Managing poor performance is one of the most challenging issues employers face.
It is crucial processes must be followed correctly to reduce the risk of legal claims (such as unfair dismissal), workplace disputes and broader cultural imbalance.
This article outlines a practical, compliant approach to managing poor performance in the workplace and when to seek legal advice.
In short: Managing poor performance requires employers to clearly identify performance issues, communicate expectations and give employees a genuine opportunity to improve through a fair, documented process.
If underperformance continues, employers may implement a performance improvement plan or consider termination in line with the Fair Work Act 2009.
This guide explains how to manage underperforming employees and reduce the risk of unfair dismissal claims.
What is poor employee performance?
Poor employee performance generally arises where an employee is not meeting the reasonable requirements of their role. This may include:
- Failing to meet agreed targets or key performance indicators
- Producing work below expected standards
- Not performing core duties despite training or support
- Ongoing underperformance over time
It is important to distinguish poor performance from misconduct. Performance issues typically relate to capacity or capability, while misconduct involves behaviour such as breaches of policy or deliberate wrongdoing.
These are two distinct concepts which need to be handled differently to avoid legal risks and a lack of procedural fairness.
Related reading
- Performance management – look before you leap
- Manage employee performance to boost engagement and productivity
Performance management FAQs for employers:
Why managing poor performance requires care
Employers have the right to expect employees to perform their role to the required standard. However, management of underperformance must be done through a fair and reasonable process.
In many unfair dismissal cases, poor performance provides a valid reason for dismissal. However, the dismissal may still be unfair due to lack of procedural fairness, such as failing to:
- Clearly communicate expectations
- Give the employee a genuine opportunity to improve
- Provide appropriate support
- Follow a consistent process
Practical process for managing poor performance
While every situation is different, a defensible performance management process typically includes the following steps.
- Identify and clarify the issue – be specific about where the employee is not meeting expectations. Vague concerns are difficult to address and hard to defend when employees are terminated.
- Communicate expectations clearly – employees must understand what is required of them, how performance will be measured and what improvement looks like in practice, including timelines for making improvements.
- Provide support and time to improve – this may include training, coaching, supervision or workload adjustments. Expectations and timeframes should be reasonable in the circumstances and may depend on the specific employee.
- Monitor and review progress – performance should be reviewed against set expectations, with regular check-ins and feedback.
- Escalate only if performance does not improve – formal steps should be considered only where informal action has not resolved the issue, or where the performance concern is more serious.
A consistent process helps demonstrate fairness and reduces the risk of claims that decisions were rushed or predetermined.
Documenting poor performance
Clear documentation is critical when managing poor performance. Records should reflect:
- Performance issues identified
- Expectations communicated
- Support or training provided
- Review meetings and outcomes
- Any warnings issued
Documentation does not need to be complex, but it should be accurate, current and objective, and recorded as soon as possible. If a matter does come before the Fair Work Commission, these records often carry significant weight.
When to use a performance improvement plan
A performance improvement plan (PIP) may be appropriate where performance concerns are ongoing or more significant.
A PIP typically sets out:
- Specific performance issues
- Measurable improvement targets
- Support to be provided
- Review dates and consequences if improvement does not occur
Importantly, a PIP should not be used as a box-ticking exercise or as a step towards a predetermined outcome. If targets are unrealistic or timeframes unreasonable, the process may be challenged as unfair.
Poor performance and dismissal
An employee can be dismissed for poor performance, but only after a fair and reasonable process has been followed.
Before termination is considered, employers should ensure they have:
- Clearly identified performance concerns
- Warned the employee that their job may be at risk
- Given the employee a genuine opportunity to improve
- Considered any relevant personal or workplace factors
Dismissals that occur without these steps are more likely to attract scrutiny and potential liability.
Workplace toolkits and guides
- Fair Work Act Guide: Understand employer obligations, rights and compliance under the Fair Work Act 2009.
- National System HR Starter Kit: covers the complete employment lifecycle of from recruitment through to end of employment, including performance management.
- Recruitment and Termination Kit: recruitment processes, termination requirements and employer obligations under workplace laws.
When to seek expert or legal support
While many performance issues can be managed internally, often legal advice can significantly reduce risk.
Employers should consider seeking legal support when:
- Performance concerns persist despite informal action
- Formal warnings or a PIP is being considered
- Employee raises issues concerning their personal life, health or capacity
- Considering termination for poor performance
- Matter could escalate into a dispute or unfair dismissal claim
Seeking advice early can help ensure performance management steps are fair, lawful and properly documented, and aligned with requirements under the Fair Work Act 2009.
This can lead to employee’s performance improving, or where this is not achieved, decisions which mitigate the risks involved in performance management.
Key takeaways for employers
- Poor performance should be addressed early, not ignored
- Clear communication and support are essential
- Documentation underpins defensible decision-making
- A fair process matters as much as the outcome
- Legal advice should be sought where matters escalate
How Business Law WA can help
Business Law WA supports employers with practical advice on performance management processes, documentation, performance improvement plans and dismissal decisions – helping businesses act confidently and compliantly.
Contact Business Law WA’s Employment Law team at [email protected] or on 08 9365 7746.
