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Employers sometimes face the situation of an underperforming staff member. Such a situation is delicate not simply because it concerns workplace morale or productivity. They also involve an employer’s legal obligations towards their employee. At times, it will be necessary for an employer to issue an underperforming staff member with a formal warning letter. This article discusses what a formal warning letter is, why they need to be given, and how to deliver one.

What is a Formal Warning Letter?

A formal warning letter tells an employee that their performance at work is unsatisfactory such that you, their employer, considers it underperformance.

The letter must explain the reason why you are issuing it.  You should specify in as much detail as possible why and how the employee’s performance is unsatisfactory. As the point of the letter is to give the employee the opportunity to rectify the situation, it must tell the employee how to improve. The letter should ideally set out clear and definite expectations.

While the subject matter of these letters is difficult, they must otherwise be reasonable and fair to the employee.

Why Give Formal Warning Letters?

An employer provides this kind of letter to their employee when they are underperforming at work. The employee either does not do their job properly or behaves unacceptably or both.

If an employee does not carry out their work satisfactorily, it means that they regularly fail to complete their work to the appropriate standard. Alternatively, it means they do not do it at all. Further, an employee behaves unacceptably if they:

  • Fail to observe workplace rules, procedures or policies;
  • Cause disruption or negativity in the workplace. For example, they might speak negatively about their employer;
  • Act inappropriately. For example, by telling an inappropriate and offensive joke.

However, unacceptable behaviour on the part of an employee is not the same as serious misconduct.  That describes an action which causes serious and imminent risk to the health and safety of another person or the reputation and commercial viability of the employer. For example, this could occur if the employee was drunk while at work.  Serious misconduct also refers to behaviour that is inconsistent with continuing employment. For example, refusing to carry out allocated work tasks.

How Do I Give a Formal Warning Letter?

Giving a formal warning letter involves a process. It is important for employers to follow this process not just because it reflects best practice. If the employee later lodges an unfair dismissal claim against you, the Fair Work Commission will take due note of this.

The first step for an employer with concerns about an underperforming staff member is to organise a private meeting with the employee to discuss the situation. Be sure to let the employee know what you will talk about in your meeting and ask them if they would like to bring a support person with them.

During your meeting, clearly tell your employee what concerns you have about their performance and the issues that you have with it. Let them respond to your concerns and listen to what they say. 

Together, discuss and formulate a solution to the situation. Outline and agree upon clear and reasonable steps for improvement. These strategies constitute a performance management plan. Once the meeting is over, document the meeting and its outcomes.  

Afterwards, make it a point to follow up regularly with the employee. These sessions enable you both to discuss progress and if any additional support or help is necessary. For example, informal training. If the employee’s performance has improved, be sure to acknowledge this.

However, if performance does not improve, an employer can:

  • Hold an additional meeting;
  • Change the nature of the employee’s role (e.g. alter their duties); or
  • Issue a formal warning letter.

Of course, you can terminate their employment. However, this action is not advisable at this stage of the process. Termination is the option of last resort.  If the employee later made an unfair dismissal claim, the Fair Work Commission will look at the context of the termination and also see if the appropriate measures were taken.

There are no limits on how many warnings an employer can give to an employee or a specified number of warnings that they must give. If you later terminate their employment, a warning beforehand is fair practice. The guiding principle in instances of underperformance is to give an employee the opportunity to fix the situation.

Warnings should be in writing so as to clearly document what you have said and the reasons why you have given it. As outlined above, the content of the letter should be detailed and provide clear expectations of how performance must improve.


LegalVision provides businesses with tailored online legal advice, including employment matters. It would be our pleasure to assist you. Call LegalVision today on 1300 544 755.


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