Reasonable management action is an important concept in understanding the boundaries of managing employee conduct and performance. However, navigating what constitutes reasonable management action can be complex, with legal and practical implications for both employers and employees. In this article, we explore the meaning of reasonable management action, its significance, key principles and practical implications.

Understanding reasonable management action

Employers may be required to take action to manage an employee when the employee is underperforming or engaging in misconduct. Such action may be deemed reasonable when it is necessary for the effective operation of the business and is carried out in a fair and lawful manner. Reasonable management action may include performance management, disciplinary action, organisational restructuring, workplace policy implementation and other managerial decisions aimed at achieving business objectives.

In the case Application by G.C [2014] FWC 6988 (at [56]), Commissioner Hampton provided useful guidance in determining what is reasonable:

• management actions do not need to be perfect or ideal to be considered reasonable;

• a course of action may still be “reasonable action” even if particular steps are not;

• to be considered reasonable, the action must also be lawful and not be “irrational, absurd or ridiculous”;

• any “unreasonableness” must arise from the actual management action in question, rather than the applicant’s perception of it; and

• consideration may be given as to whether the management action involved a significant departure from established policies or procedures, and if so, whether the departure was reasonable in the circumstances.

 Key principles of reasonable management action

1. Lawfulness

   Reasonable management action must comply with all applicable laws, regulations and workplace policies. Employers must ensure that their actions do not contravene anti-discrimination, unfair dismissal, or other employment-related legislation. Employers should also be aware of any requirements to raise and manage concerns with employees in a particular manner, in industrial instruments such as modern awards or enterprise agreements.

2. Proportionality

   Management action should be proportionate to the circumstances and the seriousness of the issue at hand. Employers should avoid overreacting or imposing disproportionate penalties for minor infractions.

3. Procedural fairness

   Employers are obligated to provide employees with procedural fairness during management action, including the right to be informed of allegations, the opportunity to respond and be heard, and access to support mechanisms.

4. Transparency

   Management action should be transparent and communicated clearly to employees. Employers should provide reasons for their decisions and allow for open dialogue between managers and employees.

5. Reasonableness

   The test of reasonableness considers whether a reasonable person, in the same circumstances and with the same knowledge as the employer, would consider the action to be justified.

Practical implications for employers

For employers, understanding and applying the principles of reasonable management action is essential for minimising legal risks and fostering positive workplace relations. Employers can promote reasonable management action by:

• Implementing clear and consistent policies and procedures for managing employee performance, conduct and grievances.

• Providing training and development for managers and supervisors on the principles of reasonable management action and effective communication.

• Seeking legal advice when implementing significant management decisions that may impact employee rights or entitlements.

• Documenting all management actions, including performance evaluations, disciplinary proceedings and workplace investigations, to ensure transparency and accountability.

Understanding reasonable management action is a crucial for employers and managers when dealing with their employees. Ensuring management of employees is reasonable can help reduce the risk of:

• successful workers compensation claims for psychological injury

• unfair dismissal claims

• high turnover of staff.    

To minimise legal risks ensure you implement clear policies, maintain thorough documentation and provide management training - CER provides bespoke training on this topic CER training — Catholic Employment Relations. Should you need seek legal advice about your or your organisation’s specific circumstances please contact us. There are more resources on this topic available in the CER Portal