Could your regular employee performance reviews be illegal?
Employers in Australia regularly conduct performance reviews with their employees to discuss problems, address shortcomings and identify future progression and development. Such reviews can also serve an additional purpose as a record to justify a warning or disciplinary action in response to poor job performance.
As discussions of performance and progress can be negative and emotive for both parties involved in the review, there is the potential for allegations of bias, discrimination or other unjust or illegal actions.
In Perez v Northern Territory Department of Correctional Services  FCA 476, which was a case heard on appeal, the judge upheld the decision of the Federal Circuit Court of Australia (FCCA) in Perez v Northern Territory Department of Correctional Services  FCCA 1384.
The court found that a performance review meeting that occurred as an “ordinary incident” of an employee’s employment could not be reasonably regarded as adverse action, regardless of how the employee perceived the performance review.
What could be considered an adverse action in a performance review?
The Fair Work Act defines adverse action as one that is unlawful if it is taken for particular reasons. It can include doing or threatening such things as dismissing an employee, altering their position to their detriment, or discriminating against them.
While there are many things that an employer might do which might be construed as adverse action, there are certain things which are not, such as actions that are authorised by or under the Fair Work Act or any other Commonwealth law, among others.
Performance review meeting initiated in response to identified problems
In this matter, the Northern Territory Department of Correctional Services had initiated a performance review meeting with Mr Luis Perez to discuss a number of matters. This included the way he had responded to a routine performance appraisal, problems he had experienced with handcuffing prisoners and shortcomings related to prisoner counting.
The appeal judge accepted the evidence of Correctional Services, that as prisons are potentially dangerous places, and prison officers work in a structured hierarchical way, it is imperative that they comply with prison systems and protocols, follow directions and remain vigilant.
The Correctional Services representative stated that one of the purposes of the meeting was to discuss the fact that Mr Perez did not take readily to criticism and did not respond well to direction by senior prison officers. These were regarded as matters of concern, given the necessary chain of command in the prison environment.
Performance review did not tarnish employee’s employment record
The judge found that Correctional Services had been “entirely justified” in calling the performance review meeting, and further concluded that the meeting did not constitute adverse action because there was no evidence indicating Mr Perez’s employment with Correctional Services had been “injured” in the sense contemplated by section 342(1)(b) of the Fair Work Act.
This was because no decision had been made by anyone to alter any aspect of Mr Perez’s employment and because there was “nothing to indicate that any black mark, either figurative or actual” had tarnished his employment record.
Employers entitled to give feedback to employees
Instead, the judge took the view that senior prison officers had been entitled to give feedback to Mr Perez, including by criticising aspects of his work. Feedback of this kind was held to be legitimate and did not constitute adverse action.
The court found that although Mr Perez may have resented the criticisms of his work and thought them unjustified, his reaction to the critique of his conduct could not reasonably be regarded as an injury of a compensable kind. Nor could the performance review be seen as diminishing the advantages he enjoyed as a prison officer in training.
The court found that it was an “ordinary incident” in the employment of prison officers in training that their progress be reviewed from time to time, that deficiencies may be identified and pointed out to the officer, and the officer counselled, encouraged or directed to take corrective action if required. The meeting involving Mr Perez was of this character and could not reasonably be regarded as adverse action against him.
Employers should still exercise caution when conducting performance reviews
Despite the findings in this matter, employers should approach performance reviews with caution, as there are circumstances in which conducting a formal performance management review may constitute a form of adverse action.
In fact, the Federal Court of Australia has on occasion found employers contravening general protection provisions of the Fair Work Act.
This means that performance reviews should always be undertaken both objectively and fairly, and with a level of transparency, as well as an awareness of employee rights under the Fair Work Act.