For a car to work, all parts of the machine need to function well. From the outer parts we see, to the inner workings we don’t- every element has a task so the vehicle can drive safely. A company is much like a car in that sense. To run a company, all parts of it need to be playing their role. That means, from the receptionist over to the CEO, everyone’s performance should be stellar. 

This is where the idea of performance management comes in. Performance management is essentially making sure everyone is doing their job well. However, there’s more to just ticking a few boxes when it comes to looking at how your employees are functioning. There’s actually a number of important legal considerations when it comes to performance management. 

Keep reading to know more. 

What Is Performance Management? 

Performance management is assessing how each employee works and finding ways to continue their growth. The performance management of each employee is often aligned with broader company goals and values, so each company will have their own way of conducting performance management tasks. 

Performance management often leads to performance reviews every now and then. Employees are examined on how they are doing and given feedback on their performance. Additionally, it’s also an employee’s chance to let employers know how they are feeling about work. 

Essentially, performance management is there to ensure employees have a clear idea on what they need to be doing and whether or not they are receiving the right kind of support to make that possible.  

What Are The Legal Considerations For Performance Management? 

As a company, you’ll likely be considering your employees’ performance against internal company policies and goals. Even though this is important, it’s also necessary to keep in mind the legal factors that play a role in determining what your employees rights and responsibilities are. 

Performance management isn’t just about what the company needs from its employees but rather, what employees need from their company. As a result, external factors play a large role in performance management practices. For instance, there are minimum standards when it comes to wages, working hours and conditions. You will also need to think about things like the privacy rights of your employees along with the employment contract you’ve signed with them. 

There can be a lot to take in when it comes to the legal side of performance management but don’t worry, we’ve elaborate more on these points down below. 

Are There Any Laws I Need To Be Aware Of When It Comes To Performance Management? 

Yes. There’s a number of regulations that impact employee rights however, the main ones you need to look out for are the Fair Work Act 2009 and Fair Work Regulations 2009. These regulations cover your main duties and obligations towards your employees, as well as theirs towards you. In order to create a fair work environment that is free from discrimination and unwarranted practices, it’s important that you’re familiar with these laws. 

Of course, we don’t expect you to sit and read the legislation, one clause at a time. Instead, it’s better to chat to someone who knows the ins and outs of employment law. Get in touch with an Employment Law Expert, so you can have a strong idea on the legal obligations you have towards your employees. 

What Are The Privacy Concerns In Performance Management?

Performance management is largely a private matter. Even though the company goals and vision is likely to be public knowledge, how each individual employee is doing should be kept between the employee and management, as it can involve sensitive or private information about the employee. Due to this, it’s important to have the right processes and procedures in place that protect your employees right to privacy. 

Consider whether you have taken reasonable steps to protect your employees’ privacy. Having things like a Data Breach Response Plan in case something goes wrong or an overall Privacy Impact Assessment Plan to see how your privacy practices measure up can go a long way. Remember, protecting your employees privacy not only builds trust with employees but it ensures that you’ve met your privacy obligations as an employer. 

Talk to a Legal Expert On Privacy to gain a better understanding of your privacy obligations, plus what steps you need to take to meet them. 

Performance Management And Employment Contracts

The Employment Contracts your employees signed when they agreed to work for you are a crucial factor when it comes to performance management. The contracts have already determined the scope of your employees roles and responsibilities, so it’s important you don’t deviate away from this when managing your employees performance. 

The last thing you want as an employer, is to be in breach of your employment contracts. It’s important to take a look at the current employment contracts you have with your employees and see if they’re working for the both of you. If not, then you can always opt to have a Contract Review and negotiate new terms but it’s vital that your employee is on board with this first. 

You’ll also need to take a look at any other agreements you have in place with your employees. Alternatively, you may need to get new agreements drawn up when managing the performance of your employees. For instance, drug testing might be something that’s required in your profession, in which case getting a Drug Testing Consent Form drafted by a legal expert is necessary. 

If you have any questions regarding your legal documents, then talking to a Specialist In Contract Law can help make things clearer. 

Documenting Performance Management

We always recommend keeping proper documentation regardless of whether or not it’s a legal agreement. Having copies and written records of employee performance management can have a lot of benefits, even if keeping a record requires a little extra effort. 

We’re not just saying this because we’re a law firm and like our written documents- it can genuinely make things a lot easier to have a paper trail you can look back on if necessary. Ensure you’re properly documenting any performance management practices and keeping these documents well secured for privacy purposes, as we discussed earlier. 

Best Practices For Ensuring Legal Compliance In Performance Management 

Making sure your workplace is being legally compliant when managing employee performances requires assessing how you’re approaching each employee individually. However, there are some ways you can make sure all employees overall are being treated fairly. This is through a few legal documents that can help clearly and effectively communicate the rights and obligations your employees carry. 

A Staff Handbook and a well written Workplace Policy can make sure everyone is on the same page. This can help cause less confusion and minimise the risk of disputes, so it’s worth getting these documents drafted by a legal expert. 

Next Steps 

There’s a lot more to performance management than just weighing up an employee’s performance. There’s a number of legal obligations that need to be followed which could in turn, reflect how your company is being managed. Keeping in mind these legal considerations when engaging in the performance management of your employees has the potential to make the process a lot more effective, so it’s important to have a good understanding of them. To summarise what we’ve discussed: 

  • Performance management involves assessing and improving employee performance, aligning it with company goals and values, and conducting periodic performance reviews. It ensures employees understand their roles and receive necessary support
  •  Companies must consider legal factors when managing employee performance, including minimum wage standards, working hours, privacy rights, and employment contracts
  • The Fair Work Act 2009 and Fair Work Regulations 2009 are critical regulations in Australia that outline employer and employee rights and obligations. Employers should seek advice from Employment Law Experts to understand these laws
  • Performance management is private, involving sensitive employee information. Employers must protect employee privacy through processes like Data Breach Response Plans and Privacy Impact Assessment Plans
  • Employee performance should align with the terms set in their employment contracts. Employers should review contracts and negotiate changes with employee consent when necessary
  • Specialised agreements, such as drug testing consent forms, may be required for specific professions. Legal experts can help draft such agreements
  • Properly document performance management practices to create a paper trail for reference and privacy purposes
  • Ensure legal compliance by using documents like Staff Handbooks and Workplace Policies to communicate rights and obligations clearly to all employees
  • Legal considerations are vital in the performance management process, and understanding and adhering to relevant laws and privacy protections is crucial for effective management 

If you would like a consultation on the legal aspects of performance management, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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