Employer Performance Reviews & Performance Management

On the issue of employee performance reviews and performance management, employers may be able to take comfort from the decision in Perez v Northern Territory Department of Correctional Services [2016] FCA 476 (‘Perez’), which was a case heard on appeal in the Federal Court of Australia (FCA), where an employee, Mr Perez, unsuccessfully argued his employer engaged in adverse action when it conducted a performance review meeting with him.

The matter at first instance was heard in the Federal Circuit Court of Australia (FCCA): see Perez v Northern Territory Department of Correctional Services [2015] FCCA 1384.

In brief, the Perez decision determined that a performance review meeting that occurred as an ‘ordinary incident’ of an employee’s employment could not be reasonably regarded as adverse action irrespective of how the employee perceived the performance review.

However, employers need to approach performance reviews and performance management of employees with caution as there are circumstances in which the conduct of a formal performance management review may constitute a form of adverse action.

In fact, the FCA has on occasion found employers contravening general protection provisions of the Fair Work Act 2009 by taking adverse action against employee’s within the meaning of item 1(c) of s 342(1) concerning the assessment of an employee’s performance as part of the employer’s performance review process, because the employee concerned exercised a workplace right within the meaning of s 341(1)(c)(ii) of the Fair Work Act 2009 by making complaints and inquiries in relation to their employment.

The Perez decision dealt with a number of matters in play. However, the focus of this blog is on the employer’s performance review meeting (PRM) of the Appellant, Mr Luis Perez.

Performance Review Meeting

The Northern Territory Department of Correctional Services (Correctional Services) initiated a PRM on the basis of a number of issues, including Mr Perez response to a routine performance appraisal, problems with handcuffing prisoners and issues related to prisoner counting. There was no escape from these facts for Mr Perez.

At first instance the FCCA accepted the evidence of Mr Tunney, Correctional Services that prisons are potentially dangerous places, that prison officers work in a structured hierarchical way, that it is necessary that they adhere to the prison systems and protocols, that they comply with directions, and that they exercise continual vigilance.

In relation to Mr Perez’s performance review meeting, Mr Tunney stated:

“…I formed the view that the Applicant failed to follow the correct procedures in relation to muster and prisoner movement records; that the applicant suggested that the records were changed by an unspecified prison officer; and the Applicant did not appear to have the ability to properly assess risk or seek direction from senior officers in the presence of a potential risk.”

Mr Tunney highlighted that a focus of the PRM was on Mr Perez’s perception that he did not take readily to criticism and was not amenable to direction by senior prison officers. Mr Tunney regarded these as matters of concern given the necessary chain of command in the prison context. The Judge at first instance found that Mr Tunney had been “entirely justified” in calling the PRM.

The Judge at first instance further concluded that the PRM did not constitute adverse action because there was no evidence indicating Mr Perez’s employment with Correctional Services had been “injured” in the sense contemplated by s 342(1)(b) of the Fair Work Act 2009, because no decision had been made by anyone to alter any incident of Mr Perez’s employment, and because there was “nothing to indicate that any black mark, either figurative or actual” had been placed on Mr Perez’s employment record.

Instead, the Judge at first instance considered that senior prison officers had been entitled to give feedback to Mr Perez, including criticism of aspects of his performance and that feedback of this kind was legitimate and could not be characterised as adverse action.

In the Appeal, White J stated that Mr Perez may well have resented the criticisms made of him and thought that they were unjustified. However, Mr Perez’s subjective reaction to the critique of his conduct could not reasonably be regarded as an injury of a compensable kind. Nor could the PRM be regarded as having affected adversely the advantages which Mr Perez enjoyed as a prison officer in training.

On Appeal the Judge at first instance was found to have accepted evidence that it was an ‘ordinary incident’ in the employment of prison officers in training that their progress be reviewed from time to time, that deficiencies may be identified and pointed out to the officer, and the officer counselled, encouraged or directed to take corrective action if required. The PRM was of this character and conduct of this kind cannot reasonably be regarded as adverse action against Mr Perez’s position.

In concluding, the Appeal Judge found that the review of the performance of officers in training would seem to be an ‘ordinary incident’ of such employment and so the Court should be slow to characterise the identification of shortcomings in an officer’s progress as a form of adverse action.

The decision in Perez concluded that the Judge at first instance was not wrong to conclude that Mr Perez’s performance review, and the actions associated with it, did not constitute adverse action within the meaning of s 342 of the Fair Work Act 2009.

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Written by Mark Port

Mark Port holds the position of Special Counsel at Stacks Goudkamp. Mark represents businesses requiring legal advice and assistance with employment and industrial matters, including performance management solutions for employees and senior management.