Dealing with an adverse performance review
Regular performance reviews can benefit both employers and employees. For employers they can provide valuable information in respect to the efficacy of their business and allow the employer to communicate to employees their expectations for the period ahead. For employees they allow an insight into how their performance is assessed and valued by the employer. In their ideal form they are a frank and honest exchange on how both parties viewed the period completed and their expectations for the period ahead.
But, as with all things in life, performance reviews are very rarely perfect. This is in part due to the fact that there are no rules within current employment law about how, when or why performance reviews can be conducted. How performance reviews are conducted is therefore a question left to any applicable enterprise agreement or contract, to any applicable workplace policy or, in the absence of any of these, the whim of the employer. Notwithstanding this, there are limited protections if an employee’s performance review is unfair or excessively harsh which we will discuss in more detail below.
Is the review fair?
Aristotle is credited with the quote: “To avoid criticism say nothing, do nothing, be nothing”. It is inevitable that not all of our actions are going to be admired by our employer and, in some instances, your employer may make demands or observations that you do not agree with. It is important to understand that within the contractual relationship that defines employment, employers have the rights to:
- Give employees lawful directions, such as how, when or where they perform their work;
- To set achievable and measurable targets for performance; and
- To direct an employee to take on new duties and measure the employee’s performance against these new duties[i].
In exercising the above rights an employer may lawfully demand that an employee change the way they perform their tasks, change the types of tasks they perform or set revised targets for performance. It is entirely reasonable for an employer to want to maximise the outcomes from staff – it is also important for employers to raise issues as they arise so that they can be effectively addressed and responded to by employees[ii]. Provided any changes are lawful and do not breach any written terms, then the performance review is fair and the employee is bound by the outcome of the review.
If the outcome of the review is fair (based on the above definition) but the employee believes it adversely affects them, such as making conclusions about the character or performance of the employee that are not entirely justified, then there are still options available. The employee is entitled to respond to a review either in person or in writing. This response must be managed carefully – while all employees have a statutory right to make complaints about their employment, they may still be disciplined or have their employment terminated if the tone of the complaint is offensive, untruthful or breaches workplace policies[iii]. The best option is to ask direct questions that would allow the employer to provide as much clarity on its decision-making as possible, such as:
- You have concluded that my performance was unsatisfactory for this period. Can you please provide me the basis on which you have reached this conclusion?
- You have concluded that my performance was unsatisfactory for this period. What steps can I take over the next review period to improve my performance? What support will you offer me?
- How will you measure my performance over the next review period?
- Are all areas of review measured equally? If not, how are they rated?
Depending on any written terms in policy or an enterprise agreement, the employee may be able to have the performance review process assessed pursuant to an applicable grievance procedure. This would allow a third party to assess the outcomes of the review.
Is the review unfair?
A performance review that simply lists a catalogue of an employees supposed failings, without offering clear, measurable and achievable targets for the next review period is not likely to be considered fair.
If an employee suspects that they are being targeted for a reason other than their performance, then they may have a right under the Fair Work Act to prevent the employer from adversely affecting their employment. Employees should ask themselves:
- Has the review been made in response to (or influenced by) a right the employee exercised in the workplace, such as the right to make a formal bullying complaint or the right to raise occupational health and safety concerns[iv]?
- Has the review been applied in a way that is discriminatory? Have you been singled out in the way the review has been implemented?
- If the employee has been dismissed, was the dismissal legitimately based on poor performance or were there other circumstances which would make the dismissal ‘unjust, unfair or harsh’? Was the employee given a legitimate opportunity to respond to the issues raised by the employer in the review[v]?
- Has the review been used as a mechanism for forced resignation?
In a recent case[vi] an employee who was dismissed because he refused to comply with a performance review was awarded his job back. In the case it was heard that:
- the review was initiated due to poor performance rating. However, the rating was a company-wide rating and the dismissed employee was the only employee subject to the review;
- although the employer advised the employee they had “performance concerns”, the employer refused to provide the employee details of those concerns; and
- prior to the implementation of the plan the employee was told to resign or he would be performance managed out.
Conversely, in Ramos v Good Samaritan Industries , an employee alleged that the reason for him being placed on a performance improvement plan was because he had made a complaint about the conduct of several other staff. The Federal Court on appeal found that there had been no adverse action and that there were ‘legitmate managerial reasons’ for the way the employer conducted itself. The employee was alleged to be abusive to other staff in contravention of company policy and the employer had every right, ‘if not a duty’, to more strictly monitor his performance. The Court found that the complaint made by the employee was ultimately not one of the reasons for the employer’s conduct in placing the employee on a performance improvement plan.
Even in employment contracts that give a right to the employer to dismiss an employee on the grounds of poor performance, a unilateral right of termination will not be free from statutory claims of unfair dismissal. An employee who has been dismissed after a review and who has been employed for at least 6 months, is covered by an award or is earning less than the relevant unfair dismissal threshold limit may have a potential claim. This will also extend to cases where the employee leaves after effectively being forced to do so because of the conduct, or course of conduct, or the employer. The dismissal itself can also be unfair on procedural grounds which may include the way in which a performance review is conducted – that is, because the employee was refused a support person, the employee was refused an opportunity to respond to the issues raised or because of some other irregularity.
Most relevant to such claims in the context of a review process is that the court will consider whether there was a valid reason for dismissal and whether the employee had been warned and given an opportunity to respond to unsatisfactory performance.
At their best, performance reviews are a chance for employers to converse directly with their employees and allow each party to express what they want to achieve from the employment relationship. At their worst, performance reviews make employees feel confused about what is expected of them and victimised for expressing their views. The best way to turn a bad review into a good review is to ask lots of questions that force the employer to focus exactly on what it wants out of you, the employee.
If you need assistance with performance review, contact our Workplace Advice and Support service on 1300 273 762.
This advice is provided as general information and should not be construed as legal advice. Separate legal advice relating to the interpretation and implication of this article for your individual circumstances should be obtained.
About the Author
Joseph Kelly has had extensive experience in commercial litigation and workplace law, having advised employers and employees on all issues relating to industrial relations and employment law. Joseph has advised industry bodies, unions, employers and government and continues to run training and information seminars for legal practitioners. Joseph is currently the Principal of Kelly Workplace Lawyers. [web: www.kwlawyers.com.au]
[i] Tao Sun  FWC 3839 (16 June 2014)
[ii] Cannan and Fuller v Nyrstar Pty Ltd  FWC 5072 (19 September 2014)
[iii] Board of Bendigo Regional Institute of Technical and Further Education v Barclay  HCA 32
[iv] AMWU v Visy Packaging Pty Ltd (No 3)  FCA 525
[v] Bermingham v Kings Transport and Logistics  FWA
[vi] Frank Moretti v HJ Heinz Company Australia Ltd  FWA 1016 (7 February 2012)