Told his PIP was on track, then sacked: dismissal found harsh

What happened

Robert McLean joined the Reserve Bank of Australia in August 2009. In January 2020 he moved into a management role in the bank's procurement team, which runs tenders and manages supplier contracts. His manager at the time described his work as exceptional, while warning that his team was under-resourced and his workload too heavy.

Then his managers kept changing: three in about two and a half years. They raised concerns about his dealings with internal customers, his planning and his communication. For 2021–22 he was rated an ‘inconsistent year’, the lowest rating available. In early 2023 two incidents added to the concern: a supplier left chasing unpaid invoices, and a rushed renewal of the bank's motor vehicle insurance.

In June 2023 the bank placed him on a performance improvement plan (a PIP): a written plan setting out what must improve and by when, with a warning that his job was at risk. A revised version started on 20 June 2023, with 14 deliverables under four goals.

On track, then out

At the mid-point review on 31 July 2023, the bank's own written assessment recorded one goal as met and the other three as ‘on-track’. His managers thanked him for engaging positively and cut check-ins to fortnightly. The Commission later found it would have been reasonable for him to believe he was on track.

After that his manager changed again. In mid-September, as the plan neared its end, he was told to produce a handover document and process maps to move the bank's fleet service to another team. The bank said this had always been part of the PIP. The Commission disagreed: the plan did not mention it, and it was not clearly communicated as a requirement until 13 September 2023.

The final PIP review meeting was cancelled. On 4 October 2023 he was given a show cause letter (a letter asking why he should not be dismissed) and two days to reply. He went on sick leave with a medical certificate and sent a detailed response. On 11 October 2023 the bank dismissed him by letter, paying four weeks in lieu of notice.

The legal test

Mr McLean applied under s 394 of the Fair Work Act 2009 (Cth). A dismissal is unfair if it was ‘harsh, unjust or unreasonable’, and s 387 lists what the Commission must weigh. These include:

(a) whether there was a valid reason related to the worker's capacity or conduct, meaning a reason that is ‘sound, defensible or well founded’; (b) whether the worker was told of that reason and given a chance to respond; (c) for poor performance, whether the worker was warned first; and (d) any other relevant matter.

A warning about performance must identify the shortcomings, the standard required and a reasonable time to reach it, and must make clear that the job is at risk.

What the Commission decided

Commissioner Matheson tested every deliverable. Some were too vague to assess. One was marked only ‘partially met’ even though the tracker it called for had been built by its due date, and the Commissioner described the plan as a ‘moving target’. For others it was unclear what was required, or why they had been marked down.

But some targets were clear and measurable, and he missed them. A pipeline update was incomplete, an engagement pack went no further than a team member's early work, and a contract management plan was finished well after its due date. Those targets were reasonable, so the bank had a valid reason: unsatisfactory performance. He had also been properly warned when the PIP began. The Commissioner rejected his argument that the dismissal was really a way to avoid a redundancy payment.

Even so, the dismissal was harsh, for four reasons:

(a) after a positive mid-point review, nothing made clear that he was now off-track and at risk; (b) the show cause letter did not say which parts of the PIP he had not met, so he could not properly answer it; (c) he had over 14 years' service and a long satisfactory record; and (d) the final review was cancelled and he was dismissed in writing while on sick leave, which the Commissioner called unnecessarily abrupt.

How much was awarded

Mr McLean did not want his job back and had found a new one. The Commissioner thought that, told clearly he was off-track, he would probably have improved for a time, but the gap between his work and the bank's expectations would have been hard to close. On that basis the Commissioner found his job would likely have lasted eight more weeks, until 6 December 2023, worth $23,643.85.

From that the Commissioner deducted $6,090 he earned in those eight weeks and the four weeks' notice pay he had already received. The order was $5,731.92, before tax.

What this means for you

If you are put on a PIP, ask what ‘met’ looks like for each target, and keep notes of every review. If you are told you are on track and then receive a show cause letter, it is reasonable to ask which targets you missed and how.

For employers, a PIP is judged on its targets. Clear, measurable targets support a dismissal; vague ones and changing goalposts do not. An honest mid-point message matters as much as the plan.

Compensation is based on the pay you lost, so finding new work quickly lowers the award. If you are dismissed, the time limit to apply to the Commission is 21 days.