Frequently Asked Questions

Managing under performance and discipline

Who is responsible for managing underperformance?

Underperformance should be addressed by an employee's direct line manager. Although a challenging and often uncomfortable process for both parties, underperformance needs to be addressed promptly and cannot be left until the formal performance appraisal process.

Possible negative effects of failing to address performance quickly include:

  • Underperforming employees mistakenly believing their performance is satisfactory without feedback to the contrary;
  • Underperformance may continue to decline which can infect the behaviour of others in the workplace; and
  • Employees who are performing comparatively well finding the lack of management action as de-motivating; leading to a lack of moral, respect for their manager and disengagement.

In order to handle situations of underperformance, line managers need clear procedures to follow, support from their organisation and training in how to manage these sorts of situations.

For more information on how to handle difficult conversations, please refer to our Guideline: Giving Feedback in Difficult Situations

What steps can I take to prevent underperformance?

There are a number of things that can be done to attempt to prevent underperformance, these include ensuring the following:

  • Job descriptions are relevant and up to date
  • Clear performance standards are set and communicated to employees
  • Clear and detailed person specifications are set when recruiting, including skills, knowledge, qualifications, experience required
  • An appropriate recruitment process is conducted and is targeted at the correct audience

For a list of common performance issues, possible causes and specific corrective action, please refer to the Fair Work Ombudsman's Best Practice Guide for Managing Underperformance.www.fwo.gov.au 

What are the main reasons for underperformance?

The reasons why employees do not meet performance standards are numerous and varied. Some of the more common reasons are listed below:

  • Unclear performance goals and/or role ambiguity
  • Personality clashes or conflict within the work environment;
  • Lack of motivation, commitment to the employer and poor office morale;
  • Lack of stimulation from job content
  • Lack of feedback and uncertainty around work performance

In many situations however, these factors are just the tip of the iceberg and may represent one of a combination of factors which have influenced an employee's attitude, performance and behaviour.

How many warnings do I need to give an employee before I can terminate them?

Warnings are a performance management tool used to inform an employee that they need to improve their behaviour, work performance and/or attitude in a precise way otherwise their employment may be at risk.

There is no magic number of how many warnings an employee must receive before their employment can be terminated. A common misconception is that three warnings is the upper limit before termination procedures can be followed, however, there is no legislative requirement which reflects this. What employers do need to be mindful of is the risk of unfair dismissal claims being made by employees who feel that they were not sufficiently warned about their underperformance and received no opportunity to improve or respond before being terminated.

For more information on warnings, please refer to our information sheet: Warnings. https://www.ahri.com.au/assist/people-development/performance-management/managing-underperformance-and-discipline/frequently-asked-questions/?a=12482

What are the legal aspects I need to consider when embarking on a performance management or disciplinary process?

Whilst there is no law governing how a performance management process should be conducted at a workplace, there are considerable legal risks to employers as a result of poorly handled performance management, disciplinary and termination procedures. Aside from the obvious risks of unfair dismissal and general protection claims being lodged against an employer, employees may also be able to argue a breach of the implied duty of trust and confidence as contained in the employment contract. It is for this reason that employers need to ensure their internal policies and procedures reflect a fair approach to managing underperformance and conduct, and are being applied equally to all employees without prejudice.

How can I ensure that our manager's handle underperformance and discipline issues properly?

An employer should ensure that those responsible for managing issues relating to the work of employees are clear as to how this should be achieved fairly and reasonably.  If an organisation has established a process for dealing with unsatisfactory work performance or misconduct (such as a series of steps escalating to dismissal, with various rights of employees and employers during that process clearly specified) then employees will have greater certainty as to what they will confront if the issue is not rectified.

If the procedures reflect proper legal requirements, then a commitment by an organisation to observe them in dealing with work and conduct matters will serve to minimise legal risk.

For more information, please see our detailed guideline: The importance of policies and procedures when managing underperformance and discipline. https://www.ahri.com.au/assist/people-development/performance-management/managing-underperformance-and-discipline/frequently-asked-questions/?a=12481

I have been asked to develop a performance improvement plan. Can you please advise on what should be included in this?

Performance Improvement Plans (PIPs) are a management tool used to assist performance improvement of underperforming employees or those employees who have demonstrated unsatisfactory behaviour and conduct in the workplace. PIPs should be implemented as a consequence of performance management/disciplinary counselling meetings or informal discussions with employees regarding their performance/conduct deficiencies. A PIP should not be issued to an employee without prior consultation of the worker and an opportunity for both parties to discuss and agree upon performance goals. 

Essential features include:

  • PIPs should have a definite time-frame in which the employees progress/performance will be re-assessed to determine improvement or underperformance;
  • Clear, specific and realistically attainable goals should be emphasised e.g. employee to sign up 10 new customers per month;
  • Training of employees may be necessary to achieve performance improvement and should be included as a part of the PIP;
  • Regular meetings with supervisor to monitor progress towards goal achievement, provide support and ability to modify objectives where appropriate;
  • Re-assessment of performance at completion of PIP time-frame and management action accordingly.
  • PIPs should always be documented, including any progress meetings and the issues discussed therein and kept by the employer, copies should also be made available to employees for their records.

For more information on PIP's, please refer to our Information Sheet: Performance improvement plans. https://www.ahri.com.au/assist/people-development/performance-management/managing-underperformance-and-discipline/frequently-asked-questions/?a=12480

How long are written warnings kept on employees files? Are they treated like 'spent convictions' that after a certain number of years, they can be archived? Or do they remain on the employee's file indefinitely?

Generally speaking, warnings will not remain "alive" forever. Depending on the severity of conduct which triggered the warning being given, they will typically lose relevance once an employee has demonstrated improvement for a consistent amount of time. It might also depend on whether the employee is being considered for a promotion in the future etc. A good guide is six months' before expiration, but ultimately it is at an employer's discretion depending on the circumstances. 

For more information on warnings, please refer to our information sheet:  Warnings https://www.ahri.com.au/assist/people-development/performance-management/managing-underperformance-and-discipline/frequently-asked-questions/?a=12482

I have an employee who is being performance managed and we are putting them on a PIP. If the employees refuses to sign it does the PIP still stand?

Yes, the PIP is effective despite not being signed by the employee. If they refuse to participate, it may give grounds for dismissal (either continuing poor performance or failure to follow a lawful and reasonable direction of the company).

Can an employee be demoted as a result of the performance management disciplinary process?

Generally, no. A demotion which involves a significant reduction in pay or status may constitute dismissal and give rise to unfair dismissal and breach of contract claims. However, this is subject to any applicable award or agreement permitting unilateral demotion.

I am undertaking a workplace investigation related to workplace bullying and victimization. Am I required to provide the accused and the complainant with the written statements?

Yes you are able to provide a copy of the accused's statement to him/her for their records. You should also have them sign this statement and give them an opportunity to correct anything before going back to the complainant with their response to the allegations.

If a staff member is on a performance warning and or pip does that compromise a redundancy discussion?

Carrying out a performance management process leading up to a redundancy decision affecting the same employee may be cause for them to claim unfair dismissal. This would be on the grounds that they did not believe the redundancy was genuine, it was a dismissal for cause. However, this is not to say you cannot select employee's on PIP's to be made redundant where there are genuine business grounds to do so. When making a selection for redundancy, an employer can take into account the skills, experience, training and performance of employees compared to the current and future needs of the organisation. You would need evidence to support your decision though.