Published 4 July 2017
In a recent case, Etienne v FMG Personnel Services Pty Ltd  FWC 1637, the Fair Work Commission found an employee who underwent informal performance management was not unfairly dismissed.
Mr Etienne was employed by FMG Personnel Services Pty Ltd (FMG) as an Inventory Controller. In September 2015, Mr Etienne’s supervisors believed he was not adequately performing his duties and had received complaints from FMG employees and clients. In one incident, Mr Etienne was said to have hung up on a client during a heated phone discussion and clients and employees avoided dealing with him.
As a result, the Acting Supervisor of the Inventory Management Team was appointed to coach Mr Etienne and improve his work performance. No improvements were made during this time and Mr Etienne became sensitive to criticism, believing he was being singled out. In response to this, the Acting Supervisor organised for the whole Inventory Team to undergo a training session offsite, at significant expense to FMG. This did not improve Mr Etienne’s performance.
In November 2015, the Warehouse and Logistics Manager for FMG was approached regarding Mr Etienne’s performance. It was suggested Mr Etienne be placed on a written performance improvement plan (PIP) as informal coaching and management were not leading to any improvements in performance.
The decision to place Mr Etienne on a PIP was delayed after Mr Etienne injured his back while at work and made a complaint of alleged harassment. It was believed the PIP may be considered a response to Mr Etienne’s injury or complaint. Mr Etienne was consequently subject to additional one-on-one coaching.
In late July 2016, Mr Etienne was placed on a PIP. He was informed of ongoing concerns regarding his performance, told of the steps the company had taken in an effort to improve his performance and what was required of him to meet expectations.
The day after the meeting, Mr Etienne emailed FMG regarding the PIP and did not acknowledge any issues with his performance or efforts by the company to improve his performance. The FMG People and Employee Relations Manager was subsequently consulted regarding Mr Etienne’s response and Mr Etienne was given an opportunity to respond.
On 3 August 2016, Mr Etienne attended to meeting to discuss the PIP. FMG maintains Mr Etienne did not respond or try to make a case that the employment relationship was workable. Consequently, FMG decided to terminate his employment.
In this meeting, FMG advised Mr Etienne of employee assistance programs and chaplaincy services and offered for the dismissal to be recorded as a resignation.
Mr Etienne claimed he was unfairly dismissed, denied being told his employment was terminated and denied being trained or coached by FMG for the purposes of performance management.
The Fair Work Commission (the Commission) found there was a valid reason for dismissal in that FMG had genuine concerns about Mr Etienne’s past and future performance.
The Commission found the actions by FMG were properly characterised as informal performance management, a method FMG believed would be the most successful way to improve Mr Etienne’s performance.
The Commission stated that “while useful from an evidentiary perspective, performance management need not occur in a formal documented manner”.
Further, the willingness of FMG to have Mr Etienne’s dismissal recorded as a resignation demonstrated a “genuine desire … to achieve the best possible outcome for him”.
The Commission found the dismissal was not harsh, unjust or unreasonable and the application was dismissed.
Whilst formal performance management is not strictly necessary when an employee is performing poorly or below expectations, it is beneficial. Decisions in the Fair Work Commission relating to informal performance management are not always consistent with this decision, with findings that the employee must be fully aware of their need to improve their performance otherwise face the risk of termination of their employment. It is good practice to have well documented evidence of performance management and attempts made to assist an employee improve their performance as this will assist an employer to defend any subsequent unfair dismissal claim made by an employee.