Introduction

When considering whether a dismissal is unfair, the Fair Work Commission (the “FWC”) must be satisfied that the dismissal was harsh, unjust or unreasonable. An important consideration in this decision is whether the employee was afforded procedural fairness. A recent decision of the FWC demonstrates how, despite the existence of a valid reason, a lack of procedural fairness can result in significant compensation for unfair dismissal.

Background

A South Australian based engineer was summarily dismissed by his employer following a series of performance issues and concerns. The employee was an experienced engineer who worked for the employer’s business which was centered around the engineering and manufacturing of city buses, school buses and double decker busses. Over the course of 2021, the employee’s managers developed concerns regarding the quality and efficiency of his work. The managers had received feedback from other members of the company that they did not have confidence in the employee’s work which resulted in them correcting or redoing work so as not to delay production.

Between April and May 2021, the employee had two meetings with management where he was told his work was below standard and was told that his work would be allocated and monitored. However, there was never any formal performance management plan issued. In June 2021 there was a fleet wide issue across specific buses, which required an enhanced level of welding beyond industry norms. The error was investigated by the employer and traced back to the work done by the employee. When questioned by his manager the employee responded that he believed he was simply tasked to make the drawing according to industry norms. The manager did not return to the employee to discuss the broader impact of the error on production, but met with other managers and came to a decision that the employee would be dismissed for failure of his duty.

The managers called the employee into a meeting without any prior notice about the meeting or its subject. The managers informed the employee that due to continuing performance concerns including the latest issue regarding the welding, it was decided that he would be dismissed immediately with payment in lieu of notice.

Outcome

The FWC found that there was a valid reason for the dismissal due to the proven and continuous instances of the employee’s work being of a sub-standard and his failure to meet deadlines and timelines. The FWC commented that these deficiencies did not meet up to the standard that would be expected of an engineer of such seniority and experience. However, the FWC found the lack of particularity as to the reasons for the dismissal added to the decision’s harshness and unfairness. In addition, the FWC found that the employee was not given an opportunity to respond.

The FWC referenced both the performance management and the dismissal regarding this issue. The performance management was described as ‘ham-fisted’ as there was no referrable benchmark in which performance was to be assessed. Furthermore, the dismissal was predetermined prior to the dismissal meeting. Both these factors lead the FWC to conclude that there was a lack of procedural fairness as the employee was prevented in responding to both the conduct issues and the dismissal decision.

The FWC awarded the employee $21,471.15 in compensation, equivalent to 11 weeks’ pay, but considered that reinstatement was inappropriate due to the employee’s lack of insight as to his own performance issues.

Key takeaways

• Despite having a valid reason for dismissing an employee, the FWC may find that a dismissal was harsh, unjust or unreasonable if employees are not afforded procedural fairness.
• Employers should address issues of underperformance proactively and communicate regularly with employees.
• When assessing performance deficiencies, it is important to ensure that performance is measured with reference to a criteria or benchmark of improvement.