AREEA employee relations consultant Simon White details a recent case that illustrates that appropriate performance management should not labelled adverse action.

The Federal Magistrates Court has recently upheld a ruling that a company was not in breach of the Fair Work Act’s general protections provisions when performance managing an employee.

In this case, the applicant claimed that he was forced to resign from his position as store manager of a retain chain.

He claimed that after exercising his workplace right and lodging a complaint with the company’s chief executive officer against the divisional operations manager and the retail operations manager, the company took adverse action against him.

The alleged adverse action included: numerous warning letters requiring him to sign a performance management contract; a possible store transfer; refusal of time-off in lieu; and constant monitoring which he believed undermined his ability to run the store.

After a series of events which ended in a suspension on full pay whilst complaints against him were investigated, the applicant resigned, stating ‘this decision has come as a direct result of the unbearable workplace conditions and pressures that I have experienced and endured which you have imposed upon me’.

The applicant alleged constructive dismissal, in breach of ss.340 and 342 of the Fair Work Act. He was seeking:

• Compensation for past and future loss of income amounting to $1,370,316 (together with interest);
• Compensation for past and future loss of superannuation benefits amounting to $124,647 (together with interest);
• Compensation for past unpaid claimed overtime amounting to $,419 (together with interest);
• The Company pay legal and court costs;
• The Company pay pecuniary penalties that the Court considers appropriate;
• The Company pay pecuniary penalties to him;
• Compensation for counselling and medical costs; and
• The Company be ordered to pay the maximum penalty in relation to each contravention of the civil remedy provision or provisions in item 11 of the table in s.539(2).

The applicant first had to prove that he had a workplace right to make a complaint. Following this, the onus was on him to prove that the alleged adverse action was made as a result of the complaint filed with the CEO.

It was held that the applicant did have a workplace right but failed to prove that the adverse action was a result of his complaint.

The Federal Magistrates Court ruled that the applicant’s claim for compensation had failed and that ‘the only loss suffered… is in consequence of his own act in resigning’.
The case was appealed in the Federal Court where Justice Barker upheld the decision. In his ruling, Justice Barker stated that in this case there can be little doubt that the respondent had ‘real concerns about the performance of the appellant’ and that ‘each of the steps of which the appellant complains had a real management justification’.

Further to this, Justice Barker found that there is ‘nothing in the evidence to suggest that up to and including the events of 30 and 31 March 2010, any of the dealings by representatives of the respondent with the appellant were motivated in any respect by the workplace right possessed by the appellant’.

Lessons for Employers

• Employers should ensure that they are complying with company policy in regards to performance management and termination of employees. This should focus on the procedural fairness in addition to the substance of the issues.
• The key in defending adverse actions when the onus is on the employer is the quality and quantity of documentation demonstrating the reasons for performance management.

Click here to view the case decision.