Terminating employment due to poor performance or serious misconduct is an area of law fraught with litigation risk. Every employer should therefore have basic processes and procedures to manage poor performance in the workplace. These processes and procedures are usually set out in a Human Resources Policy which includes transparent processes to dismiss and discipline employees.

Given the high risk that an employee terminated for poor performance will challenge the decision, it is very important that the entire process is well documented by the employer. This documentation can be used by the employer as evidence should litigation ensue.

What constitutes poor performance

In Australia, underperformance (or as it is commonly referred to, poor performance) can take the form of unsatisfactory work performance, non-compliance with workplace policies, or unacceptable, disruptive or negative behaviour.

Employees are entitled to be given the chance to reach the key performance indicators set as part of their job description and to be given a fair hearing. Where necessary, employees should be given fair warnings to improve their performance and some help if required, for example extra training.

Underperformance is not to be confused with misconduct. Misconduct is regarded as seriously “bad” behaviour such as theft or assault and often warrants immediate dismissal. See the separate precedent for termination without notice due to serious misconduct.

Relevance of unfair dismissal

When considering whether to terminate the employment of an employee, it is important to be aware of the laws relating to unfair dismissal and unfair termination to ensure that the termination will not fall foul of these laws.

For example, where an employee has the right to challenge the termination under the Fair Work Act 2009 (Cth), the employee can allege, amongst other things, that the termination was unfair due to inadequate provision of warnings, insufficient opportunities to respond to warnings or to improve behaviour, or that there was no valid reason for termination.

When using this precedent

After managers have attempted informally to coach underperforming employees, and where those employees have failed to improve their performance standards, managers commonly invite the employee to a formal disciplinary meeting where details of the underperformance are discussed. It is very important for the employee to receive a formal notice of the meeting.