Medical organisation payout $56K in personal grievance claim

Published 28 May 2024 | 2 min read

Hidden danger of Performance Improvement Plans

A Sales Manager working on behalf of a New Zealand medical organisation suddenly found themselves on the receiving end of a Performance Improvement Plan (PIP).

A Performance Improvement Plan is meant to be a helpful tool for addressing performance concerns, but for this manager, it becomes a stressful, overwhelming ordeal.

The situation deteriorated rapidly, leading to the sales manager resigning and subsequently submitting a personal grievance claim.

When do efforts to improve backfire?

This scenario isn't just hypothetical. It played out in a recent case handled by the Employment Relations Authority (ERA) in NZ.

The manager in question had been with a medical supplies company since early 2022, tasked with selling surgical implants and supplies. Despite initial successes, performance concerns were raised, and a PIP was introduced.

However, the process was anything but supportive. The manager's repeated requests for clarity and written documentation were ignored, culminating in a hastily delivered PIP that left them feeling blindsided and stressed.

Their resignation soon followed, along with a claim for unjustified constructive dismissal.

ERA's decision

This case serves as a crucial reminder for employers about the importance of fair and transparent processes when dealing with performance issues. Here's what the ERA decided:

• Good faith breach: The employer ignored the worker's requests for more information and failed to consult properly.
• Unfair process: The PIP was sent as a document to sign without prior consultation, shocking the worker.
• Lack of consultation: The content of the PIP had not been discussed during the initial meeting.
• Foreseen impact: The employer should have anticipated the negative impact on the worker.
• Compensation: The worker was awarded $15,000 for emotional distress and $41,354 for lost wages.

Despite the challenges faced, Employers can learn from this failure to create more supportive and legally compliant performance management processes.

Understand the importance of good faith and fair processes and you can avoid costly grievances and further build on a productive work environment.

How to reach positive outcomes with fair process

Here's what you need to check off when managing poor performance:

1. Keep lines of communication open and clear. Employees should be fully informed and have opportunities to ask questions and express concerns.

2. Document thoroughly! Ensure all performance discussions and plans are well-documented. This helps create a clear record and helps prevent potential misunderstandings.

3. Consult properly. Before implementing a PIP, discuss it thoroughly with the employee. This includes setting clear expectations and providing the necessary support.

4. Consider the human impact. Recognise the emotional and psychological impact of performance management on employees. At the end of the day both parties are wanting a positive and stress free solution so look to work together as people before escalating for an unnecessary reason. Approach these processes with empathy and care.

Remember: a fair and transparent process isn't just a legal requirement—it's a cornerstone of good management and a thriving workplace.