As an employer, you want to ensure your staff’s continuous professional development and productivity as it benefits your business, and facilitates a harmonious work environment. Employers manage performance to monitor motivation as well as individual and team successes.

It’s important then to plan ahead when managing staff underperformance, and have the appropriate procedures in place should you have to terminate their employment. We set out how you should approach performance reviews as well as outline the legal requirements to help protect you against any potential unfair dismissal claims.

How to Recognise Underperformance?

The Fair Work Ombudsman categorises underperformance as the following:

  • Failing to perform work to a required standard or failing to carry out work at all; or
  • Failing to follow workplace rules, procedures and policies; or
  • Poor behaviour that is not acceptable in a workplace; or
  • Negative or unruly behaviour at the workplace.

Employers should ensure that their Employee Handbook is updated and clearly outlines workplace policies, so employees know what employers expect of them.

How to Address Underperformance?

It is best practice to address underperformance in a private meeting and discuss the problem or situation. Communicating effectively with your employees is important, as well as allowing him or her to listen and respond to your concerns before discussing an action plan.

Once the meeting is over, it is necessary to write down a performance management plan or policy, clearly stating how you will manage the employee’s underperformance, a time frame and consequences for failing to meet this new policy.

What are the Legal Requirements?

While the law does not strictly require you to provide formal documentation, written warnings, or even a set number of warnings to underperforming staff, it is important that you do so for both the employee’s improvement, but also to protect yourself.

The Fair Work Commission can consider an employee unfairly dismissed if they were:

  1. Not warned about performance or conduct issues; and
  2. Not provided with a reasonable opportunity to improve on identified issues.

Current Best Practice

  • Identify the underperformance issue and outline how the employee can address the problem;
  • Meet with the employee. This is a good chance to clarify, discuss and create a solution or management plan to improve the underperformance or situation;
  • Issue a warning letter including the following:
    • The performance or conduct issue.
    • What parties discussed about the issue in the meeting.
    • How the employer will address and assist with the issue.
    • An action plan that sets reasonable time frames.

The warning letter is an essential component of managing underperformance. Take steps to meet regularly with your employee to monitor performance and provide ongoing training and support if necessary.

What to do if Performance Hasn’t Improved?

Providing your employee with opportunities to remedy any problems, as well as details on the issue and where appropriate, written warnings, can minimise the chances of an unfair dismissal claim.

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If you have questions about addressing your employee’s underperformance, or next steps, ask our employment lawyers.

Sophie Glover
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