Mental health and performance management: Achieving the right balance

By Andrew Piper and Lindsay Carroll, NRA Legal

Heath authorities have warned, and it is fast becoming clear, that the anxiety and isolation caused by the COVID-19 pandemic will have drastic consequences for the mental health of Australians. With the pandemic continuing to be a fact of life for at least the near future, it is anticipated that in the coming year, employers will see a higher than usual number of employees experiencing mental health issues.

Employers have a valuable role to play in assisting their employees in the management of these issues. It should be clearly stated that a mental health condition is certainly not a performance issue in itself. There are, however, times when an individual experiencing mental health issues will also demonstrate performance issues.

NRA Legal is often engaged by our clients to advise and assist in such circumstances. At such times, employers must effectively address the underperformance while also being conscious of the needs of the employee experiencing these mental health issues.

This can be a difficult balance to strike but the following four suggestions can assist to appropriately achieve this balance:

Employers should:

  • understand the employee’s mental health condition or injury;
  • draft and follow a performance management policy;
  • develop an appropriate performance improvement process; and
  • keep detailed records of the performance improvement process undertaken.

 

Opening dialogue about an employee’s mental health

An understanding of what an employee’s mental health condition is and how it is affecting the employee should inform an employer’s decision as to whether or not to commence performance management, and if so, what form that performance management will take.

Open dialogue with an employee about their mental health will be essential for the employer to be able to discern what instances of underperformance are attributable to or caused by the mental health condition and those instances that are not.

For example, if an employee experiences acute social anxiety, the difficulties experienced when performing parts of their role may be addressed through assessing whether other duties are more appropriate for the employee. In such a case the underperformance is likely caused by the social anxiety.

In contrast, if an employee suffering from social anxiety had repeatedly left the shopfront unlocked at the end of each shift without reasonable justification, the failure to complete the assigned task may illustrate the employee failing to follow directions rather than their social anxiety causing this result. However, caution should be exercised to speak with the employee to understand whether the social anxiety is causing this result.

If an employer is unclear about how, or the extent to which, an employee’s mental health condition may be impacting upon their ability to perform their duties, it is essential for that employer to obtain medical advice in respect of this.

 

Performance management policies

When evaluating the performance of employees, it is essential that performance is assessed and managed in a consistent manner. An appropriately drafted performance management policy will:

  • provide a process for identification of performance issues;
  • explain how this is to be communicated to employees; and
  • outline the escalation process for such matters.

Where such a policy is in place it will be significantly easier for a business to demonstrate why a performance management process was commenced, and where relevant, why disciplinary action was taken.

Before preparing to take disciplinary action in respect of an employee’s underperformance, an employer should firstly seek to understand the full circumstances of the case including what the employee is experiencing.

 

Developing an appropriate performance improvement process

It is important to keep in mind four key principles when developing a performance improvement plan (PIP) where an employee has a mental health condition:

  1. The performance of an employee should be assessed by reference to whether they can satisfactorily perform the duties of the role. This is an objective standard, performance should not be compared directly to the employee’s prior performance, particularly so when the mental health condition has only just recently begun to impact upon the employee’s performance.
  2. Allow the employee to have input into the development of the PIP itself. This will enable the employer to understand how the mental health condition impacts the employee from their own perspective and may facilitate better understanding of how to work with the employee.
  3. The employer must clearly articulate its standards and expectations while ensuring the criteria that employees are measured against are within the control of the employee. An employee should know specifically what standards they are underperforming in respect of, examples could include taking excessive time to complete a routine task or failing to follow certain procedures as instructed.
  4. Ensure that the PIP puts the employee on notice that continued underperformance by reference to clear measurable criteria may result in disciplinary action up to and including termination of employment.

While not strictly required, a support person can be quite valuable for the employee and the employer. A support person can assist the employee to understand and appreciate the performance issues being discussed and how they personally can improve their behaviours and habits. The presence of a support person can also significantly reduce how stressful the performance meetings are for the employee.

Unfortunately, at times, a performance management process can lead to the development of a mental illness or can exacerbate an existing condition. Importantly, if an employer can demonstrate that reasonable management action has been taken in a reasonable way it can operate to exclude liability under workers’ compensation legislation. Both for this reason, and the mental health of employees, it is crucial for an employer to routinely review its performance management processes to ensure that they are appropriate.

 

Record-keeping

It is essential to keep clear records of the PIP undertaken. Specifically, the employer needs to be able to demonstrate the reason why performance management (or potentially disciplinary action) has been taken.

This may include the completion of reports or forms as required by a performance management policy and file notes of any conversations with the employee about their performance. The employer should also keep detailed notes of the employee’s comments concerning their mental health condition and any further information that the employer is relying upon to understand the needs of the employee such as medical certificates and letters from a doctor.

 

If you have any questions about performance managing employees who are experiencing a mental health condition contact NRA Legal on 1800 572 679 for further guidance.