How You can Rid Your Company of Poor Performers without Breaking any Laws

Expecting your employees to discharge their job descriptions as agreed is not unreasonable. Contrary to popular belief, it’s not difficult to dismiss serial poor performers. There’s no general rule that you have to give an employee 3 warnings, or even 1 warning, before ending their employment. But there’s a way to do it that is fair and reasonable and keeps you out of trouble.

Bernadette Eichner

Aug 24, 2022

Share:

It’s widely believed that it’s almost impossible to fire someone for poor performance in Australia because of what is perceived as an onerous and bureaucratic process of warnings imposed by the Fair Work Act.

Not true.

While termination of employment should be a last resort, there is no general rule or law that an employer has to give an employee 3 warnings, or even 1 warning, before ending their employment. There is, however, a reasonable expectation that an employer should give the employee a chance to fix any performance issues.

The warning process is in place to protect people from unreasonable action based on spurious reasons and to ensure that staff are treated fairly and provided with the opportunity to understand where they’ve gone wrong and correct it.

But if you have serial poor performers, and you’ve given them every chance to improve through informal and formal warnings and they don’t, then you have every right to do something about it.

What is performance management?

Managing the performance of employees is essential to a company’s success. The objective of a performance management process is to create an environment where people can perform to the best of their abilities and produce the highest-quality work most efficiently and effectively.

Examples of performance management processes or tools include performance appraisals, key performance indicators (KPIs), objectives and key results frameworks (OKRs), quarterly check-ins, and management dashboards. Essentially, performance management is what organisations do to become more successful, retain staff, and stay ahead of their competitors.

High performance in business means:

• increased productivity
• increased profitability
• engaged and committed employees
• attracting and retaining good employees
• positive brand recognition
• increased referrals

Underperforming employees can have a negative effect on a business, such as:

• unhappy customers or clients
• decreased productivity
• lowering profits
• high staff turnover
• poor staff morale

What is underperformance?

Underperformance is when an employee isn’t doing their job properly or is behaving in an unacceptable way at work. It includes things like:

• not carrying out their work to the required standard or not doing their job at all
• not following workplace policies, rules or procedures that have been clearly communicated
• unacceptable behaviour at work (e.g. telling inappropriate jokes, unfairly treating others, making unreasonable demands of people, blaming others for their mistakes, etc.)
• disruptive or negative behaviour at work (for example, constantly speaking negatively about the company, gossiping about colleagues, etc.)

Addressing underperformance

Before taking steps to manage underperformance, you should consider if there are any rules you need to follow under your award or registered agreement, a contract of employment or a workplace policy.

If an employee underperforms, then as a first step it’s a good idea to have a private but informal chat to them about the performance and ask if there is something preventing them from performing to the standard expected. It may be that they have something going on in their private life that is affecting their ability to work. Either give them the time they need to get their head together or make it clear what your expectations are and by when you need to see the improvement. It’s always good to make a contemporaneous note about the conversation.

If the performance doesn’t improve, arrange a private meeting for you and the employee to discuss the situation more formally. You should tell them what the meeting is about and ask them if they want to bring a support person along. Everyone in this meeting should be encouraged to:

• be clear about what the issues or concerns are and listen to the other attendees
• do their best to discuss and agree on a solution together, including clear and reasonable steps for improvement
• document the meeting and outcomes

Warnings and disciplinary action

Depending on the circumstances, you may decide to take disciplinary action against your employee because of their underperformance. Before taking action, ensure you:

• have a valid reason with evidence in the form of examples or corroboration by others
• follow a fair process

If you decide to issue them with a warning about their underperformance, the warning should be given in writing. You should also make sure:

• you are clear about the reason for the warning
• you write down all the details
• you set clear expectations about what needs to be done differently – a Performance Improvement Plan (PIP)
• the warning is fair and reasonable in the circumstances

If the underperformance is serious, the warning can be a First and Final Warning, with potential termination of employment as a consequence if their performance doesn’t improve in line with the Performance Improvement Plan (PIP).

Terminating underperformers

If you’ve provided enough opportunities for your employee to improve their performance and they don’t, then you have grounds to terminate the employment relationship and pay them out in lieu of notice.

Again, you need to be clear about your reason and have the evidence that their performance hasn’t improved in line with the agreed Performance Improvement Plan (PIP).

What is serious misconduct?

There is a difference between underperformance and serious misconduct. Serious misconduct is when an employee:

• causes serious and imminent risk to the health and safety of another person, or
• causes serious or imminent risk to the reputation or profits of their employer’s business
• deliberately behaves in a way that’s inconsistent with continuing their employment
• assaults or threatens to assault a colleague, client, supplier or visitor to the company’s premises
• steals from the company
• misappropriates company funds or lodges fraudulent expense claims
• attends the workplace under the influence of drugs or alcohol and is unable to execute their duties
• shares confidential information about the company’s business with competitors or third parties

Dismissal for serious misconduct

Serious misconduct is a valid reason for instant dismissal. If the misconduct is egregious, you may elect not to provide payment in lieu of notice and only pay out their accrued annual leave entitlement.

However, you must make sure that the misconduct has been proven and has been corroborated by others before taking such action if you don’t want an Unfair Dismissal Claim on your desk.

Consider a written performance management policy to set the expectation up front

You should consider creating and sharing with your employees a written performance management policy. The policy should outline what underperformance is, how underperformance will be managed and the possible consequences of underperformance. Ideally, this would form part of the suite of policies new hires get as part of their onboarding.

A policy can help to make clear what your and their expectations and responsibilities are and what can happen if underperformance occurs. It can also help prevent them feeling they’ve been treated unfairly if an issue does come up.

Expecting your employees to do their jobs to the standard required is not being unreasonable

As an employer, you have a right to expect that your employees do what is required of them in accordance with the Job Description they have agreed to discharge.

It is not unreasonable to manage them to those expectations and requirements.

It is, however, unreasonable to do that in a way that is unfair, not based in fact, or denies them due process. You may be wise to seek some independent advice on how to effectively manage such situations.