How do I deal with an under-performing employee?

Terminating employees is not without risks. “T’s” need to be crossed and “I’s” dotted to avoid winding up in the Fair Work Commission facing an Unfair Dismissal or General Protections Application.

So it is understandable that a lot of employers are gun-shy when it comes to underperforming employees.

But some of the things employers worry about are just myths. There is no rule that in every case you need to provide 3 performance warnings prior to dismissing an underperforming employee, or that you cannot dismiss an employee on sick leave or workers compensation. Dismissing an employee for underperformance will always come down to the facts of each case.

We offer some general guidance below, but this is subject to any underperformance management requirements in an applicable contract, policy or enterprise agreement.

What is an underperforming employee?

Underperformance is a broad term that includes:

  • Unsatisfactory work performance, or a failure to perform the duties of the position, or to perform them to the standard required
  • Noncompliance with workplace policies, rules or procedures
  • Inappropriate behaviour in the workplace
  • Disruptive or negative behaviour that impacts on colleagues

Underperformance is not, however, misconduct. Misconduct will involve something more than mere negligence, error of judgment or innocent mistake. Misconduct is wrongful, improper or unlawful conduct motivated by premeditated or intentional purpose, or by obstinate indifference to the consequences of one’s acts.

Why do employees underperform?

There can be many reasons for an employee to underperform, including:

  • Not knowing what is expected of them as they do not understand their key performance indicators or do not know about the workplace’s policies and procedures
  • Absenteeism
  • Interpersonal differences or workplace bullying
  • An imbalance between the employee’s skills and the requirements of the position
  • Lack of awareness due to a lack of performance feedback and counselling
  • Lack of personal motivation, low morale in the workplace and/or poor work environment
  • Personal issues such as family stress, physical and/or mental health problems or problems with drugs or alcohol
  • Cultural misunderstandings.

How do I manage an underperforming employee?

  • Arrange to meet with the employee, including providing reasonable advance notice of the meeting
  • Invite the employee to bring a support person if they wish to
  • Hold the meeting in private where other employees cannot hear or see the discussion
  • Be prepared with talking points which address:
    • What the problem is
    • Why it is a problem
    • How it impacts the workplace
    • Clear requirements as to outcomes, ie achievable goals for addressing the concerns and the timeframe in which you need to see improvement
    • Clear notification of any consequences, such as reduced pay, demotion, reclassification, or termination
  • Provide the employee the opportunity to put their point of view, including reasons why they may be underperforming
  • Give the employee’s response proper consideration

What will be a reasonable time frame for improvement will depend on the circumstances and the seriousness of the underperformance. Generally speaking, a month will be sufficient.

At the end of the meeting, you should send an email or letter to the employee setting out the details of this meeting including:

  • Issues raised
  • Strategies proposed for dealing with the issues
  • Timeframe for necessary improvement, including what ‘improvement’ would look like
  • Consequences if there is no improvement in performance

When can I sack an underperforming employee?

If the employee continues to underperform, you may wish to consider dismissal.

Whether dismissal will be appropriate depends on the context. Was the performance target achievable in the timeframe set? How serious is the underperformance? What likelihood is there of improvement? Where there cogent reasons why there was no improvement in the timeframe nominated? Are there personal reasons for the underperformance? Is the underperformance due to a disability, or the employee’s family responsibilities?

Meyer Vandenberg can assist with sorting the wheat from the chaff in this area, and advise whether dismissal is in the organisation’s best interest.

If you wish to proceed with a dismissal, the employee should be provided with the requisite notice, a written notice of termination and paid out their due entitlements.

For more information contact the Employment & Industrial Relations Team:

William Ward  Special Counsel — Employment and Industrial Relations
(02) 6279 4366
william.ward@mvlawyers.com.au

Kirsty Easdale  Senior Lawyer — Employment and Industrial Relations
(02) 6279 4441
kirsty.easdale@mvlawyers.com.au