Many employers worry that placing an employee on multiple Performance Improvement Plans (PIPs) could expose them to claims of unfair treatment or even constructive dismissal.
A recent Fair Work Commission decision has provided some reassurance.
The case involved an employee who resigned while on a second PIP within a nine-month period. He argued that the performance management process had effectively forced him to resign and that the resignation should be treated as a dismissal.
The Commission disagreed.
In reaching its decision, the Fair Work Commission found there was no evidence the employer intended to terminate the employee’s employment. Importantly, the employee still had options available to him, including awaiting responses from leadership and engaging with internal HR processes.
The decision reinforces an important principle for employers: performance management is not automatically unreasonable simply because it is ongoing. While being placed on consecutive PIPs may feel uncomfortable for employees, the Commission recognised that employers are entitled to address genuine performance concerns, provided the process is fair, reasonable and focused on improvement.
The case is also a good reminder that documentation matters. Clear records of performance concerns, coaching conversations, support provided and employee responses can be critical if a performance management process is later challenged.
For employers, the message is relatively straightforward. A well-managed performance process should be designed to help employees improve, not to push them out the door. When concerns are genuine, expectations are clear and appropriate support is provided, performance management remains a legitimate and important management tool.
To reduce risk when managing performance concerns:
- Ensure performance management is focused on improvement, not a predetermined outcome.
- Clearly communicate concerns, expectations and next steps.
- Provide employees with reasonable support and opportunities to improve.
- Keep records of performance discussions, feedback and actions taken.
- Treat resignations carefully and confirm they are genuinely voluntary.
If you’re managing ongoing performance concerns and want to ensure your process is fair, consistent and legally compliant, our team can help. Contact us on (08) 9316 9896 or get in touch.
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