FWC has confirmed the long held understanding that failing to meet reasonable KPIs will be a valid reason for dismissal but unreasonable KPIs will be unfair.
Case
FWC found that holding a part time employee to the same sales KPIs as a full time employee was an unfair basis to assess compliance with performance expectations (Chuqi Wang v Perfect Shape Medical Beauty Australia Pty Ltd (U2023/5786)).
Our thoughts
No one wins by setting an employee up to fail. We agree with FWC that this was plainly unfair. It is also just as demotivating to a high performing employee as a poor performing employee to consistently not meet an unachievable target.
‘Stretch targets’ are good but we have to wonder what genuine purpose a target is that cannot be realistically achieved. Such a practice is likely to undermine general confidence in other ‘figures’ that the business or manager relies on.
Action Items:
Review your KPIs annually for ‘genuine-ness’
Consult with your team members on achievability before implementation
Communicate the performance expectations in your recruitment, induction and position descriptions
Adjust for seasonal, operational and work patterns (ie part time, casual, shift workers) as well as individual factors (eg bereavement, sickness, family and domestic violence etc)
Regularly discuss achievement against the KPI thresholds and proactively introduce support to improve performance before introducing disciplinary processes
Edge Legal
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