2 December 2009
Employees commonly express a lack of confidence in their Agency's management of underperformance. The State of the Service Report 2008–2009 states that only 25% of employees considered that their Agency dealt with underperformance effectively.1
Managers in the Australian Public Service (APS) commonly report that dealing with underperformance is one of their greatest challenges. One reason for this is the perception that underperformance processes are difficult and complex.
This briefing outlines:
- what effective management of underperformance consists of from a management perspective
- the legal framework for effective management of underperformance, including legal risks
- steps which can be taken to minimise legal risks in managing underperformance.
Object of Public Service Act
One of the main objects of the Public Service Act 1999 (the PS Act) is to provide a legal framework for the effective and fair employment, management and leadership of APS employees (PS Act, s 3(b)). Consistent with these objects:
- performance management, including management of unsatisfactory performance, should be an aspect of the effective management and leadership of APS employees
- systems for performance management should be fair.
Efficient and effective service
Another of the main objects of the PS Act is to establish an apolitical public service that is efficient and effective in serving the Government, the Parliament and the Australian public (PS Act, s 3(a)).2
The APS Values recognise the importance of achieving results and managing performance in the APS for the purpose of achieving this object.3 In this context, underperformance procedures must be seen as a tool in helping to ensure that APS agencies efficiently and effectively serve the Government, the Parliament and the Australian public.
APS Values binding
Agency Heads and APS employees are required to behave in a way that upholds the APS Values and the integrity and good reputation of the APS (PS Act, ss 13(11) and 14).
The APS Value contained in s 10(k) of the PS Act is that the APS focuses on achieving results and managing performance. The Public Service Commissioner is required by the PS Act to issue directions in writing in relation to each of the APS Values for the purpose of:
- ensuring that the APS incorporates and upholds the APS Values, and
- determining, where necessary, the scope or application of the APS Values (PS Act, s 11(1)).
The Commissioner's directions on the APS Value in s 10(k) of the PS Act are set out in cl 2.12 of Chapter 2 of the Public Service Commissioner's Directions 1999 (the Commissioner's Directions). The Commissioner's Directions state (cl 2.1) that the purpose of the Chapter 2 is to:
ensure that Agency Heads and APS employees understand their responsibilities in relation to the APS Values
set out the minimum requirements that an Agency Head must meet in upholding and promoting the APS Values,4 and
set out the minimum requirements that an APS employee must meet in upholding the APS Values.5
Agency Heads and APS employees are required by the PS Act to comply with the Commissioner's Directions (PS Act, s 42(2)).
Having regard to the minimum requirements in cl 2.12, performance management systems in an Agency should be directed at ensuring, among other things:
- a culture of achievement
- a fair and open performance management system which:
- covers all APS employees
- provides each APS employee with a clear statement of performance expectations and an opportunity to comment on those expectations (Commissioner's Directions, cl 2.12(1)(b), 2.12(1)(e), 2.12(2)(a)(ii), 2.12(2)(b)).
One of the APS Values is that the APS has leadership of the highest quality (PS Act, s 10(1)(h)). Leadership is important to the successful implementation of the APS Value of focusing on achieving results and managing performance.6
Under the PS Act, APS managers have the following responsibilities:
- Agency Heads are required to uphold and promote the APS Values (PS Act, s 12).
- SES employees have a function of promoting the APS Values. The PS Act provides that the function of the SES is to provide a group of APS employees each of whom, within his or her Agency, by personal example and other appropriate means, promotes the APS Values and compliance with the Code of Conduct (PS Act, s 35).
APS managers, particularly Agency Heads and SES employees, who fail to adequately deal with poor performance are not upholding the APS Value in s 10(1)(k), that the APS focuses on achieving results and managing performance.
Importance of effective performance management
In its report Performance Management in the Australian Public Service: A Strategic Framework (2001) the Management Advisory Committee identified performance management as fundamental in the APS.7 The Committee stated (Executive Summary, p. 7) as follows:
Performance management is an essential tool that is relevant at all levels in all Australian Public Service (APS) agencies. It provides a means to improve organisational performance by linking and aligning individual, team and organisational objectives and results. It also provides a means to recognise and reward good performance and to manage under-performance.
The Committee highlighted how important it was for management to adequately address underperformance to ensure the credibility of performance management systems overall (para 2.5). It identified management of performance as a key challenge and concluded that leaders need to give it high priority and ensure that results are achieved.8
In its State of the Service Reports the Australian Public Service Commission continues to highlight that there is room for improvement in the management of underperformance in the APS.9
Impediments to effective management of poor performance
The Management Advisory Committee identified a number of problems in achieving effective management of poor performance. It is worth setting out in full the section of the Committee's report (p. 28, section 2.2.5) about managing underperformance:
There is no doubt that staff become cynical when poor performance is not dealt with. Staff surveys show this consistently. While inadequate recognition of good performance is often a cause of concern, the inability of an organisation to manage ineffectiveness and poor performance creates even stronger resentment. This cynicism does affect the credibility of performance management systems.
