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Performance management appears to be universally despised. From the employees who are subjected to it, to the managers who have to carry it out, it seems no-one enjoys the process of documenting an employee’s failings and trying to force an improvement. At best, it may be deemed a necessary evil that most managers will have to face, sooner or later in their careers.

The process of performance management is also a hotbed for all kinds of disputes, with bullying and harassment allegations and stress-related claims a not uncommon outcome. With this in mind, how can managers safely navigate the performance improvement process while protecting themselves and the company from liability? A key fact to keep in mind is that “reasonable management action, carried out a reasonable manner”, is expressly excluded from the definition of workplace bullying1. Similarly, a worker’s compensation claim for psychological injury can be defeated if the condition has resulted from “reasonable action” of the employer with respect to performance appraisal or discipline2.

The recent case of Miroslav Blagojevic v AGL Macquarie3 provides some useful examples of how to ensure that a performance management process is carried out in a reasonable manner. The complainant in this case was an engineer who was placed on a performance improvement plan (PIP) for three months. Over the course of the PIP, the manager realised that the engineer’s health was being adversely affected by the PIP process. The manager attempted to address this issue by:

  • Reiterating to the engineer that the PIP was not a formal warning, but a process to assist him in improving his performance and output;
  • Offering the engineer access to the employer’s Employee Assistance Program (EAP)
  • Offering the engineer the manager’s personal support and coaching
  • Referring the engineer to the employer’s return to work co-ordinator
  • Obtaining information from the engineer’s treating doctor about his mental health, and
  • Allowing the engineer to take an extended period of annual leave.


When the engineer’s performance did not improve to the required standard, the manager implemented a revised PIP, for another three month period. The revised PIP was ultimately never completed, as the engineer was diagnosed with an adjustment disorder and became unfit for work.

The engineer then filed an application with the Fair Work Commission (FWC) for an order to stop bullying. He claimed, amongst other things, that:

  • His performance was not deficient in a way that justified being put on a PIP
  • The PIP was unreasonable because three of the five areas of underperformance identified by his manager were not within the scope of his role, and
  • Many of the actions contained in the revised PIP were impossible for him to execute.


The FWC denied the engineer’s application and found that although the engineer had a reasonable belief that he had been bullied, the employer had engaged in “reasonable management action carried out in a reasonable manner”.  Management action does not have to be perfect, or the most acceptable course of action, it need only be objectively reasonable in the circumstances. The steps that the manager took throughout the process to take into account the engineer’s health demonstrated that he had, in fact, implemented the process in a very reasonable manner.

It is worth noting that the manager in this case also took detailed notes of performance conversations that he had with the employee. These notes were submitted as evidence in the bullying case, and helped to prove that the steps he had taken were reasonable in the circumstances.


Lessons for the Performance Management Process

  • The PIP should be carefully drafted to specifically identify areas of underperformance and relate them to the job description for the relevant position
  • Notes should be taken of performance conversations with employees
  • Support should be offered to the employee in the form of an EAP or personal support and coaching
  • If the employee is affected by medical issues, seek further medical advice and modify the PIP if appropriate.





1 Fair Work Act 2009 (Cth) s789FD(2)

Workers Compensation Act 1987 (NSW) s 11A

3 [2018] FWC 2906


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