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Perspective

Consistency saves the day in performance improvement plan dispute

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Employers have been provided with a timely reminder as to why persistence and consistency with performance improvement plans can result in liability benefits beyond actual performance improvement for employees and pathways to lawful termination.

In the recent case of Jayde Paranihi v Roy Hill Holdings Pty Ltd [2021] FWC 1493 (30 March 2021), Roy Hill’s relied on its consistent approach with its PIPs to successfully defend a general protections claim brought by an employee who had resigned.

Roy Hill had implemented the PIP as an alternative to an agreed exit with an employee who had engaged in misconduct and had performance issues. Roy Hill streamlined the PIP and provided a clear, concise direction to the employee to perform one task each day against a measurable KPI. The employee was then measured against this KPI monthly, achieving the KPI in some months, and failing to achieve it in others.

The employee alleged the PIP had caused him stress and alleged a delayed PIP meeting caused by administrative errors of Roy Hill pushed him over the edge, leaving him no choice but to resign.

Given the recent decision of Milford v Coles Supply Chain Pty Ltd & Anor [2020] FCAFC 152, Commissioner Williams was first required to determine whether the Employee had been dismissed as a preliminary jurisdictional point.

In finding the employee could have taken alternative action to resigning and was not, therefore, dismissed for the purposes of the FWA, Commissioner Williams found the PIP to be ultimately reasonable, emphasising the consistent use of PIPs at Roy Hill, the proper purpose of performance improvement for which the PIP was pursued, and the setting of a clear and consistent target favourable to the employee.

Lessons for employers:

  • Consistency is key – having structured processes around PIPs and implementing those consistently across employees provides a strong defence to employee allegations of contrived or targeted PIPs.
  • PIPs need to be clear and the directions to the employee easily implemented. Focusing on what tasks an employee needs to demonstrate actual improvement in will benefit the employee and make the management of the PIP easier.

Written by Mathew Reiman

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Our team are here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas or Kim McLagan.

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