A number of factors can work against the effective management of poor performance. One is a lack of preparedness by managers to take the issue on.
Another inhibiting factor may be the procedural or process frameworks that agencies establish to handle under-performance. Processes obviously need to meet basic principles of procedural fairness. This is important from an administrative law point of view and a basis for staff trust in the system. In many cases the procedures will have been subject to negotiation as part of any agency bargaining and it may have been difficult to negotiate streamlined arrangements. As a result many agency Certified Agreements have provisions beyond what is necessary and create an overly cumbersome framework.
- The period during which the employee's performance is monitored has been extended and become quite lengthy;
- The formal reporting and responding requirements are more than required (for example reporting on a weekly basis); and
- Very complex processes are put in place for arriving at a determination, once the assessment is complete and the report made to the decision-maker.
The bottom line is that management's failure to address under-performance in most workplaces, across all sectors, is one of the persistent factors that undermines the credibility of performance management systems overall. Agencies could re-visit the issue, particularly in the context of negotiating new certified agreements.
The Committee also included the following quotes from staff in its report (p. 28, section 2.2.5):
- Managing under-performance is one of the hardest skills of a manager.
- Managers aren't prepared to confront hard issues and then issues of rights and remedies arise and … an awareness of the legal pitfalls … It was a weakness in managers to tolerate weak performance but with more experience managers will do it better.
- I believe that the term 'managing under-performance' is code for supervisors not being prepared to tell people that they are not performing satisfactorily, so they hide behind guidelines and booklets. It is code for saying that you cannot sack public servants, which is incorrect. It means you are not prepared to do it.
The recent report of the Advisory Group on Reform of Australian Government Administration (October 2009) identifies underperformance procedures as a barrier to efficiency. The Report states:
Unnecessary red tape in the form of cumbersome regulatory or administrative arrangements is another possible barrier to efficiency, absorbing resources that could otherwise be used more productively. Onerous agency-level process requirements for dealing with underperformance is an example of a particularly tricky form of red tape posing a barrier to efficiency–not only is considerable time and effort required to follow through processes, but they also discourage public service managers from actually addressing some cases of underperformance. A lack of appropriate training and management skills may be another factor.10
APS managers' concerns about the complexity of formal underperformance procedures should not prevent them from managing poor performance effectively and should not be an excuse for failing to effectively manage underperformance.
What should not happen
Employers should take action to deal with performance concerns only where their concerns are genuine. Taking action in the absence of genuine performance concerns can result in the constructive dismissal of the employee and possible proceedings for unfair termination of employment or proceedings for wrongful dismissal.11
A concern commonly expressed in the APS is that managers do not take adequate action in response to genuine performance concerns.
If sound management policies and practices are in place, APS agencies should not experience undesirable cases of the following kind:
- An alleged chronic underperformer for many years has been rated satisfactory or better because no supervisor has been prepared to be honest with the employee, so there is no documentation to support the generally held view that the employee is a poor performer.
- After a year of poor performance, an employee is surprised to be rated unsatisfactory.
- A long-standing employee who has been doing the same job with the same performance standards for many years, and who has been previously rated as satisfactory or better, is rated unsatisfactory by a new supervisor, even though there has been no change in the work or performance requirements for the employee's duties.
- A poor performer is rated as satisfactory or better because of extenuating personal circumstances.12
Effective management of underperformance
Effective management of performance, including poor performance, is primarily a matter of using good management practices rather than focusing on process or legal issues.
An effective manager will use techniques such as good supervision, coaching and mentoring. Some policies and practices for effective performance management are listed on p. 14 below.
Where good supervision and other administrative actions do not succeed, the manager may need to have recourse to available legal powers.
Legal powers to deal with underperformance
The PS Act is the primary source of legal power to deal with underperformance in APS agencies. It is the only one discussed in detail in this briefing.
The following can also be a source of power or can impact on the exercise of powers under the PS Act:
- industrial instruments under the Workplace Relations Act 1996 (the WR Act) or the Fair Work Act 2009 (the FW Act)
- terms and conditions of employment which are enforceable in contract.
Range of powers under PS Act
Under the PS Act, the following actions are potentially available to deal with performance problems:
- directions about the employee's performance of duties13
- action for possible breach of the APS Code of Conduct
- reassignment of duties
- reduction in classification
- termination of employment.
Where an employee wilfully refuses to satisfactorily perform their duties, the employee can be given written directions about performance of work and a warning about the consequences of a breach of the directions. If the directions are breached then consideration should be given to the commencement of a formal process to determine whether or not there has been a breach of the Code of Conduct (PS Act, s 13(5)).
Code of Conduct
APS employees are subject to the following potentially relevant conduct requirements:
- An APS employee must act with care and diligence in the course of APS employment (PS Act, s 13(2)).
