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Resign or be sacked

The hearing of a recent unfair dismissal claim[1] over unsatisfactory performance has resulted in a $21,200 payout for the aggrieved employee.

Following protracted contract renewal/negotiations and purportedly hostile communications, the employer Sundance Marine decided to terminate a sales person’s employment on the basis of poor performance and behavioural concerns.

Unfortunately for Sundance there was one significant catch; they failed to communicate these reasons to the employee until after his dismissal.

The Ultimatum

Over the course of his employment, the employee had a number of employment contracts put before him by his employer.  Only the first of these was signed by the employee.

Tensions arose over a later employment contract put to the employee containing a post-employment restraint of trade clause.

Discussions regarding the structure and wording of the contract culminated in a letter from the employee in which he stated that unless his concerns were met favourably, he would “have no choice but to seek alternative employment”.

Construing this ultimatum in their favour, Sundance management called a meeting on 10 September 2012 and provided two options to the employee – resign or be fired.

Three days later, the employee received a letter of termination purporting to outline the employer’s reasons which included “poor performance”, “low sales” and “argumentative behaviour”.

The Consequences

Warning bells would be ringing for prudent employers over the employer’s reasons for and manner of dismissal. They rang for the Fair Work Commission too.

The FWC found that the reasons put forward for the dismissal, when viewed objectively, either individually or collectively, did not provide a sound or defensible basis for the dismissal of the employee.

The following pointers can be drawn from the FWC’s unfair dismissal decision.

1. Be Clear

Not only was there no substantive evidence of the employee’s poor performance or low sales, there were no minimum performance levels ever put to him against which he could be held accountable.

Expecting an employee to maintain a satisfactory standard of performance is understandable, but holding them to a standard even they are not familiar with will not be viewed favourably by the FWC. In the present case, at one meeting between Sundance and the employee in which it was suggested he was not meeting projected targets – he was told “not to worry”.

2. Be Reasonable

A genuine belief by the employer of unsatisfactory performance, without defensible or justifiable evidence in support, could not amount to a valid reason for termination.

No evidence was provided in support of the reasons put forward by the employer for the dismissal. Further, the evidence that was tendered did not amount to a valid reason – leaving the FWC unable to conclude that in fact the employee’s performance was poor or that his sales were low.

3. Be Responsible

The FWC recognised that employers have a right to determine how they wish to deploy staff and dictate the way in which staff perform their jobs.  However where poor performance is raised as a reason for a dismissal, employers are responsible for ensuring that their reasons are brought to the attention of the employee and supported with objective evidence.  A mere assertion of unsatisfactory performance will not be enough.

4. Be Fair

Only holding a formal meeting after months (and years) of disagreements, and making a decision to end the employment relationship prior to the meeting was a fatal error on behalf of Sundance. As a matter of logic, procedural fairness dictates that an employee be notified of performance or conduct concerns before any decision is made based on those concerns, thereby allowing an employee an opportunity to respond to concerns.  Without a genuine opportunity to respond to either performance concerns, or the dismissal decision, the employee’s dismissal was considered unfair.

Final Word

Employment relationships, like all relationships, can breakdown.

Where unsatisfactory performance is concerned, employers run the risk of costly litigation if  they cut corners and fail to adhere to proper HR performance management procedures.

Vague performance discussions, a lack of warnings, no demonstrable evidence and a misunderstanding of procedural fairness will likely put an employer in the same hot water as Sundance found itself in.

[1] Rohan Veal v Sundance Marine Pty Ltd as trustee for Sundance Unit Trust T/A Sundance Marine [2013] FWC 2653 (10 May 2013)

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