Employee performance issues – beware of Award provisions

A recent matter before the IRC provides a timely reminder to all Councils of the need to carefully take into account the detailed provisions set out in the State Award before taking action to terminate staff on performance grounds. This case also confirms the need to comply with the stepped procedure set out in the Award, even when employees are exited during their probation period.


Facts


This case concerns a council employee, JB, who was terminated on performance grounds following the end of his six months’ probation period. JB’s employment commenced with a 3-month probationary period. Due to performance issues, this probation period was extended for an additional 3 months to allow JB to demonstrate his improvement rather than terminate his employment.


During the second probation period, JB was thought to have not improved and the council sought to dismiss JB at a meeting during his probation period. JB avoided the meeting, taking sick leave for over a week and ignoring any attempts by Council staff to contact him. Once JB returned from work, after the probation period had finished, he was informed by the council that his employment was terminated with immediate effect and he would receive a payment in lieu of notice and payment of any untaken sick leave.

JB subsequently sought a claim for unfair dismissal.


Determination


Commissioner Sloan accepted that the Council had legitimate concerns with JB’s performance and had a legitimate basis for terminating his employment. Based on the overall employment relationship, the Council demonstrated every effort to extend fairness to JB.


However, cl 36 of the Local Government (State) Award 2017 (“Award”) - now cl 37 of the 2020 Award - requires that in cases of poor performance, the employer must engage in a three-stage process. Namely, Clause D provides:


  1. an initial communication, which is anticipated to be verbal but which nevertheless must be recorded in writing, as to the nature of the unsatisfactory performance and of the required standard to be achieved;

  2. a “formal warning” and counselling. The employer must keep a written record of the warning (which must in any event be in writing) and counselling; and

  3. a “final warning” in writing giving notice of disciplinary action should the unsatisfactory work performance or conduct not cease immediately.

The Commission found that the Council failed to provide JB with a final warning before terminating his employment, breaching cl 36 of the award. Despite informal verbal warnings relating to JB’s work performance, the Council failed to expressly articulate and record in writing a warning that could constitute a final warning. The Commissioner also made note that nothing in the Award precluded a probationary employee from the protections under cl 36 and although in this case the probationary period had finished before the termination, the Council would still be under the same requirement to provide a final warning.


Key Takeaways


This case reiterates the importance of complying with all necessary legal requirements when terminating an employee’s employment. This includes understanding whether an award is applicable to an employee and, if so, following the relevant disciplinary procedures. Sometimes what an employer considers to be an official warning or final warning may not meet the strict requirements of the Award.


It is also important to follow all requirements for probationary employees. Relying on the fact that an employee is still within their probation period should not encourage complacency when considering terminating the employee. This case confirms that even in matters where employers are fair, reasonable and just when terminating an employee, employers may still be liable for not following the terms of the Award.


Bowen v City of Ryde Council (No 2) [2020] NSWIRComm 1076

https://www.caselaw.nsw.gov.au/decision/175918d640c4118507d595b5







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