- An APS employee, when acting in the course of APS employment, must comply with the PS Act, PS Regulations and Commissioner's Directions (PS Act, s 13(4)).
- An APS employee must comply with any lawful and reasonable direction (PS Act, s 13(5)).
- An APS employee must at all times behave in a way that upholds the APS Values (PS Act, s 13(11)). As noted, the APS Value in s 10(k) of the PS Act is that the APS focuses on achieving results and managing performance.14
Code of Conduct or underperformance process?
Action for possible breaches of the Code of Conduct is potentially available where an APS employee fails to:
- properly participate in the Agency's performance management system as required by the Commissioner's Directions, or otherwise fails to comply with the Commissioner's Directions15
- perform duties with care and diligence
- comply with a lawful and reasonable direction about performance of duties
- uphold the APS Values.
Generally, performance problems are better dealt with as performance issues rather than as a possible breach of the Code of Conduct for a failure to perform duties with care and diligence. However, the Code of Conduct may be appropriate where the employee is wilfully refusing to satisfactorily perform duties, where there is a deliberate or flagrant failure to act with care and diligence, or where the employee has had repeated underperformance problems (such as lateness or excessive leave) which appear to be within the employee's control and which have previously been dealt with as underperformance.16
Reassignment of duties
An Agency Head has a general discretion to determine from time to time the duties of an APS employee and the place or places at which the duties are to be performed (PS Act, s 25).
It will be appropriate in some cases to consider reassignment of duties before commencing formal underperformance action. For example, reassignment of duties should be considered if the reason for a performance problem is that:
- there is a personality conflict between the employee and a supervisor, or
- the employee's work-related qualities, including relevant personal qualities, are not a good fit with their job.
Reduction in classification or termination of employment
An Agency Head has power to reduce the classification of an APS employee or terminate the employment of an APS employee on the following grounds:
- non-performance of duties
- inability to perform duties because of physical or mental incapacity (the incapacity ground), or
- unsatisfactory performance of duties.17
The non-performance ground is available where an employee does not perform the relevant duties at all: for example, where the employee does not attend work.
The incapacity ground is available where:
- the employee is unable to perform duties, and
- the inability is because of physical or mental incapacity.
Additional requirement in the case of potential termination of employment of employees who are CSS or PSS members
In a case where an employee who is a CSS or PSS member faces potential termination of employment on the incapacity ground, there is an additional requirement: that the relevant superannuation authority must have issued a certificate to the effect that the member is entitled to invalidity retirement benefits under the relevant superannuation scheme. This is a precondition for termination of employment under the PS Act on the incapacity ground (Superannuation Act 1976, s 54C; Superannuation Act 1990, s 13).
Unsatisfactory performance ground
APS agencies should rely on the unsatisfactory performance ground only where the non-performance and invalidity grounds are not applicable. APS agencies can clearly rely on the unsatisfactory performance ground where the employee is able to perform duties, and is performing duties, but where the employee's performance of duties is unsatisfactory.
The unsatisfactory performance ground generally will not be available where the employee has an inability to perform duties and the inability is because of physical or mental incapacity.
In some cases where an employee suffers from an illness, the employee does not have an inability to perform duties because of a physical or mental incapacity. In such cases, the incapacity ground will not be available. The unsatisfactory performance ground is potentially available in such cases, even though the illness to some extent contributes to performance problems (provided that the illness does not cause an inability to perform duties).
Agencies need to exercise extreme caution where they propose to rely upon the unsatisfactory performance ground in cases where an employee has a medical condition. In particular, agencies need to be careful to ensure that their actions are not harsh, unjust or unreasonable and that they do not breach anti-discrimination protections.
What is 'unsatisfactory performance of duties'?
The term 'underperformance' is not used in the PS Act. The term used in the PS Act is 'unsatisfactory performance of duties'.
The PS Act does not define 'unsatisfactory performance of duties'. In accordance with its ordinary meaning (see Macquarie Dictionary online), performance of duties will be unsatisfactory where:
- performance is not satisfactory
- performance does not satisfy specified desires or requirements, or
- performance is inadequate.
In accordance with its ordinary meaning, 'unsatisfactory performance' would extend to any situation where an employee does not have the capacity or ability to satisfactorily perform duties.18 However, in the PS Act, the unsatisfactory performance ground is contrasted with the incapacity ground. As noted, the unsatisfactory performance ground generally will not be available under the PS Act where the employee is unable to perform duties because of physical or mental incapacity.
Duties which are not satisfactorily performed
The duties that are not being satisfactorily performed must clearly comprise the duties of the employee determined by the Agency Head or delegate in accordance with s 25 of the PS Act. Agency Heads or delegates making decisions about reduction in classification or termination of employment on the ground of unsatisfactory performance should have regard to the duties assigned to the employee in accordance with s 25.
It is desirable for APS agencies to ensure that the work performed by an employee is accurately reflected in the duties assigned in accordance with s 25 and that performance plans and other performance measures reflect the duties assigned under s 25.
