In a recent ruling, the Fair Work Commission (FWC) has ordered the Reserve Bank of Australia (RBA) to pay compensation to a long-serving manager who was dismissed under what was described as “unnecessarily abrupt” circumstances. The decision highlighted concerns over the fairness of the dismissal process, despite the bank having a valid reason for the termination.

Background of the Case

The manager, who had been employed by the RBA since 2009, was earning $154,000 annually when he was dismissed in October 2023. Having taken on management responsibilities in 2020, the manager’s performance was scrutinised by the bank, leading to his eventual termination while he was on leave. This decision came after the manager had undergone a Performance Improvement Plan (PIP), a process intended to address issues with his job performance.

FWC’s Findings

The Commissioner, who presided over the case, acknowledged that the RBA had a valid reason for the dismissal, citing the manager’s failure to meet the minimum performance requirements.

The manager was found to have struggled in a complex work environment, this was compounded by having three different managers in a relatively short period. Although the manager was described as hard-working and committed, his supervisors appeared to be sensitive to stakeholder feedback, which often influenced their perception of his performance.

However, the Commissioner raised concerns about the fairness of the process leading to the manager’s dismissal. She noted that the manager, who had a long history of satisfactory performance at the RBA, would have reasonably believed he was on track to retain his job based on feedback received during the PIP. The Commissioner said that it was the abrupt shift from the mid-point review of the PIP to a “show cause” process—where the manager was suddenly asked to justify why he should not be dismissed—which was deemed unfair.

Criticism of the Dismissal Process

The Commissioner criticised the RBA for skipping the end-of-PIP review meeting and moving directly to the “show cause” process. This abrupt decision was particularly harsh given the manager’s 14 years of service, during which he had a history of satisfactory performance and was even described as “exceptional” in a performance review shortly before reporting to new managers.

The FWC found that the dismissal, carried out via written correspondence with immediate effect and while the employee was on leave, was undignified and disregarded the manager’s long service and contributions to the bank. This led the Commissioner to conclude that the manager was unfairly treated, particularly considering his belief that he was making progress under the PIP.

Compensation Ordered

As a result of the unfair dismissal process, the FWC ordered the RBA to pay the manager approximately $6,000 in compensation. This amount was calculated based on the eight weeks the Commissioner considered the manager would have otherwise remained employed.

Lessons for Employers

• This decision is a reminder to employers that it is important to follow a fair and transparent process when dealing with employee performance issues;
  • Employer’s must conclude the performance management process prior to issuing a show cause letter in order to meet their obligations;
• Despite the Commission concluding that there were legitimate concerns in relation to the employee’s performance, the manner in which the dismissal was carried out was found to be lacking in fairness particularly considering the employees service and challenging circumstances;
• Employers should take into account the whole of the employment relationship and adapt their process accordingly.

If you would like to discuss these or other workplace issues, please contact Andrew Bland or call 02 9412 3077.