HR Staff n’ Stuff has supported many clients who have needed to implement Performance Improvement Plans (PIPs). We always highlight the need to follow process to protect both your business and the employee. When used correctly, they can have incredibly positive outcomes but when used inappropriately, they can cost a business an absolute fortune!
A recent case proves how costly it can be if you get it wrong.....
A Performance Improvement Plan (PIP) is a tool to give an employee with performance shortcomings the opportunity to succeed. It may be used to address failures to meet specific job goals or to amend and modify poor behaviours that are not acceptable within the workplace. It’s a fair process that ensures under-performing and poorly behaved staff are given clear instructions and ample opportunity to make changes that will allow them to flourish within a business. If an employee chooses not to take up this opportunity, a business case can then be made to remove the individual and reduce the chance of an unfair dismissal case hitting your desk. Sounds simple enough right!
If ever there was a case to prove that process as well as proper use of a PIP is important, the $205k damages awarded to an employee of Rotary International’s South Pacific and Philippines office in Sydney should serve as a warning to all.
In this case, the aggrieved employee held an executive position and his remuneration level meant that he earnt over the high income threshold, which means he was not eligible to make an unfair dismissal claim. However, the employee alleged that the PIP process was used to bully him, and this allowed for an adverse action (general protections) claim to be lodged. Any employee has the right to lodge an adverse action / general protection claim and unlike an unfair dismissal claim, there is no limit on the monetary cap that courts can award and applicants can claim for pain and suffering.
The basic elements of the case are as follows:
Had Rotary followed a proper process the end result may have been very different – they could have had an employee back on track in terms of performance or they would have evidence proving reasonable grounds to terminate.
Performance Improvement Plans should be seen as a positive and useful mechanism that can allow a business to drive better outcomes for their people. No one sets out to fail deliberately and there can be valid reasons for poor performance, as simple as confusion about what is required to deliver the required outcomes. In order to make change, the leader needs to communicate clearly the expectations moving forward and needs to establish what tools the employee will require to make the changes required – is it further training and support, clarity around their actual areas of responsibility, defined goals? Work out what they need and what can be delivered with the aim of setting the employee up to succeed.
Fair Work states that a business is not legally obliged to give an employee warning prior to termination however they “should give the employee a chance to fix any performance issues.” It is fundamentally fair to do so but it could save you and your business a lot of time and money!
Fair Work legislation not only manages claims for wrongful dismissal, but also dictates procedural fairness processes. In addition, with an increase in general protections claims which have no eligibility criteria, it is important for all businesses to understand their obligations in managing employee performance and behaviour appropriately so as to meet your obligations and avoid a claim being made against your business.
If you require support or guidance with implementing a Performance Improvement Plan, contact the HR Staff n’ Stuff team and we can have a confidential discussion about what is required and how to move forward.
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