The test for unsatisfactory performance of duties is an objective test. An employee can be performing unsatisfactorily even though the employee is doing their best in all the circumstances.
A Full Bench of the Australian Industrial Relations Commission in Crozier v Palazzo Corporation Pty Ltd19 considered an application for unfair dismissal under the WR Act. One issue under the WR Act was whether there was a valid reason for termination of employment related to the employee's capacity. The Full Bench held that:
- a key requirement of the employee's position was to generate new business
- this requirement of the position was reasonable
- the employee had failed to meet the key requirement despite his best endeavours, and
- there was a valid reason for termination of employment related to the employee's capacity.
The Full Court of the Federal Court, on judicial review of the decision of the Full Bench, rejected the argument that, if an employee worked to their full capacity and was the best worker that he or she could be, the employer could have no valid reason related to the capacity of the employee to terminate the employee's employment.20 The Full Court held that:
- the word 'capacity', as used in the relevant provision of the WR Act, meant the employee's ability to do the work which they are employed to do
- a reason will be related to the capacity of the employee where the reason is associated or connected with the ability of the employee to do their job
- there can be a valid reason for the termination of an employee's employment where they simply do not have the capacity or ability to do the job.
Standard of proof
The standard of proof in determining whether there has been unsatisfactory performance of duties is the ordinary civil standard of the balance of probabilities. The more serious the possible consequences of a finding of unsatisfactory performance of duties, the higher the level of satisfaction required by the decision maker.21 In determining whether there has been unsatisfactory performance of duties such as to warrant reduction in classification or termination of employment, a high level of satisfaction is required.
Source of procedures
The PS Act itself does not set out procedures for making decisions about reduction in classification or termination of employment on the ground of unsatisfactory performance of duties.
The general practice of APS agencies has been to include underperformance procedures for non-SES employees in industrial instruments made under the WR Act and FW Act.
Agencies commonly also have administrative or policy documents which set out underperformance procedures.
Application of procedures
APS underperformance procedures set out in industrial instruments have generally been developed for application to ongoing employees. It is generally desirable that such underperformance procedures not apply to probationers or non-ongoing employees.
If underperformance procedures in industrial instruments do not make it clear that they do not apply to probationers or other specified classes of employees then the procedures may well apply to all employees in the Agency, including probationers and non-ongoing employees.22
If underperformance procedures set out in industrial instruments are to not apply to probationers or non-ongoing employees, the industrial instruments should make this clear.
Code of Conduct and illness: traps to avoid
Underperformance processes should generally not be used in circumstances where:
- action for breach of the Code of Conduct should be taken in respect of the particular conduct of concern, or
- there is a health issue that should be dealt with by way of management of a medical problem.
Agencies should be careful not to adopt provisions in industrial instruments or in policy documents which are unnecessarily prescriptive or which inappropriately constrain the Agency. For example, provisions which preclude all Code of Conduct action against an employee merely because there is a formal underperformance process in place would not be appropriate. Also, it would not be appropriate to have provisions which could preclude the Agency from pursuing, or continuing to pursue, a formal underperformance process merely because the employee has suffered, or is suffering, some degree of illness.
Procedures in industrial instrument
Potential consequences of failure to adhere to procedures in industrial instrument
APS Agencies should adhere to procedures in an industrial instrument. If Agencies fail to do this they may face the following consequences:
- proceedings in Fair Work Australia (FWA) under dispute resolution provisions in an enterprise agreement under the FW Act23
- proceedings under the FW Act for civil penalty remedies against the employer for any contravention by the employer of a term of an enterprise agreement under the FW Act24
- any decision to reduce the classification of an employee will be a breach of the PS Act and will be ineffective by virtue of s 23(5) of the PS Act
- any decision to terminate the employment of a non-ongoing employee will be a breach of the PS Act by virtue of reg 3.11(2) of the PS Regulations, and will potentially be ineffective.
Where provisions of PS Act and Regulations require adherence to procedures in industrial instrument
Reduction in classification
Section 23(5) of the PS Act provides that:25
If a relevant industrial instrument contains procedures to be followed when reducing the classification, then a reduction is of no effect unless those procedures are followed.
Section 23(5) gives to an industrial instrument a legal force and effect which is additional to the legal force and effect which it has under the WR Act or FW Act. Section 23(5) makes it clear that procedures in the industrial instruments referred to in the provision must be followed and that, if those procedures are not followed, the decision to reduce the classification of an employee is of no effect.
Agencies should note that underperformance procedures in industrial instruments generally apply to both decisions to reduce classification and decisions to terminate employment. Agencies should strictly adhere to those procedures so as to ensure the validity and effect of any decision to reduce classification.
