Introduction
Navigating performance reviews and implementing Performance Improvement Plans (“PIPs”) can be challenging, particularly when managing employees who have been with an organisation for over twelve months and have successfully passed their probation period. These employees are often more entrenched within the Company’s operations, making performance management a delicate task. The difficulty is further compounded when performance issues contribute to stress-related absences, creating a complex interplay between maintaining organisational standards and supporting employee well-being. This article delves into these challenges, exploring practical approaches and insights through the lens of a recent case before the Workplace Relations Commission (“WRC”).
Caroline McGarry v JTI (Ireland) Limited (2023) ADJ-00041399
Background
Caroline McGarry (“Employee”) worked for JTI (Ireland) Limited (“Employer”) for 14 years before resigning in 2022. The Employee argued that she was constructively dismissed, in breach of Section 1 (b) of the Unfair Dismissals Act, 1977 (as amended) (the “UDA”). Constructive dismissal is defined as an employee resigning due to the employer’s behaviour, which justifies leaving immediately, without needing to give prior notice.
In March 2021, the Employee’s health deteriorated due to work-related stress, rendering her medically unfit to work. The Employer arranged for the Employee to be assessed by an occupational health service (“OHS”). After a 4.5-month absence, the OHS deemed the Employee fit to return to work, provided accommodations were made. These accommodations included a phased return over six weeks, regular meetings with her line manager and HR, and a further review by the OHS.
The Employee returned to work in July 2021 and completed her phased return in September 2021. Between September and December 2021, the Employee and her line manager held regular meetings, during which the Employee did not raise any issues regarding her workload, nor did the Employer indicate any concerns about her performance.
After the Employee had fully returned to work, the Employer conducted a performance review of her for 2021 and discussed the review with the Employee in January 2022, concluding that she “needs improvement” and was an “inconsistent player.” The Employee contended that the performance review was unfair because it was based on business goals set in January 2021, which did not account for her 4.5-month absence. Consequently, the Employee was placed on a PIP for six months, starting on 6 April 2022. On 25 April 2022, the Employee wrote a letter to HR and her line manager, detailing her health issues caused by the PIP. The Employer’s reply was a single line acknowledging receipt of the letter.
Following a meeting about the PIP in May 2022, the Employee suffered a panic attack and was deemed unfit to work. Ultimately, the Employee felt she had no other choice but to resign one month after the commencement of the PIP in order to prioritize her health and well-being, handing in her three-month notice in June 2022.
The Employer argued that the constructive dismissal claim was unfounded because the Employee did not engage with the company’s grievance policy or the PIP before resigning.
Constructive Dismissals
There are two alternative tests to assess whether an employee has been constructively dismissed: the “Contract Test” and the “Reasonableness Test.” The “Contract Test” assesses whether the employer’s conduct was a breach of contract that compelled the employee to resign. The “Reasonableness Test” evaluates whether the employer’s conduct made it reasonable for the employee to terminate their employment. In this case, the “Reasonableness Test” was applied. It is critical to any case of constructive dismissal that the employee avails of the Company’s grievance procedure before terminating their employment.
Constructive dismissal follows a different procedure from other dismissal claims under the UDA, with the burden of proof resting on the employee to demonstrate that the dismissal was unfair, unlike other unfair dismissal claims where the burden of proof is on the employer. Consequently, constructive dismissal claims are generally more challenging for employees to win.
Findings
The WRC Adjudicating Officer (“AO”) found no fault with the Employer’s conduct up until July 2021 regarding resources, workload, and response to the Employee’s health issues and absence. There was also no issue with the Employer providing a safe workplace or conducting performance reviews. The AO had no difficulty with a PIP in general, however, the timing of the PIP was deemed unfortunate by the AO, as it failed to adequately accommodate for the employee’s absence due to health issues and did not specifically deal with the period the Employee was working. Ultimately, the Employee terminating her employment was deemed a ‘reasonable’ response by the AO to being placed on a PIP following the 2021 performance review.
The AO noted that the manager primarily relied on the Employee’s work during the 4.5 months post-absence to deem the 2021 performance unsatisfactory. The AO found it unacceptable that the Employee’s performance objectives for 2021 were not revised to consider the Employee’s prolonged absence due to health issues, and performance issues were not communicated to the Employee when they were occurring in 2021. Had these issues been flagged, it could have prepared the Employee for the negative evaluation.
While acknowledging the Employer’s legitimate concerns about the Employee’s performance, the AO criticised the lack of feedback and the Employer’s reliance on goals set at the start of 2021. The AO took issue with the Employer’s handling of the Employee’s letter dated 25 April 2022, which detailed a panic attack following a January 2022 meeting, an increase in medication intake, and heightened anxiety since being placed on a PIP. The Respondent’s one-line reply was deemed unsatisfactory. The AO determined that the manager and the HR department should have provided a substantive response to the letter. The AO further stated that the letter, which detailed significant personal and health-related difficulties, warranted greater intervention by the HR department, beyond the PIP and the Employee’s line manager.
The AO also took issue with the Employer’s failure to arrange a follow-up meeting with the OHS after receiving the Employee’s letter, her further sick leave in May 2022, and her evident distress during a PIP-related meeting later that month.
The AO emphasised that a key aspect of the “Reasonableness Test” is allowing the employer to respond to any issues raised. An employee not engaging with the company’s grievance policy is seen as denying the employer a reasonable opportunity to address concerns. While it is crucial for employees to use the grievance policy or PIP for work-related issues, it is equally important for employers to investigate and respond to any issues raised by employees.
The AO also noted the significance of the April 2022 letter being sent to both the Employee’s manager and the HR department. This underscored the shared responsibility in addressing such concerns according to the company’s grievance policy. The AO determined that the serious nature of the issues raised in the letter by the Employee constituted a grievance, albeit the letter was not technically labelled as one.
The AO concluded that the Employee met the “Reasonableness Test” and discharged the burden of proof. When calculating the compensation to be awarded to the Employee, the AO determined that the Employee’s use of internal procedures and the evidence she provided showed that she did not contribute to her dismissal or the financial loss she suffered after terminating her employment. Having made considerable efforts to mitigate her loss through applying for other work after terminating her employment, the AO awarded €40,000 to the Employee, equivalent to six months’ salary.
Employer Spotlight
Thoroughly Revise Performance Objectives After Absences: Employers should ensure that performance objectives are revised to account for any prolonged absences due to health issues. Relying on pre-absence goals can be seen as unfair and unreasonable.
Communicate Performance Issues Clearly and Timely: Regular communication regarding performance issues is essential. Employees should be made aware of any concerns well in advance of formal evaluations, especially if those issues will influence significant decisions like placement on a PIP.
Respond Appropriately to Employee Concerns: When employees raise health or stress-related issues, employers must respond with more than just an acknowledgment. Detailed and considerate responses are necessary.
Handling Competency-Based Assessments Fairly: involves two approaches:
- If there is a dedicated policy on performance management, it must be thoroughly adhered to. Failure to follow this policy will be deemed a breach of fair procedures.
- In the absence of a specific policy, principles of natural justice apply. This generally includes issuing a notice of improvement that outlines the deficiencies compared to objectives, timelines for the PIP, and possible outcomes if the employee fails to meet the PIP requirements. This article was co-written by Robin Hyde (Partner), Don McGann (Partner) and Stephen Barry (Pre-Trainee)
