Employers still have legal obligations when dismissing a wayward worker
Employers still have legal obligations when dismissing an underperforming employee. According to the FWC, “There is no doubt that incompetence and underperformance on the part of an employee constitutes a valid reason for the dismissal…”. However, in a recent decision, the dismissal of an unsatisfactory employee was deemed unfair. At the time of his dismissal the applicant, who was employed as a Business Development Manager, was on a six-month probation period.
On 7 February 2020, the respondent spoke to the applicant about another employee, who had been dismissed for poor performance. During this meeting, the applicant indicated his belief that he too would be dismissed, as his average monthly sales equated to just 23% of his monthly target. However, he received no explicit warning of this from the respondent.Two months later, the applicant was called to another meeting, where his employment was immediately terminated.
After his dismissal it was found that, while the applicant’s total quotes amounted to $801,918, he only secured $65,358 in gross sales – during a period where he was expected to secure at least $300,000. With this, the respondent alleged that the applicant had artificially inflated his sales pipeline, by providing quotes without being requested to and failing to remove quotes which he knew were unsuccessful.
The Commission found that this, together with his failure to meet performance targets, constituted a valid reason for his dismissal. However, given the respondent became aware of the applicant’s deceitful practice after his dismissal, it could not possibly have notified the applicant of this reason before dismissing him. Further, without being notified, the applicant had no opportunity to respond to this reason.
The Commission also found that the applicant had not been formally warned about his performance, nor placed in a performance improvement program. With the extent of these defects, the Commission found that the applicant was denied procedural fairness and unfairly dismissed under the Fair Work Act s 385. Compensation of $5,769.23 gross was ordered to the applicant.
Key Takeaways for HR:
- An employer is not required to retain underperforming employees. However, this does not excuse employers of their legal obligations surrounding the employee’s dismissal
- The reason must be clarified prior to the dismissal. Further, the employee must be notified of and given an opportunity to respond to this reason