Termination of employment of non-ongoing employees
Section 29(4) of the PS Act provides that the PS Regulations may prescribe procedures applicable to the termination of the engagement of non-ongoing APS employees. Regulation 3.11(2) of the PS Regulations provides as follows:
If an employment arrangement sets out procedures that apply to the termination of the non-ongoing APS employee, the procedures apply to the termination of the engagement of the employee unless the procedures:
(a) are prohibited content (within the meaning given by the Workplace Relations Act 1996); or
(b) would be prohibited content of that kind if the employment arrangement were a workplace agreement.
The employment arrangements referred to in reg 3.11(2) include certain industrial instruments under the WR Act. They also include a determination of employment conditions under s 24(1) or (3) of the PS Act or a written contract of employment.26
It seems that the effect of s 29(4) and reg 3.11(2) is to require that procedures in the employment arrangements referred to in the provision, being procedures that apply to the termination of the employment of a non-ongoing APS employee, must be followed.
Unlike s 23(5), reg 3.11(2) does not specify the consequences of a failure to adhere to relevant procedures in an employment arrangement. It is therefore a matter of statutory construction, having regard to the intention of Parliament, as to whether the departure from a procedure referred to in reg 3.11(2) will mean that the decision to terminate the employment of a non-ongoing employee is invalid and of no effect.27
It is prudent for APS agencies to assume that a decision to terminate employment will be liable to be found invalid by a court in judicial review proceedings for any non-trivial failure to comply with the procedures applied by reg 3.11(2).
Where provisions of PS Act and Regulations do not require adherence to procedures in industrial instrument
Termination of employment of ongoing employees
Section 29 deals with the power to terminate employment and sets out the only grounds for termination of employment of ongoing APS employees. Section 29 contains no provision equivalent to s 23(5) or reg 3.11(2). There is no requirement in the PS Act or Regulations that procedures set out in an industrial instrument (or any other document) must be followed in the termination of employment of ongoing employees.
In the absence of a requirement in the PS Act, it is arguable that a failure to adhere to the procedures should not render a decision to terminate employment invalid.
There is some judicial authority to support the view that breaches of industrial instruments under the WR Act are generally enforceable only by way of remedies provided for in the WR Act and not by way of judicial review remedies.28
Under the FW Act, the Federal Court and Federal Magistrates Court have been given broad powers to grant injunctions to prevent, stop or remedy the effects of a contravention of the FW Act and therefore to enforce compliance with industrial instruments (e.g. modern awards and enterprise agreements) (ss 545, 564, 568).
It would be prudent for APS agencies to assume that, where there is a failure to adhere to any applicable procedures in an industrial instrument, there is a risk that a decision to terminate employment will be found by a court in judicial review proceedings to be invalid for a failure to comply with the administrative law requirement to observe procedures required by law (Administrative Decisions (Judicial Review) Act 1977, s 5(1)(b)).
Procedures in administrative or policy document
Procedures binding under industrial instrument
In some Agencies the underperformance procedures which are set out in an administrative or policy document are either incorporated in an industrial instrument or are given legal force by the industrial instrument. For example, the industrial instrument can state that an underperformance process will be carried out in accordance with the procedures set out in a specified policy document. Under such an industrial instrument, any failure to follow the procedures set out in the policy document is a breach of the industrial instrument.
Procedures not binding under industrial instrument
In some Agencies the underperformance procedures set out in a policy document are not legally enforceable under any industrial instrument.
Administrative law requirements
Even where procedures are not legally enforceable under an industrial instrument, there is potential for the procedures set out in policy documents to give rise to procedural rights which are enforceable in accordance with the requirements of administrative law.
In some circumstances, administrative law will require that a decision about reassignment of duties, reduction in classification or termination of employment not be made in a manner that departs from any of the procedures set out in a policy document unless the decision maker has first afforded procedural fairness. In cases where it applies, procedural fairness can require that, before the decision maker proceeds with any process that is contrary to the procedures set out in the policy document, the decision maker must give the affected employee notice of an intention to depart from the procedures and a reasonable opportunity to comment. The decision maker must consider any comments of the employee.
It is generally prudent for a decision maker to adhere to procedures set out in a policy document and to only depart from such procedures if the departure from the procedures has been done in a manner which accords with procedural fairness requirements.
In some cases, procedures set out in an industrial instrument or policy document can be contractually binding.29 For example, there can be express or implied agreement that terms and conditions set out in an employment policy document form part of the terms and conditions of the contract of employment.30 The courts will imply such agreement if it can be objectively implied from all the circumstances that there was agreement between the parties to create legally binding obligations by reference to the terms and conditions as set out in the policy document. There can no such implication if it is contrary to legislation or to the express terms of the contract.
