A recent unfair dismissal decision by the Fair Work Commission (“FWC”) highlights the need for employers to consider how they manage employees and whether they are setting unreasonable performance expectations during COVID-19.

The decision in Clair Peterson v Kizuri Capital Pty Ltd [2020] FWC 5332  provides a case study on how employers need to approach the management of performance in the shifting working environment caused by COVID-19.

Background

The case of Clair Peterson v Kizuri Capital Pty Ltd concerned an employee who was summarily dismissed by her employer for serious misconduct due to performance, raising questions over whether the employer had set unreasonable performance expectations in the COVID-19 environment.

The employee was a field sales executive for the employer, effectively working as a sales representative in South Australia, Tasmania and Northern Territory. The responsibility for Tasmania was later reallocated and the employee was given responsibility for Queensland, although her remuneration was not increased despite the increase in workload. As part of her role, the employee was required to provide daily and weekly sales reports.

In March 2020 the employer notified all staff that there would be a 20% reduction in pay and a 20% reduction in work hours due to the impacts of COVID-19. However, despite the reduction in hours and pay, the employee was required by the employer to balance the competing and conflicting obligations of servicing all of her customers to the same extent (including on her days off), completing her existing reporting obligations and complying with new reporting obligations that had been brought in during COVID-19.

The employee had been formally warned on two occasions that she had not been providing her weekly and daily sales reports on time. The employer had also received some negative feedback from certain clients about the employee’s service, with complaints about her failure to return calls.

The employee was dismissed on 14 April 2020 for serious misconduct, with the employer claiming that she had not performed her role satisfactorily and relying on the following reasons:

• failure to provide weekly sales run sheets in a timely manner;
• failure to provide satisfactory representation to clients; and
• a poor attitude and lack of respect for management.

The employer claimed that it had applied a fair disciplinary approach to the performance concerns, relying on two performance meetings in which the issue of reporting concerns and client engagement were raised. One of these meetings was conducted via telephone, which the employee attended while she was in her car as part of her travelling role.

Decision

The FWC held that the dismissal was unfair as there was no valid reason for the termination, and the process of termination was not procedurally fair. While the failure to meet her reporting obligations was found to be a performance failure, the FWC considered that the employer had created a “cocktail of unreasonable expectations” on the employee. These unreasonable performance expectations were due to the employee’s “heavy” workload, as she was required to perform effectively the same role and to undertake administrative tasks outside of her ordinary hours. The employer had also failed to take into account the employee’s “natural anxieties” about COVID‑19, in terms of its impacts on her job security if the business was to be severely impacted.

Ultimately, the FWC found that the expectations of the employee’s performance could not be objectively assessed against “orthodox” working hours or standard performance criteria as she had been subject to sudden changes in her working hours, pay and job security. The FWC found that her performance issue warranted a business response in the form of counselling or a warning, but not dismissal. The decision to terminate the employee was “rash and impaired”.

Unreasonable performance expectations

Employers need to adopt flexible and adaptable strategies when making management decisions during COVID-19, which includes consideration over whether unreasonable performance expectations are being set. In this case, the employer could have used different strategies to approach the issue of the employee’s performance, including counselling and formal warnings, instead of going straight for dismissal.

Key takeaways:

• The Fair Work Commission will consider performance expectations, particularly in the COVID‑19 environment.
• Employers need to consider other tools such as counselling and performance management to address issues of performance.
• Summary dismissal should be reserved for the most serious cases of misconduct.

People + Culture Strategies