Employers have the right to expect their employees to meet established standards. However, properly managing expectations is essential to minimise workplace issues. This article provides guidance on managing poor performance employees fairly and effectively. The material is general and does not constitute legal advice. Australian workplace law can change, so always seek current legal advice for your situation.
What is Poor Performance?
Poor performance is more than an occasional mistake or off day. Examples include:
- Failure to meet objectives: Not achieving set targets or goals, such as sales quotas or project deadlines.
- Poor quality of work: Producing work that is frequently inaccurate, substandard, or requires constant correction.
- Failure to follow reasonable instructions: Not carrying out job-related directions.
Poor Performance vs Misconduct
Before addressing performance issues, employers must distinguish between poor performance and misconduct. Each requires a different approach.
- Serious misconduct: Theft, fraud, violence, or serious safety breaches may justify immediate disciplinary action or summary dismissal.
- Underperformance: Usually requires a process focused on improvement first.
The Importance of a Fair Process
Fairness is the core principle in managing poor performance. If you dismiss an employee for performance reasons, you must show that you followed a fair process. Failure to do so can result in the employee succeeding in an unfair dismissal claim before the Fair Work Commission.
What counts as “fair and reasonable” depends on the circumstances. Factors include the business size and resources, the employee’s length of service, any applicable award or enterprise agreement, and workplace policies.
Steps for a Fair Performance Process
1. Clearly Identify the Problem and Set Expectations
Employees cannot fix problems they do not know exist. Be specific about the performance issue.
- Use facts, not opinions: Avoid statements like “You’re lazy.” Instead, say, “Your sales figures for the last three months are 20% below the target” or “The last five reports each contained four significant errors.”
- Communicate expectations: Explain what the employee must do to meet standards. Link expectations to the position description, contract, KPIs, and any relevant award or enterprise agreement.
- Document everything: Keep detailed records of dates, times, communications, and specifics of the performance issue.
2. Provide Support, Training, and Time to Improve
Performance management is about helping employees improve, not punishing them.
- Offer support: Ask what may be affecting their performance. Do they need training, new tools, or clearer instructions?
- Create a Performance Improvement Plan (PIP): Outline areas for improvement, steps, resources, and a reasonable timeframe. A period of 4–6 weeks is typical but may vary depending on the role, the severity of issues, and the business context. Inform employees in writing about support and training, and make reasonable adjustments for health or disability issues.
- Regular check-ins: Meet weekly during the PIP to provide feedback, encouragement, and assess progress. Document these meetings.
3. Formal Warnings and Final Decisions
If performance does not improve, escalate the process.
- Formal warnings: Issue written warnings detailing ongoing concerns, referring to previous discussions and the PIP. State the improvements required and the deadline. Explain the risk of further disciplinary action, including termination.
- Final decision: If performance remains unsatisfactory after the final warning, consider dismissal. Give the employee reasons and allow them to respond, ideally in a meeting with a support person. Consider mitigating factors, such as health, workload, unclear instructions, or lack of training, and explore alternatives like redeployment or extending the PIP.
Small Business Dismissal Code
Businesses with fewer than 15 employees must comply with the Small Business Fair Dismissal Code if they wish to rely on it to defend against unfair dismissal claims.
Key Takeaways for Employers
- Be clear and specific: Base feedback on objective facts and measurable targets. Tie it to position descriptions, KPIs, and relevant policies.
- Document everything: Keep records of meetings, warnings, PIPs, and support provided.
- Give a fair chance: Allow employees reasonable time and support to improve.
- Allow a right of reply: Let employees respond to proposed dismissals, ideally in a meeting with a support person.
- Ensure warnings are formal: Warnings should be written, clear, and labelled as formal disciplinary warnings, stating the risk of job loss.
- Seek legal advice: Workplace laws are complex. Employers should seek legal advice before dismissing an employee for poor performance.
If you or someone you know wants more information or needs help, call (03) 9600 2768 or email [email protected].