Terms and conditions of employment which form the contract of employment between the employer and an employee give rise to potential remedies in contract law. If the employer breaches a term or condition of employment, it is potentially subject to an action for damages.31
Avenues of redress
An employee has a wide range of avenues to challenge decisions relating to their performance, including:
- judicial review by the Federal Court or Federal Magistrates Court on the ground of failure to comply with the requirements of administrative law32
- review of action under the PS Act and Regulations in cases other than termination of employment (PS Act, s 33; PS Regulations, Div 5.3)
- remedies under FW Act for unfair dismissal on the ground that the termination of employment was harsh, unjust or unreasonable, including remedies by way of reinstatement and payment of compensation33
- remedies under FW Act for breach of civil penalty provisions under the FW Act, including remedies by way of payment of a penalty, reinstatement and payment of compensation34
- remedies under the FW Act for breach of workplace protections, including the following actions by the employer:
- adverse action against the employee because of the employee's physical or mental disability, including (but not confined to) action by way of termination of employment35
- termination of employment because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the FW Regulations36
- remedies for disability discrimination under the Australian Human Rights Commission Act 1986 and the Disability Discrimination Act 1992 (the DD Act), subject to the inherent requirements exception and the unjustifiable hardship exception (DD Act, ss 15, 21A, 21B):
- in cases of termination of employment, where the employment is terminated on the ground of disability
- in cases other than termination of employment, where there is adverse differential treatment of an employee in employment on the ground of their disability
- damages for breach of contract, including for wrongful dismissal where the termination of employment is legally invalid: for example, for breach of procedural fairness requirements.37
Effective performance management
Management of performance is a management matter, not a legal matter, although adherence to legal requirements is important. Sound management policies and practices will help to minimise legal risk exposures.
Publications of the Australian Public Service Commission contain very useful guidance on the management issues involved: in particular, see Sharpening the Focus: Managing performance in the APS (2006).
Paul Vermeesch specialises in administrative law and employment law issues.
- See the Australian Public Service Commission State of the Service Report 2008–2009 at p. 100. These reported perceptions are similar to reports for previous years.
The State of the Service Report 2005–2006 states at p. 165 that only 25% of employees (being non-manager respondents to the state of the service survey) agreed that their Agency dealt with underperformance effectively.
The State of the Service Report 2007–2008 states at p. 147 that 25% of employees did not think that their manager dealt appropriately with employees who perform poorly and that 37% of employees did not think that their Agency dealt with underperformance effectively.
See also the annual State of the Service Report Employee Survey Results.
- For a broad perspective on APS-wide performance management and accountability issues, see Australian Public Service Commission, Contemporary Government Challenges: Delivering performance and accountability (2009). It discusses development by the APS of more varied accountability and performance management arrangements better suited to new modes of policy implementation.
- The APS Values are set out in s 10(1) of the PS Act. APS Values of particular relevance are as follows:
(a) the APS is apolitical, performing its functions in an impartial and professional manner
(e) the APS is openly accountable for its actions, within the framework of Ministerial responsibility to the Government, the Parliament and the Australian public
(f) the APS is responsive to the Government in providing frank, honest, comprehensive, accurate and timely advice and implementing the Government's policies and programs
(g) the APS delivers services fairly, effectively, impartially and courteously to the Australian public and is sensitive to the diversity of the Australian public
(h) the APS has leadership of the highest quality
(k) the APS focuses on achieving results and managing performance.
- Agency Heads are required to uphold and promote the APS Values: s 12 of the PS Act.
- APS employees are required at all times to behave in a way that upholds the APS Values: s 13(11) of the PS Act.
- In its report Performance Management in the Australian Public Service–A Strategic Framework (2001), the Management Advisory Committee identified management of poor performance as a key challenge and concluded that leaders need to give the management of underperformance high priority and ensure that results are achieved: see the Executive Summary at p. 12; also section 2.2.3 on 'Management buy in'.
See also the Australian Public Service Commission, Sharpening the Focus–Managing Performance in the APS (2006).
- The Management Advisory Committee is a forum of Secretaries and other Agency Heads established under s 64 of the PS Act to advise the Australian Government on matters relating to the management of the Australian Public Service.
- See the Executive Summary at p. 12; see also section 2.2.3 on 'Management buy in'.
- See, for example, the State of the Service Report 2007–2008 at p. 147. The Report also says that the employee survey results suggest that it is possible for agencies to improve employees' perceptions of how underperformance is handled. However, the Report makes clear that there is a real issue and not just a problem in perception.
- See Reform of Australian Government Administration: Building the world's best public service (October 2009) at p. 44.
- Where an employer makes a serious and baseless allegation against an employee, this can be a breach of the implied contractual condition of trust and confidence and will entitle the employee to treat themselves as wrongfully dismissed. An employee who is wrongfully dismissed can sue for damages for wrongful dismissal for breach of the contract of employment.
In Courtaulds Northern Textiles Ltd v Anderson  IRLR 84, an assistant manager said to an employee, 'You can't do the bloody job anyway', not believing this to be true. This was found to be a constructive dismissal. The case was cited with approval by the Federal Court in Hem: in the matter of Caulco Trading Pty Ltd v Cant  FCA 81 at .
