The case of the poorly managed performance improvement plan

In an ironic turn of events, a poorly implemented and followed performance improvement plan (PIP) has resulted in an employer having to pay $205,342 to an employee who brought a successful adverse action claim in the Federal Circuit Court of Australia.

What happened in this case?

For over 10 years, Mr Pezzimenti was an office manager of Rotary International (Rotary). He was dismissed in June 2017 for alleged poor performance and subsequently commenced adverse action proceedings against Rotary.

It all started in October 2016, when Mr Pezzimenti was placed on a PIP, for a period of 4 months. During the PIP, Mr Pezzimenti made a formal bullying and harassment complaint against his supervisor, who had placed him on the PIP. The complaint alleged that the PIP was not being properly implemented and it was a sham to terminate his employment.

After a series of discussions regarding the PIP, including one where Mr Pezzimenti's supervisor said to him "Frank you didn’t need to go to the extent of putting in a bullying complaint against me”, Mr Pezzimenti was told, on 15 March 2017, that one item of the PIP was still outstanding.

On 27 March 2017, Mr Pezzimenti completed the final requirement of the PIP and later provided his supervisor a document identifying the achievements against each of the four deliverables of the PIP.

However, Mr Pezzimenti's supervisor ultimately found that he failed to meet the deliverables of the PIP and he was suspended.

On 11 April 2017, Mr Pezzimenti commenced proceedings seeking to restrain Rotary from dismissing him. Following the commencement of proceedings, Mr Pezzimenti's supervisor, and Rotary's HR director reviewed his leave records and email account and issued him with a show cause letter. Rotary asked Mr Pezzimenti to show cause why his employment shouldn’t be terminated for reasons including;

• inaccuracy in his leave records,
• breaching confidence in an email, and
• failing to meet the standards expected in the PIP.

When Mr Pezzimenti failed to attend the show cause meeting, his employment was terminated.

The Decision

Mr Pezzimenti filed an adverse action claim, seeking relief against Rotary. While Mr Pezzimenti originally sought relief to restrain Rotary from dismissing him, he did not move on this relief. The claim alleged, among other things, that Rotary took adverse action against Mr Pezzimenti because he made a bullying complaint against his supervisor.

Unsurprisingly, Rotary argued that while Mr Pezzimenti was threatened with dismissal, it was not because he had made the complaint, but rather because of his unsatisfactory progress under the PIP, breaches of confidence and failure to comply with the show cause letter.

In his decision, Judge Driver observed that:

1. while Rotary's issues with Mr Pezzimenti had some substance, and the PIP was justified, at least in the form it was originally conceived, "the goalposts of the PIP themselves changed… It was as if Mr Pezzimenti was from that point, set up to fail";
2. after the initial process of the PIP, Rotary went looking for additional reasons to dismiss Mr Pezzimenti, including, reviewing his leave records to find out if he was absent from work without proper authorisation. Judge Driver held that this had an "air of artificiality to it"; and
3. it was of significance that there were three individuals who were responsible for the dismissal and not all of them were called to give evidence.

Judge Driver held that Rotary had contravened the general provisions under the Fair Work Act 2009. Rotary was ordered to pay $205,342 in compensation, being equivalent to his annual salary.

Practical Tips: How do you ensure a PIP doesn’t result in an adverse action claim?

1. Arrange a face-to-face meeting with the employee that you propose to put on a PIP and offer them the assistance of a support person.
2. Explain, where appropriate, the issues that you have with the employee's performance or conduct.
3. Formulate a set of definite objectives that the employee needs to achieve over a set period of time. An "assessment period" will make it realistic for the employee to achieve. Ask for the employee's input on the objective. Make sure to only set objectives for the employee that are achievable within the assessment period of the PIP.
4. Finalise the PIP. Ensure the parties sign a copy of the minutes/a summary of the meeting and keep a copy on file for your records.
5. Regularly monitor the employee's progress over the assessment period.
6. Provide the employee with support, as required, throughout the assessment period.
7. Meet again with the employee at the end of the assessment period and determine whether the performance or conduct objectives have been achieved. If this is coupled with an adequate organisational support structure, you will ensure the employee has the best chance of improving their performance and conduct.
8. If any decision is made with respect to the employee and the PIP, limit the number of individuals making that decision as it could mean all decision makers will be required to give evidence in possible legal proceedings.