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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


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?

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

By Portner Press on January 7th, 2019

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Performance Management

An issue with urine testing is that it may detect recreational, out-of-work drug use rather than actual impairment at work.

By Charles Power on November 9th, 2018

Your questions answered: Can we dismiss an employee for taking excessive sick leave?

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Q: Can we dismiss [an employee] for not fulfilling his expected duties due to the amount of sick leave he is taking?

By Portner Press on August 29th, 2018

Your questions answered: Which insurance covers independent consultants?

Workers' Compensation

Q: We are considering engaging an independent consultant on a fixed-term contract. Do we have to pay WorkCover, or is it covered by their professional indemnity insurance?

By Portner Press on August 6th, 2018

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Employee Management

Today, there is often a blurring of lines between work and home. EAPs are imperative no matter how large or small the business.

By Angela Godfrey on July 23rd, 2018

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Performance Management

An excavator operator baited and taunted a co-worker over a number of years until, one day, his co-worker snapped and assaulted him in the car park.

By Kelly Godfrey on July 16th, 2018

Your questions answered: Does dishonesty warrant dismissal for serious misconduct?

Performance Management

Q: If an employee engages in dishonest behaviour that could damage the reputation of the company, would this count as serious misconduct for dishonesty?

By Portner Press on July 16th, 2018

Your question answered: Ignoring grievance policies

Performance Management

Q: If employees have a right not to use a company’s grievance policy to resolve the matter – why have one at all? Would the employer be able to discipline the employee for then not abiding by the employer’s policy?

By Jeff Salton on June 4th, 2018

6 legitimate reasons for requesting more information from a worker on sick leave

Performance Management

Managing an ill or injured worker is fraught with legal and commercial difficulties if you do not manage it the right way. Get it wrong and your business can be hit with any number of legal actions.

By Kelly Godfrey on May 21st, 2018