The decision of the Supreme Court of South Australia in State of South Australia v McDonald  SASC 219 suggests that in public sector contracts of employment the employer is not subject an implied contractual duty of trust and confidence. The Court held that the State as employer was not subject to an implied contractual duty of trust and confidence under Mr McDonald's contract of employment as a teacher in the public sector.
- Ratings should reflect actual performance even where there are extenuating reasons for poor performance, such as health or other personal circumstances. Where there are extenuating reasons for poor performance, this will be relevant to the formulation of the appropriate management response.
- Section 13(5) of the PS Act recognises that employees can be given directions.
The employment contract, not the Public Service Act 1922, has been held to be the source of power to give directions: Bayley v Osborne (1984) 4 FCR 141 at . See also McManus v Scott-Charlton (1996) 70 FCR 16.
- Clause 2.12 if the Commissioner's Directions sets out minimum requirements that an employee must meet in upholding the Value in s 10(k), as discussed above. See also the Values set out in footnote 3 above.
- Clause 2.12(2)(c) of the Commissioner's Directions. A failure to comply with the Commissioner's Directions is a failure to comply with s 42(2) of the PS Act and a breach of s 13(4) of the PS Act.
- In Rothfield v Australian Bureau of Statistics (3 February 2003) Print PR927240, the AIRC upheld a decision by an APS Agency to terminate employment on the ground of misconduct related to an underperformance process.
- Section 23(4) of the PS Act in relation to reduction in classification. Section 29(3) of the PS Act in relation to termination of employment.
The grounds of termination set out in s 29(3) are the only grounds for termination of an ongoing APS employee. A non-ongoing APS employee can have their employment terminated on the grounds set out in s 29(3), but the grounds of termination are not confined to the grounds set out in s 29(3).
- See Crozier v Palazzo Corporation Pty Ltd Print S5897, (2000) 98 IR 137; and Crozier, in the matter of an application for Writs of Certiorari and Mandamus against the AIRC  FCA 1031, as discussed below.
- Crozier v Palazzo Corporation Pty Ltd Print S5897, (2000) 98 IR 137 at 149 and 150.
- Crozier, in the matter of an application for Writs of Certiorari and Mandamus against the AIRC  FCA 1031.
- Briginshaw v Briginshaw (1938) 60 CLR 336.
- In Wilson v Australian Taxation Office (2002) 112 IR 24, a Full Bench of the AIRC held that underperformance procedures in a Certified Agreement under the WR Act applied to a probationer.
- Part 6-2 of the FW Act. In relation to industrial instruments under the WR Act, see ss 709–712 of the WR Act.
- Sections 50 and Part 4-1 of the FW Act. Available remedies include payment of a penalty, reinstatement and/or payment of compensation. The FW Act also provides for protection of workplace rights. For example, s 340 precludes discrimination against, victimisation of, or other adverse treatment of an employee because of the employee's workplace rights, including rights under an industrial instrument.
The WR Act provided for penalties and other remedies for breach of an industrial instrument under the WR Act.
- Section 23(6) of the PS Act defines an 'industrial instrument' to mean:
(a) a modern award; or
(b) an enterprise agreement; or
(c) a workplace determination; or
(d) a WR Act transitional instrument; or
(e) a transitional APCS.
Section 23(6) of the PS Act includes definitions of 'transitional APCS' and 'workplace determination'. Section 7 of the PS Act includes definitions of a 'modern award', an 'enterprise agreement' and a 'WR Act transitional instrument'. A 'WR Act transitional instrument' is defined by s 7 of the PS Act to mean an award, a workplace agreement, a pre-reform certified agreement, an AWA or a pre-reform AWA within the meaning of those terms in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
- An 'employment arrangement' is defined by the PS Regulations to mean:
(a) an award; or
(b) a workplace agreement; or
(c) a pre-reform certified agreement; or
(d) an AWA; or
(e) a pre-reform AWA; or
(f) a determination under subsection 24 (1) or (3) of the Act; or
(g) a written contract of employment.
The industrial instruments referred to in the definition of an 'employment arrangement' are themselves defined by the PS Regulations. They are various types of industrial instruments under the WR Act. They do not include industrial instruments under the FW Act.
- Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. Compare Bromet v Oddie  FCAFC 213. Compare Lhose v Arthur (No 3)  FCA 1118 at [53(b)], where the Court held that a failure to comply with mandatory procedures applicable to a Code of Conduct process resulted in a sanction decision being invalid for jurisdictional error.
- See Wattyl Ltd v Australian Liquor, Hospitality and Miscellaneous Workers Union  IRCA 597; 134 ALR 203 at 216 (Madgwick J); cf. Actew Corporation Ltd v Pangallo (2002) 127 FCR 1 at – (Allsop J). See also Soliman v University of Technology  FCA 1512 at – (Jagot J).
The Court held at  that the weight of authority establishes that the remedies available for contravention of a certified agreement, at least for a person who is bound by, but is not a party to, the agreement are those provided for by the WR Act. The Court appears to have left open whether a person who is bound by, and is a party to, an industrial instrument can enforce rights under the instrument by way of judicial review.
