Engineer's work was below par, but his sacking was still unfair

What happened

Rohieth (Roy) Lakhan was a 59-year-old engineer at a bus plant in Edinburgh, in northern Adelaide. He had worked at the site since 2007 through two changes of owner, and from November 2017 was a manufacturing engineer with Bus Tech (SA) Pty Ltd (then called Precision Buses). He earned $101,500 a year.

In July 2020 a new chief technology officer was appointed to lift the engineering team's performance. By January 2021 he had formed the view that Mr Lakhan's work was too slow and not up to the level of an engineer of his seniority and pay. Mr Lakhan was moved off a major project and given simpler, less time-critical drawings. He noticed his duties changing, but was not told why.

Two closed-door meetings followed, in late March or early April and on 4 May 2021. At the second, Mr Lakhan was told he would be "performance managed". But no plan was tabled, and no benchmarks, deliverables or time frames were discussed. He was not warned what would happen if his work did not improve. The company had no template plan, and none was ever applied to him.

In late June 2021, production of Mercedes buses in Adelaide and Queensland halted when staff noticed that the weld wire being used did not meet Mercedes specifications. The faulty drawing was traced to Mr Lakhan. He said he had believed he was to draw the weld to industry norms. Within days the directors decided to dismiss him.

The dismissal meeting

On 9 July 2021 Mr Lakhan was called into a meeting with no notice of its subject. The executive chairman told him he was dismissed on performance grounds, effective immediately, with four weeks' pay in lieu of notice. The detailed reasons came only in a letter dated 12 July 2021, days later.

Mr Lakhan applied to the Fair Work Commission for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth). He argued there was no valid reason for his dismissal and that the process was unfair, and sought reinstatement or compensation.

The legal test

A dismissal is unfair if it was "harsh, unjust or unreasonable". In deciding that question, s 387 requires the Commission to weigh a list of factors. They include whether there was a valid reason related to the worker's capacity or conduct, whether the worker was told of that reason and given a chance to respond, and, for a performance dismissal, whether the worker had been warned about the unsatisfactory performance beforehand.

A valid reason is one that is "sound, defensible or well-founded". The standard an employer can expect is "one of competence, not perfection", so occasional mistakes in otherwise competent work are unlikely to justify dismissal.

What the Commission decided

Deputy President Anderson found that there was a valid reason. Mr Lakhan's work was not "riddled with errors", but missed deadlines, slow turnaround and mistakes, including on simpler tasks, were frequent enough to be material. The weld wire error was a failure of substance: an experienced engineer should have checked the client's specifications. Other allegations, about leadership, team culture and use of a new task tracker, were not proven. He also rejected the claim that Mr Lakhan was sacked to make way for cheaper junior engineers.

The process was another matter. The decision was made before the dismissal meeting, so Mr Lakhan had no chance to respond. The performance management was described as "ham-fisted": no record was kept of the meetings, no plan or review point was set, and there was no mention of possible disciplinary consequences. Mr Lakhan was never warned that his job was at risk, and his seniority did not make a warning unnecessary. The lack of detail in the dismissal meeting was "disrespectful" to an experienced professional.

Overall, the Deputy President found the dismissal harsh and unjust. Being denied due process meant Mr Lakhan was never confronted with the blunt reality that he had to lift his work or be dismissed.

How much was awarded

Reinstatement was refused. The reason for dismissal was valid, his managers' loss of trust in his work had a sound basis, and Mr Lakhan still lacked insight. At the hearing he said: "I don't think my performance is poor."

Instead, the Deputy President estimated how long Mr Lakhan would have stayed if the company had done things properly: about a week to draw up a plan, eight weeks to run it, and a week each to assess the result and carry out any dismissal fairly. That made eleven weeks. He had applied for about 34 jobs without success, so nothing was deducted. Bus Tech was ordered to pay $21,471.15 plus $2,147.10 superannuation, on top of the four weeks' notice already paid.

What this means for you

If you are told you are being "performance managed", it is reasonable to ask, in writing, what standard is expected, how long you have to meet it, and what happens if you do not. If you have been dismissed for performance without a warning or a real chance to respond, the dismissal may be unfair even if your work had problems, though compensation is likely to be modest where there was a valid reason.

For employers, the lesson is just as clear: write the plan down, set review points, warn the employee that their job is at risk, and hear their response before deciding. The time limit to apply for an unfair dismissal remedy is 21 days from the dismissal.