Two managers sue as employer’s performance management goes wrong
The Employment Relations Authority (ERA) recently dealt with two claims against an employer where employees argued they had been unfairly treated during their employment. Both employees claimed they received inadequate support and faced unreasonable demands that ultimately led to the end of their employment.
One employee argued she was constructively dismissed after being unexpectedly placed on a performance improvement plan and having her role changed without consultation. The other employee claimed she was unjustifiably dismissed during a trial period after being told to resign or face impossible performance targets.
The employer initially responded to these claims but failed to properly participate in the investigation process, with no representatives attending the ERA meeting. This left the employees' sworn evidence largely unchallenged.
The employees worked for Employment Group Limited (EGL), a recruitment company with operations in Australia and New Zealand. They were based in the Auckland Airport area office, which had around five to eight staff members during their employment.
The business development manager began her role in January 2023 without receiving a job description. Her primary responsibility was to obtain new clients. She regularly met with the general manager, Melinda Connelly, every Friday, but these meetings were cancelled around March and April 2023.
Throughout her employment, she sought support on administrative matters such as obtaining GST numbers for clients as part of EGL's vendor setup process. Her requests were either ignored or met with criticism for contacting the general manager too frequently.
On 21 June 2023, she was unexpectedly placed on a performance improvement plan. This came as a surprise as she believed she was performing well. After completing the plan, she faced complaints from workers about non-payment for work and when she sought assistance with these issues outside her area of responsibility, the general manager was dismissive.
The branch manager started her role in May 2023, managing the New Zealand office. From the beginning, she noted several concerns about her employment conditions.
The ERA noted that upon starting her employment, the branch manager "was concerned about several issues that arose which included her not receiving a job description about her day-to-day role. She was also not spoken to by [the employer] about any performance milestones expected of her."
She received no initial job training and was directed to online induction videos that provided no assistance with her daily responsibilities. She also observed concerning management practices, including hearing the general manager's "comments about her practice of 'firing' employees without notice."
As her employment progressed, she discovered that the office had been underperforming due to customer-related issues that predated her employment. When she raised these issues with the general manager, they were ignored, leaving her feeling unsupported.
The situation escalated when she was invited to a same-day meeting with no context provided. During this meeting, the general manager told her she "should be respectful and resign from her employment by 28 July 2023" or face new KPIs that would be impossible to reach within the timeframe given.
After reviewing the evidence, the ERA determined that the business development manager was constructively dismissed because EGL's actions were unreasonable and compelled her to resign.
The Authority found that EGL "did not articulate its expectations to [the business development manager] about what her role entailed and the performance requirements of the role; carried out a performance improvement exercise without any previous warning to her about her performance; unilaterally changing the title of her role without consultation with her... and failing to properly communicate with her even when she had made reasonable attempts to communicate with [the employer] on important business issues."
These actions, combined with advertising her role while she was on sick leave, led the ERA to conclude that "EGL's unreasonable conduct during her employment led to her stress and compelled her to resign."
For the branch manager, the Authority found that the 90-day trial period in her employment agreement was not properly executed. There was "an onus on [the employer] to properly explain the application of the provision to [the branch manager] and the possibly of her employment being terminated under the provision."
The Authority noted that "[the general manager's] actions at the 26 July meeting in asking [the branch manager] to resign or face unreasonable KPI's was clearly an attempt to coerce [the branch manager] to resign."
Based on these findings, the ERA awarded compensation to both employees for the harm caused by EGL's actions.
The business development manager was awarded $15,000 in lost wages for the two months it took to find new employment after resigning. She also received $20,000 in compensation for humiliation, loss of dignity, and injury to feelings.
The Authority acknowledged that "although [the business development manager] had not provided any medical evidence associated with her stress, I accept she suffered distress because of [the employer's] actions." Her evidence showed she suffered stress leading to weight loss and hair loss.
The branch manager received $30,000 in lost wages for three months without employment, plus $20,000 in compensation. The ERA noted that "given the situation she was in and how her employment ended, she was upset and became very angry" and as a solo parent, the sudden end of employment created financial strain that forced her to withdraw her KiwiSaver due to hardship.
These cases highlight the importance of properly supporting employees, clearly communicating performance expectations, and following correct procedures when terminating employment, particularly when using trial periods.
