Leahey v CSG Business Solutions (Aus) Pty Ltd
Citation: [2017] FCA 1098
At a glance
- Employees affected
- 1
What happened
Forrester Patrick Leahey was employed by CSG Business Solutions as Regional General Manager NSW & ACT from 26 June 2013. His employment agreement provided for variable remuneration (Short Term Incentive or STI) based on key performance indicators. His employment was terminated on 23 August 2016 following performance issues and an incident on 7 July 2016 where Leahey allegedly used inappropriate physical force against a sub-agent. Leahey claimed termination was adverse action for exercising workplace rights (redundancy entitlements and complaints about STI calculation).
What was decided
The adverse action claim failed. The Court found CSG established legitimate non-prohibited reasons for termination: falling substantially short of sales targets, expressed lack of motivation and engagement, and unacceptable conduct involving physical force. However, the Court found CSG breached the employment contract by failing to set key performance indicators in a timely manner for FY2015 and FY2016, depriving Leahey of the opportunity to earn STI bonuses. The matter was adjourned for determination of damages and other issues.
What it means for employers
Employment contracts providing for performance-based remuneration must contain an implied obligation that the employer will set clear KPIs in advance. Failure to do so constitutes breach of contract and exposes employers to damages claims.
What it means for employees
Employees entitled to performance-based pay have a contractual right to have clear performance metrics set in advance. If an employer fails to set KPIs, the employee may recover damages for breach of contract.
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This summary was drafted from the published decision and reviewed before publishing. It is general information, not legal advice. For your specific situation, speak to the Fair Work Ombudsman (13 13 94) or a qualified lawyer. About these summaries & corrections →