complete as the last step in the process of ‘managing out’ an employee. Employees often feel that being placed on a PMP is as good as being told their employment is about to be terminated. Using the word ‘improvement’ can show that the employer is more focused on retaining an employee.”
A PMP should not make it impossible for the employee to attain the objectives set out or incorporates new tasks that have not been previously listed in an employee’s job description or are part of the role.
“A PMP isn’t an opportunity for an employer to add a whole lot of extra tasks to an employee’s workload to try and set them up for non-compliance and ultimately the termination of their employment,” Alilovic said.
“A court will not find a PMP ‘fair’ where it is measuring an employee against tasks that they should not reasonably be expected to perform.”
Like any review process, the goals need to be measurable, she said.
“The more objective the measurement, the better. For example, how many sales calls are to be made in a week? Within what time period are certain tasks expected to be completed?”
A review period of at least four weeks is recommended, however, depending on the tasks that need improvement - and the support plan in place – a longer period may be more appropriate, said Alilovic.
“No matter the length of the PMP, it is necessary to have check-in points for interim measurement and to feedback to the employee how they are progressing. It is not appropriate to set and forget a PMP until you are advising of termination.”
Legal implications to PIPs
An employee may not agree to a PMP and if forced to do one, may be very unhappy about the situation. This could lead to an entirely new situation with legal ramifications.
“Where an employee is not in agreeance, it is not uncommon for the employee to choose to take personal leave, or potentially bring a workers’ compensation claim alleging that they are suffering mental health issues as a result of the process,” Alilovic said.
In these circumstances, employers will need to carefully navigate the situation to determine whether they are able to continue with the PMP process, she said, “while not being seen to be exacerbating the employee’s issues, or whether it is appropriate to pause.”
Ultimately, when employees are not meeting required performance standards, and they fail to improve, an employer can terminate the employee’s employment, said Alilovic.
And to defend against any potential legal action arising from the dismissal, the employer will need to be able to prove that there was a valid reason for the dismissal - the poor performance - and that the employer followed a fair and reasonable process leading up to termination, such as advising of the issues, givig an opportunity to improve and warning the employee of the consequences, she said.
“The employer will also need to be able to prove that there was no unlawful reason behind the termination.”
If an employee resigns during a PMP, that doesn’t end the matter as the court case above demonstrates. This can lead to a whole array of legal issues.
“In some circumstances an employee may resign during a PMP or rather than be placed on one,” Alilovic said. “If the PMP was so unreasonable the employee could not achieve it, they may claim they were forced to resign because of the employer’s conduct. This is called a constructive dismissal and would enable the employee to bring an unfair dismissal claim.”