Unfairly dismissed remote worker wins $13,000 compo: Lessons in handling performance management

Performance management is a challenging process, which can be further complicated when employees are working remotely.

Of course, improvements in technology have eliminated some accessibility issues, but the physical distance can mean what would ordinarily be a quick question for a colleague in the office can turn into a drawn-out series of emails or delays in order to find a time when everyone is free to join a Skype meeting.

Despite the challenges, the obligations on employers to properly performance-manage employees working remotely are no less than those working in the office. Nailing performance management and communication in remote working situations is critical to ensuring you have a productive and engaged employee, and are minimising the risks of various types of employment claims.

In a recent unfair dismissal decision, the Fair Work Commission (FWC) examined a set of circumstances involving a remote worker, performance issues and a breakdown in honest communication.

The employee was a software developer initially based in Canberra. For personal reasons, the employee relocated to Newcastle and began working remotely from a home office.

The remote working arrangement involved regular Skype meetings between the employee and his supervisor, as well as detailed emails from the employee to his employer setting out what work he had completed.

About three years into the working-from-home arrangement, the employer noticed that the employee’s active time on his computer was dropping below the employer’s expectations and was well below that of his colleagues in the Canberra office. The issue of productivity and active time was raised with the employee who took immediate steps to improve his active time, including by working voluntary overtime. In the months following, the employee’s active time exceeded the employer’s benchmark.

Despite this improvement in active time, the employer still held concerns about the employee’s overall performance. It reviewed in-house metrics comparing the employee to other software developers and believed he was not completing as many tasks as the software developers based in the office.

The chief executive and the employee’s supervisor met to discuss the employee’s performance and they agreed there was significant underperformance, which could only be addressed if the employee returned to work in the Canberra office.

An email was sent to the employee stating that if he wanted to continue working for the employer, he would need to return to working from the Canberra office in four weeks’ time.

The employee considered his situation and decided it was not possible for him to return to Canberra. After advising his employer of such, he received an email stating: “It is your choice whether to return to the Canberra office or not but if you do not return then we would appreciate your resignation.”

The employee did not resign and later received an email from the office manager, which said that his employment was terminated but he should continue working until the following Friday.

Upon termination of his employment, the employee was issued with a separation certificate that stated he had ceased work voluntarily because he was asked to return to the Canberra office and decided not to.

The employee then lodged an unfair dismissal claim with the FWC, alleging his dismissal was harsh, unjust and unreasonable.

The employer denied the employee’s allegations and claimed there was a valid reason for the dismissal in the employee’s “gross poor performance”. The employer claimed that, compared to other software developers, the employee took too long to deliver work or did not deliver work at all. It also pointed to the earlier issue with low active time.

The employee denied his performance was poor. The employee argued that, often, the work assigned to him as a single task was so large that it should have been broken into smaller tasks. The employee also argued the work he was assigned was vague, in the end, no issues with his actual work were ever raised with him. He said he never received any written responses to his work emails challenging or criticising his work. Nor did he receive any verbal criticism or counselling about his work in at least the five months leading up the termination of his employment.

The FWC found there was no valid reason for the employee’s dismissal and the basis for the employer’s position on the employee’s alleged poor performance was a flawed comparison of the employee’s metrics to those of other software developers.

The FWC found the work or productivity of software developers, in general, could not be compared based on the number of tasks completed because the nature and complexity of the work varied considerably. In short, the completion of one task was not directly comparable to the completion of another task.

The FWC commented: “It is clear that [the supervisor] and [the CEO] believed that [the employee] was not working productively, but there is no proper basis for a finding on the evidence adduced in these proceedings that [the employee] took too long to perform the tasks assigned to him.”

The FWC also examined the procedural fairness of the processes followed by the employer leading up to the employee’s dismissal.

It found the employee was never notified of the real reasons for his dismissal and was not afforded an opportunity to respond. Further, the employer never told the employee he was taking too long to complete work, nor did it establish any targets or goals for the employee to meet, or make clear to him his employment was at risk unless things improved. Accordingly, the employee was denied procedural fairness.

Having found there was no valid reason for dismissal and the employee was denied procedural fairness, the FWC reached the conclusion that his dismissal was unfair and awarded the employee $13,716.25 in compensation (the equivalent of three months’ wages).

Lessons for employers

Despite any physical distance, it is critically important that employers maintain clear and open channels of communication with employees working remotely — particularly where issues of performance are concerned.

Before commencing any performance management, employers should have a clear picture of the following.

1. What is the nature of the underperformance? Is the employee not delivering work on time? Is the employee not hitting their sales targets?
2. How have you measured the underperformance? Is the employee not achieving pre-agreed goals? Is the employee not performing as well compared to other employees? Is that comparison reasonable, taking into account variations in the complexity of tasks?
3. What are the improvements you need to see and by when? What are the expectations moving forward? What is a reasonable timeframe for the employee to achieve results?

Once those matters are clear to the employer, open and constructive communication with the employee is required. They must be able to understand the issues and what is required of them, and they must be afforded an opportunity to improve.

Where performance issues are persistent and disciplinary action (including dismissal) is a potential outcome the employee must know the seriousness of the situation and be advised that their employment is at risk.

Where employers fail to properly communicate performance issues to employees, the result may be an unfair dismissal claim with a similar outcome to this case.

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