In O'Halloran v Wood  FCA 544 at – the Federal Court found it unnecessary to decide, and left open, the question whether it is appropriate for the Court in judicial review proceedings concerning a decision to terminate employment to deal with matters concerning the interpretation of, or compliance with, a certified agreement.
Under the Administrative Decisions (Judicial Review) Act 1977 the Federal Court and Federal Magistrates Court have no jurisdiction to review any decision made under an industrial instrument under the WR Act or FW Act: see item (a) of Schedule 1 to the ADJR Act; see also O'Halloran v Wood  FCA 854.
- Procedures set out in an industrial instrument under the WR Act or FW Act are not automatically part of the terms and conditions of the contract of employment.
An award is not automatically part of the terms and conditions of the contract of employment and will not be part of the contract unless expressly agreed or unless its implication by way of implied terms is necessary for the reasonable or effective operation of the contract in all the circumstances: see Byrne and Frew v Australian Airlines Limited (1995) 185 CLR 410; and BHP Iron Ore Pty Ltd v AWU  FCA 430.
A similar approach applies to certified agreements, which, like awards, are industrial instruments under the WR Act: see ACTEW Corporation Ltd v Pangello (2002) 127 FCR 1; and Soliman v University of Technology  FCA 1512; compare O'Halloran v Wood  FCA 854 and  FCA 544.
- Goldman Sachs JB Were Services Pty Ltd v Nikolich (2007) 163 FCR 62 is an example of a case where employment policies were found to constitute contractual terms and conditions of employment. In implying agreement, the Court had regard to the text of documents, the purpose and object of the arrangement and all the surrounding circumstances.
- McDonald v State of South Australia  SASC 134 is an example of a case where the employment policies were found not to be part of the contract of employment–but their breach was found to constitute a breach on the part of the employer of an implied contractual duty of trust and confidence and this led to a substantial award of damages by the court. On appeal the decision was set aside by the Supreme Court of South Australia in State of South Australia v McDonald  SASC 219. The Court held that the State as employer was not subject to an implied contractual duty of trust and confidence under Mr McDonald's contract of employment as a teacher in the public sector.
- The Federal Court and Federal Magistrates Court have judicial review jurisdiction under the Administrative Decisions (Judicial Review) Act 1977. The Federal Court also has jurisdiction under s 39B of the Judiciary Act 1903.
- Part 3-2 of the FW Act. The following cases are examples of cases where the AIRC upheld decisions by APS agencies to terminate employment on the ground of unsatisfactory performance of duties:
– Singh v Australian Taxation Office (15 July 1998) Print Q3695
– Buerckner v Australian Taxation Office (8 December 2000) Print T4239 (a case concerning underperformance in the context of probation conditions)
– Ray v Department of Defence (5 December 2001) Print 912115
– Duma v Centrelink (8 February 2002) Print PR914162
– Ockendon v Australian Taxation Office (13 January 2003) Print PR925954
– Uitdenbogerd v ATO  AIRC Print 39 PR985312.
In Rothfield v Australian Bureau of Statistics (3 February 2003) Print PR927240 the AIRC upheld a decision by an APS Agency to terminate employment on the ground of misconduct related to an underperformance process.
- Part 4-1 of the FW Act. Civil penalty proceedings under the FW Act are available against the employer for any contravention by the employer of a term of an enterprise agreement under the FW Act: s 50. The WR Act provided for penalties and other remedies for breach of an industrial instrument under the WR Act.
- Section 351 of the FW Act. The protection is subject to some exceptions, including where the adverse action is because of the inherent requirements of the particular position concerned. 'Adverse action' is defined in s 342.
See previously ss 659(2)(f) and 659(3) of the WR Act.
- Section 352 of the FW Act. Previously ss 659(1) and 659(2)(a) of the WR Act.
- See Jarratt v Commissioner of Police for NSW (2005) 224 CLR 44.
Under general contract principles, if the employer breaches a term or condition of employment, and the breach is serious, such that it would be regarded by the courts as a repudiation of the employment relationship, the employee can treat the employment relationship as having been terminated and can sue for damages for wrongful dismissal.
- A termination of employment for unsatisfactory performance can be found by FWA to be harsh, unjust or unreasonable, among other things, if the employee was not given an opportunity by the employer to respond to any reasons related to the capacity or conduct of the employee, if there is an unreasonable refusal by the employer to allow the employee to have a support person present to assist at any discussions relating to dismissal or if the employee was not warned about the unsatisfactory performance before the dismissal: s 387(c), (d) and (e) of the FW Act.
A warning by the employer generally should state the particular shortcoming which the employee needs to correct. If the employee has not been given a reasonable opportunity to address what management considers to be the employee's shortcomings, FWA can find the dismissal to be unfair and it can order that the employee be reinstated to their
former position: see for example Rouse v Minit Australia Pty Limited (2 September 1997), Print P5080.
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