FWC looks into handling of performance-based terminations in senior roles
The Fair Work Commission (FWC) recently dealt with an unfair dismissal case where a worker argued he was denied procedural fairness after being dismissed from his finance and administration manager role. He had held the position for 18 months before his termination in September 2024.
The worker claimed his dismissal was predetermined, pointing to a job advertisement posted by his employer in May 2024 for a similar role. He argued that two subsequent formal warnings were part of an artificial process designed to justify his eventual termination, rather than genuine attempts to improve his performance.
He also maintained he was never given a proper job description and was asked to perform tasks beyond his role. A key part of his argument was that any errors made were minor and recoverable, and that his annual performance review had given him a full year to meet certain goals, but he was dismissed just two months into that period.
The worker started as finance and administration manager in March 2023 at a family-owned winery in South Australia's Barossa Valley. Though bringing 15 years of hospitality finance experience, he had no prior wine industry background. The position was newly created, with plans for him to eventually take over from a company director who intended to retire from managing financial operations.
The business employed 29 permanent staff plus seasonal workers, with operations in Australia and an associated import office in the United States. The worker reported to the company president while receiving daily guidance from the company director.
During the first year, the company provided allowances for the worker to learn about seasonal business cycles and internal systems, including a week-long handover from the departing junior accountant.
In late 2023, management began noting performance concerns. These intensified in April and May 2024 when payroll errors resulted in both overpayments and underpayments to staff.
After the worker discovered and confronted management about a job advertisement for a bookkeeper/accountant position, they issued the first formal warning on 17 May 2024. As stated in the FWC's decision, the warning letter read:
"Specifically, you were made aware of detailed errors that were made in employees' pay which will affect [the employer] financially and employee morale. Generally, you were also advised that your lack of attention to detail goes across to your other duties, including A/P, A/R, and financial reporting."
The FWC emphasized the significance of accurate payroll processing: "An underpayment, no matter how minor, is a breach of the employer's legal obligations, and an overpayment no matter how small or great, creates a practical and reputational challenge for the employer to manage with the relevant staff member if the business seeks re-payment."
Following the first warning, management expected improvement by June 2024. When concerns about financial reporting and inventory control persisted, a second warning was issued in August 2024.
The FWC noted the importance of the worker's role: "It ought to have been reasonably apparent to [the worker] that his end of financial year responsibilities were significant to [the employer], that [the managers] required results to be reported to enable the owners to be fully informed."
The worker failed to meet specific deadlines for providing an inventory control plan or explain the delays. The FWC viewed this as particularly significant given his senior position.
The FWC concluded the dismissal was not unfair, stating: "Considered overall, I find that whilst the incidence and seriousness of some of the employer's allegations of poor performance were overstated, there was a valid reason for dismissal based on the combined effect of [the worker's] failures and his lack of proactivity and responsiveness."
The decision emphasized that improvement opportunities were provided: "Section 387 requires a global assessment of all relevant factors. Considered overall, even though some employers may have given [the worker] further opportunities to meet the standard of performance required, he was given plenty of opportunity to do so."
The FWC also addressed the worker's unauthorized removal of company documents: "Should this issue have required determination, I find that such conduct was misconduct and a valid reason for dismissal... It was a breach of [the worker's] employment contract and his duty of fidelity."
