Employers must warn workers of bad performance before termination, unfair dismissal case shows

An unfair dismissal case decided on Friday serves as a reminder small businesses need to clearly communicate a record of poor performance to any employee over a period of time, according to legal experts.

Rohan Veal was terminated from his role as a yacht and boat salesman from Sundance Marine in September 2012, for what the company claimed was poor performance, low sales results, and “refusal to do what is required to grow sales”.

The termination letter also came after Veal sent a letter to his employers regarding a proposed employment contract, which the company interpreted as a threat that he would resign unless his “demands” were met.

But in the judgment, Commissioner Bissett found no evidence was ever put forth by Sundance Marine regarding the alleged poor performance.

“Nothing has been put that establishes the required performance levels of [Veal] and which measures his actual performance against these standards,” he found.

However, Bissett also said he accepts Veal “did not conduct himself in a way preferred by [Sundance Marine]”. Sundance Marine said it wanted Veal to be more proactive in contacting customers rather than relying on text messages and email.

“The extent to which this impeded business growth is, however, difficult to determine,” Bissett found.

Bissett also found it was of some concern Sundance Marine didn’t raise these issues, and as a result, found Veal was not given any warning about his unsatisfactory work performance.

“Whilst I have found that [Sundance Marine] was not without fault in the breakdown in the relationship (which is related to his argumentative behaviour and refusal to grow sales as the [Sundance Marine] required) the relationship had not deteriorated to such an extent that dismissal was justified.”

Andrew Douglas, principal at M+K Lawyers, says the case reinforces the need for businesses to inform employees of poor performance in the lead-up to a termination, and also says the case reveals one more important lesson.

The commissioner found while Veal wasn’t without fault in the breakdown of the working relationship, the company wasn’t justified in terminating the employment.

Douglas says this can happen when companies become tired of working with a particular person and the relationship becomes a bad one.

“Just because someone gets sick of you not being able to get something right, and you’re in not in agreement as to what would be a fair agreement, that doesn’t mean you can just terminate the employment.”

“Another thing to remember is that when a business gets rid of a bad person in a job, they don’t think they need to create a new role. We far too often replace a bad person with just another employee.”

“You need to think about what might be causing the role to fail as well.”