Conduct and Performance

What is a “Warning” Worth?

There is a common misconception amongst employers that the dismissal of a troublesome employee can only occur once the employer has followed the “three strikes and you’re out” rule – in other words, the employer must give the employee three official warnings before they can terminate the employment relationship. There is a broad management philosophy that three warnings prior to termination is best practice, and this may well be true, however, there is no legal requirement to provide a specified number of formal warnings. In this way, the notion of “three strikes” simply does not feature anywhere in Australia’s employment law landscape.

In some circumstances, a warning may not even be appropriate such as where an employee has been grossly negligent in the performance of their duties, committed serious misconduct, or failed to comply with a lawful direction of the employer and thereby placing themselves or others in potentially danger.

A warning may also be required however to address less serious misconduct, poor performance and other areas of concerns to ensure an unsatisfactory situation does not becomes worse. In most if not all circumstances where a warning is advisable, the warning should also be provided in written form. Warning letters, are crucial in circumstances where the employee later seeks to bring a claim against the employer. However, to have any real utility they need to properly address the matter in issue. Unfortunately, we often hear the refrain that there have been previous warnings provided, when in reality all that has occurred is a very general discussion about matters or a comment has been made in passing. This will not be sufficient to constitute a warning.

Before creating the content of a warning letter, it is important that employers consider a few practical steps. Firstly, there is a significant difference between an ordinary warning letter and a final warning letter. Final warning letters should only be used when the conduct or performance is such that they failure by the employee to address the matters will result in the termination of employment. We set out below the matters relevant to the issue of a warning letter, but note that this will need to be modified to the extent it is intended to be a final warning letter. In most circumstances, a final warning letter should not be issued unless there have been previous warnings (preferably in writing) regarding the relevant conduct or performance issue. However, it is not required that in order to issue a final warning letter there must have been prior warnings. This will very much depend on the issue at hand.

The relevant matters that should be considered are as follows:

  1. Identify and consider the problem – employers should clearly identify the issue in respect of which the warning letter is designed to address, and whether that issue is performance or conduct based. It is also essential to think about the seriousness of the problem, how long it has existed and what actions are required to address it.
  1. Meet with the employee – meeting the employee prior to issuing a warning letter is important for identifying the relevant issues, clarifying expectations of the employer and agreeing on solutions to address the issue, and establish a constructive path forward. It is also best practice to inform an employee about the purpose of the meeting and agenda in advance so they can adequately prepare and arrange a support person to attend the meeting.
  1. Create the warning letter – when creating a warning letter, it is fundamental to include and set out:
    • detailed examples of the performance or conduct issue of concern;
    • the matters discussed with the employee about the issue (with as much specificity as possible);
    • what the employer will do to assist and support the employee through the process;
    • the action points and steps the employee needs to take to address the issue;
    • a reasonable timeframe in which the changes or improvements will to need to occur;
    • whom will be responsible for reviewing and assessing progress; and
    • what disciplinary outcomes may apply if the issue is not rectified.
  1. Delivery of the warning letter – it is critical to ensure the employee receives the warning letter and acknowledges receipt. If the employee fails to acknowledge receipt, a prudent employer will document the details of having provided the letter and this may include preparing an internal file note of the time, date, individuals present and what was said when the warning letter was provided.
  1. If it is a Final warning Letter – the letter should set out the history of the performance or conduct issue, the previous warnings provided, and the most recent evidence of problematic behaviour or performance giving rise to the final warning. The letter must specify that it is a final warning and that any further problematic behaviour performance will result in the termination of employment.

It is always best practice to ensure that an employee reads a warning letter, understands its legal effect or has an opportunity to clarify the letter. Depending on the circumstances, it may be appropriate to ask an employee to sign a counterpart of the letter and return it to you. Please note however if the employee refuses to do so, it will not have any impact on the fact that the employer has provided the letter.

Notably, even where an employer follows the above steps, a disgruntled employee may nonetheless choose to submit a complaint or claim against their employer, for example, an unfair dismissal or discrimination complaint. In order to dispose of such claims, the issue of evidence and especially documentary evidence becomes extremely important. In that connection, it is essential that an employer can rely on any carefully crafted warning letters provided to the employee as part of defending legal proceedings.

As noted above, there is no legal requirement to give an employee three official warnings prior to termination of employment. In some situations, it may even be appropriate to bring the employment to an end immediately. The process that ought to be followed will necessarily depend on the nature of the issue, the seniority of the employee concerned, and the extent of damage to the employer (if any) as a result of the issue. Whilst the response of an employer to performance or conduct issues should be approached and judged on a case-by-case basis, it may be entirely reasonable to issue a first and final warning if the circumstances so require.

We regularly advise employers in relation to performance management procedures and misconduct issues including by assisting to draft appropriate workplace policies and of course warning letters. If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law matter, please do not hesitate to contact us.

This alert is not intended to constitute, and should not be treated as, legal advice.

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