Manager resigns over 'shocking' performance improvement plan

Worker raises questions about the 'fairness' of the employer's feedback process

Manager resigns over 'shocking' performance improvement plan

The Employment Relations Authority (ERA) recently dealt with a case involving a worker's claim of unjustified constructive dismissal and disadvantage against their employer, a medical supplies company.

The worker, who had been employed as a senior-level category manager, resigned from his position after being placed on a performance improvement plan (PIP) and subsequently raising a personal grievance.

The ERA examined the sequence of events leading up to the worker's resignation to determine whether the employer's actions amounted to a breach of duty serious enough to justify a constructive dismissal claim.

The case highlighted the significance of adhering to the principles of good faith and fair process when addressing performance issues and implementing disciplinary measures in the workplace.

Background and performance concerns

The worker, who had been with the company since early 2022, was responsible for selling specific categories of surgical medical implants and associated supplies.

According to records, his role involved ongoing relationship building with medical professionals as users of the products in orthopaedic surgery. In February 2023, the worker was invited to a meeting to discuss performance concerns and the possibility of implementing a PIP.

During the meeting on 8 February 2023, the worker's manager raised issues related to the worker's performance on the job, including a previous situation that had been addressed in September 2022 and a new complaint from a client. The meeting focused primarily on the worker's failure to meet sales targets, with the employer requesting a plan to address the issue. The worker repeatedly requested that the matters discussed be put in writing for him to address, but this request was ignored.

Following the meeting, the worker's manager sent him an email with an attached PIP on 10 February 2023, outlining four areas of concern: non-achievement of sales targets, lack of understanding and adherence to procedures, lack of understanding of surgeon's preferences, and lack of progress in gaining access to key customers.

The email stated that the worker was to sign and return the PIP, acknowledging that his performance was not at a satisfactory level and that further steps might be taken if it did not improve within a reasonable period.

Resignation and personal grievance

On 13 February 2023, the worker went on stress leave and instructed a representative to communicate with the employer. The representative raised concerns about the fairness of the performance improvement process and requested the worker's personnel file and records.

Despite attempts to resolve the issue, the worker ultimately resigned on 3 March 2023, citing constructive dismissal and raising a personal grievance. The worker argued that the employer had breached its duty of good faith by failing to provide a safe working environment and not responding fairly to his resignation.

The employer, however, maintained that it had engaged in a fair and reasonable process to support the worker's performance.

ERA's findings and decision

The ERA found that the employer had indeed breached its duty of good faith to the worker by failing to communicate constructively and responsively regarding the performance improvement issues. The authority emphasised the importance of a fair process when implementing a PIP, which is effectively a disciplinary step.

The ERA noted that the worker's requests for more information to respond to during the 8 February 2023 meeting were deliberately ignored, and the employer's subsequent actions, such as demanding a sales plan on short notice and sending a PIP without prior consultation, compounded the breach of good faith.

As the ERA stated in its decision:

"What makes this a serious breach of good faith is that [the worker] was understandably shocked by the PIP. Decisions had been made according to the statement in that document that he had failed in four areas of his performance.”

“Even if, as [the employer] now says, it was mistakenly sent as a document to sign rather than an intended proposal, this still misses the point that none of the content had been consulted on as was [the employer's] purpose for the 8 February 2023 meeting invite as set out in its written invitation to that meeting," the ERA added.

The ERA also found that the employer “ought to have foreseen” the effect on the worker when it continued to maintain that it had previously discussed the PIP with him, despite evidence to the contrary. The authority concluded that the employer's actions were not those of a fair and reasonable employer and that the worker's dismissal was unjustified.

In determining the appropriate remedies, the ERA considered the emotional impact on the worker, noting:

"[The worker] appears to have been unhappy with his employment prior to the process that has been examined in this determination but like [the employer] has not provided evidence of when and how he may have raised issues before."

Consequently, the ERA awarded what it deemed to be the appropriate amount. "Compensation is for the human effect on an employee as a result of the grievance. I find there was a serious human effect on [the worker] here although not to the level he has claimed. I find in the circumstances [the employer] should compensate [the worker] $15,000.00."

The ERA also awarded the worker reimbursement for lost wages, stating:

"[The employer] is to pay [the worker] $41,354.00 gross under s 128 of the Act to reimburse him for lost wages because of the grievance of unjustified constructive dismissal."

The ERA's decision reminded employers to follow proper procedures, provide employees with sufficient information and opportunities to respond, and consider the emotional impact of their actions on their workers.

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