An employee who was let go after being put on three different performance improvement plans gets his job back.

In a matter heard before the NSW Industrial Relations Commission (IRC) last week, a senior technical policy advisor at the state’s Environment Protection Authority (EPA) who was dismissed for poor performance was reinstated, without compensation for lost salary, after the NSW IR commissioner found EPA had unfairly dismissed him.

The employee’s mental health had deteriorated following a series of personal changes, including being diagnosed with Legionnaires’ disease during the 2016 Sydney outbreak and sleep apnoea, selling his family home, the death of his father-in-law and having his wife undergo surgery and lose her job, all of which resulted in a drastic decline in his performance.

To the IRC, the employee argued that the quality of his work had previously been up to the organisation’s standards and admits it slipped following these events, but says he received a lack of support in his efforts to improve. According to the IRC decision, the employee’s supervisor had flagged performance issues since 2014, when the employee first joined the organisation.

Serious shortcomings

After receiving his potentially life-threatening diagnosis and being unable to work for five weeks in March 2016, the employee spent a period of time in hospital. He came back to work on 24  March 2016 at reduced hours under a return to work plan. 

Over the following year, the personal circumstances mentioned above unfolded and the employee was eventually diagnosed with major depression, irritable moods and poor concentration levels. The IRC was satisfied that this is what led to the employee’s unsatisfactory quality of work.

In the period between September 2017 and January 2019, the employee had been placed on three performance improvement plans (PIPs), two informal and one formal. The first informal plan stretched over a nine week period, the second was just over four weeks and the final formal improvement plan went over 12 weeks.

The IRC said there were “serious shortcomings” in his performance during this time and that it was reasonable for the employer to expect he would have been more “proactive in having his mental health issues properly diagnosed and treated in a more timely manner.”

This last point is why the employee didn’t receive any compensation for lost wages. However, evidence presented by three different doctors was enough to tie his underperformance to his mental health condition and justify his reinstatement.

Getting PIPs right

As HRM previously reported, not getting performance improvement plans right can end up costing your business big time (sometimes to the tune of hundreds of thousands of dollars). If circumstances were a little different, EPA could have been asked to pay compensation for psychological damage caused by the dismissal. Especially considering that the employee alleges the PIPs were flawed as he was “judged only with a pass/fail and not supported to improve [his] performance.”

The employee also stated to the IRC that:

• There was no review of his first two informal PIPs to assess if they had been working
• Feedback from his supervisor was unclear, contradictory to previous guidance and unreasonable 
• None of the plans contained an improvement pathway and he received no indication of whether (any) progress had been made
• His proposed approach to changing his work flow in an effort to improve was rejected
• His supervisors behaved offensively, undermined his confidence and harmed his reputation
• After his diagnosis and treatment, the employee’s request to extend his formal performance plan was denied

Importantly, the employee says that when he asked both the HR representative and his supervisor, “What does the formal process offer to help me improve that the informal processes did not offer?” they were both unable to provide a satisfactory response or clarify what kind of supervision he would receive.

“The formal improvement plan was punitive and set me up to fail,” the employee said in his submission.

“Throughout the performance improvement plans I was stressed. This is known to my supervisor. I was also dealing with undiagnosed depression. My supervisor failed to apply internal guidance on mental health and use it to prompt me to consider the extent of impact on me from my stress.”

The employee’s supervisor told the IRC he was not advised by the employee that his medical or personal issues were having an impact on his performance and that he treated the personal issues with “concern and empathy”.

In speaking of his second informal plan, the employee said “there were no documented outcomes from the meetings and no flexibility to modify the approach. I was given no feedback regarding progress towards the goal, only advice making clear where I was not meeting the desired performance.”

In determining his decision, commissioner Murphy said that while EPA complied with its obligations in determining that the employee’s work was missing the mark, he found some of the supervisors criticisms of the worker were “misguided or verged on nit picking”. It suggested that any future performance plans be managed by someone else and that another colleague be present during all meetings.

Are informal plans worth it?

This case highlights that while informal performance plans are often a good way to nip a problem in the bud before it snowballs, they can get complicated. 

Employees who are signed onto an informal plan should have it made very clear to them that if they don’t meet the agreed benchmark for improvement that a formal performance plan will follow. It should be thought of as preliminary action before a formal plan, not an all encompassing solution to poor work quality/behaviour.

According to Birkbeck University of London, the recommended time frame to run an informal PIP is, at a minimum, six weeks. This amount of time allows for necessary coaching/training and then for the skills acquired to be applied to the job. 

At the six week mark, the employee and their manager should have a meeting and come to one of the following conclusions:

• If they’ve reached the agreed upon benchmark, this should be made clear to them and they should be encouraged to stay on this track
• If they’ve shown some but not all signs of improvement, the informal process can be slightly extended
• If little or no improvements have been made, the issue should be escalated to a formal plan

While it appears that EPA adhered to these suggestions in allocating the appropriate time frames for the plans to be carried out, and attempted to offer a second informal PIP before implementing a formal one, it’s clear that a lack of clarity around the expectations of the employee is what caused this case to make its way through the commission.