"Even where an employer has
a valid reason to discipline or dismiss an employee, the employee
may still succeed in an unfair dismissal claim if the performance
management process is flawed."
In November 2015, Mark Cox and Nikita Barsby presented this
topicto lawyers and human resources professionals at
Legalwise's seminar: "Workplace Law -A Brave New World
Trends in unfair dismissal cases suggest that a common pitfall
for employers is failure to adopt a fair and proper procedure when
managing underperforming employees.
Even where an employer has a valid reason to discipline or
dismiss an employee, the employee may still succeed in an unfair
dismissal claim if the performance management process is
Performance management is important to the success of any
enterprise. Yet it can be fraught with risk of claims or complaints
by employees, especially if mishandled (See our Employee Handbook
and HR Guide products).
What Is Underperformance?
The test is not whether an employee is working at their personal
best, but whether the work performed meets the needs of the
business and the requirements of their role, considered
objectively. A performance issue may also arise where the employee
fails to observe an employer's policies, procedures or
"It is important to ask the
employee if there is an explanation or reason for their poor
Communication and documenting are crucial
The employee must be given a reasonable opportunity to
understand what the performance issues are anda reasonable
opportunity to respond to them. An employee should be warned that
they are underperforming in a timely manner. There is no minimum
number of warnings that must be given when managing
underperformance. However, warnings are designed to put an employee
on notice of their underperformance and to provide them with an
opportunity to remedy the underperformance. The process should be
the aspects of the employee's performance that are below
the performance improvement plan and means of monitoring it;
the warning that the employee's employment is at risk
unless they meet requirements of their role.
What is the required level of performance?
Clear, measurable and reasonable performance targets must be set
and clearly communicated to the employee. Active steps should be
taken to assist the employee to meet the required level of
performance, for example, training, counselling, mentoring, and or
performance improvement plans.
Is there a reason for the underperformance?
Ask the employee if there is an explanation or reason for their
poor performance, for example, personal illness or injury, lack of
understanding of expectations, lack of training, or difficult
How long should an employee be given to improve their
There is no set timeframe that must be given to an employee to
improve their performance. However, the timeframe must be
reasonable in the circumstances of the particular case and needs of
What if the employee has not improved?
Give the employee a genuine opportunity to "show
cause" (ideally by way of a show cause letter) prior to any
final decision to terminate their employment.
"Employers should not avoid
performance management of ill or injured workers, but should adopt
appropriate, fair and lawful strategies for doing
Policies and procedures
Policies and procedures should be in place to guide the process
and ensure compliance with procedural fairness in the performance
management process, and if used correctly, will mitigate the
employer's risk of exposure to legal claims.
However, to limit the risk of exposure to breach of contract
claims, performance management policies and procedures should not
form part of the employment contract. This can be achieved with
statements to that effect and carefully drafted policies,
procedures and management guides.
llness or injury
Where personal illness or injury is a cause of the
underperformance, consider what reasonable adjustments can be made
to support the employee. Let the employee know that the employer
wants to support them to reach the required level of performance
while remaining clear, firm and consistent on what the required
level of performance is.
Employers do not have to avoid performance managing ill or
injured employees, but should use fair and lawful procedures for
doing so. Employers should take care to avoid discriminating
against employees by reason of illness or injury. The
underperformance and illness or injury should be managed as
management in a careful and considered manner will increase the
likelihood of a competent and lawful process being
Approaching performance management in a considered way that is
clearly communicated and documented throughout the process will
minimise the risk of claims, and if claims are made the employer
will be better placed to defend them.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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