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Managing employee performance comes with legal risks because Australian parliaments protect employees from unfair and unreasonable disciplinary action. This means that your employees have legal rights that allow them to challenge the way they are treated in relation to performance issues.

If one of your employees is not performing to a satisfactory level at work, you might think you have reasonable grounds to dismiss them. But it’s not as simple as that… Your employees have legal rights that allow them to challenge the way they are treated and the way their performance at work is assessed.

That’s why you need to have a legally effective performance management process in place. By having proper policies and procedures in place for dealing with performance issues, you’ll be far less likely to face a claim of unfair dismissal and in a far better position to make the best decision for your business.

Performance management
is the process of evaluating and managing an employee’s performance to ensure it is consistent with your business’s objectives, and with the specific goals and standards of that employee and their role.

Performance management involves:

  • identifying the performance standards;
  • offering feedback and reviews to employees about their performance;
  • counselling employees where their performance or conduct is poor; and
  • disciplining employees where there is continued poor performance or conduct, or where such performance or conduct is unacceptable.

Any management action you undertake – including performance management – must be reasonable and conducted in a reasonable way, i.e. reasonable management action.

Most businesses conduct formal employee performance reviews annually. However, this is often too infrequent as the particular performance issue may have long passed and already caused damage to your business. Some businesses conduct more regular but less formal performance reviews. These are documented, but are usually quicker to complete.

Always follow up the employee’s performance in a week or two of their performance review to ensure the matter has been addressed. If not, further performance management may be required.

Never state in your employment contract that you will review an employee’s performance within a certain schedule, e.g. annually. If the contract includes such a provision and you fail to conduct performance reviews annually, then any dismissal you make on performance grounds could be legally challenged because you have not complied with the guidelines stipulated in the employment contract.

Having to confront the issue of underperformance with an employee can be challenging and uncomfortable as an employer. But by doing your due diligence to learn of your obligations and how to comply with them, you can approach the issue with confidence and make sure you reach the best possible outcomes for your business.


Top stories for Performance Management


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By Charles Power on December 13th, 2019

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Performance Management

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Your questions answered: Can we dismiss an employee who has lodged a workers’ compensation claim?

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Performance Management

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By Portner Press on July 19th, 2019

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Performance Management

Q We propose to have drinks and nibbles once a month at our office. Beer and wine will be provided responsibly by the company. However, we would like to have some sort of disclaimer signed by employees stating that they […]

By Portner Press on June 12th, 2019

Your questions answered: Is our employee’s rejected workers’ compensation claim fraudulent?

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Your questions answered: Can we search employees’ bags for alcohol and drugs?

Performance Management

Q We would like to implement a policy that specifies that if a team leader, business unit manager or company executive suspects, on rational grounds, that an employee possesses or has been consuming alcohol or illegal drugs on business premises: […]

By Portner Press on May 1st, 2019

Ill-tempered fashion worker’s dismissal upheld by FWC

Performance Management

A former employee of fashion designer Alex Perry has lost his unfair dismissal claim with the Fair Work Commission (FWC), after he was dismissed for threatening and aggressive behaviour towards female colleagues. In May 2016, the pattern maker and machinist […]

By Portner Press on April 8th, 2019

Your questions answered: Can we ask employees who appear to be intoxicated to take a drug and alcohol test?

Performance Management

Q: Can an employer ask an employee to undertake a drug and alcohol test if there is any suspicion they may be affected?

By Portner Press on March 1st, 2019

Your questions answered: How do I approach an employee submitting incorrect timesheets?

Performance Management

"Dishonesty of this nature usually constitutes serious misconduct and may be grounds for dismissal."

By Portner Press on January 7th, 2019