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As an employer, it’s evident that you benefit most when you have motivated staff performing at their best, meeting expectations, and upholding the standards you’ve set for your business.
Unfortunately, things don’t always work out so perfectly!
When your staff underperform, it can be challenging to determine the best way to address the issue effectively.
Although addressing issues of underperformance may seem uncomfortable or awkward, it’s crucial to manage these situations appropriately and with sensitivity. Left unchecked, underperformance can create an unhealthy environment for your entire workplace.
So, what should you do? In this article, we explore what constitutes ‘underperformance’ and examine why an employee may not be meeting expectations. We also outline the steps you should take if performance remains inadequate – all the way to terminating the employment if necessary.
Employee termination is rarely a pleasant process for either party, but as you’ll discover, it’s essential to conduct it correctly to minimise legal risks.
A heads up: this article focuses solely on the termination process. For more information on the related process of redundancy, please see our guide here.
What Is Poor Performance?
Poor performance can manifest in several ways. It might involve uncooperative conduct, an attitude that disrupts team harmony, failure to adhere to workplace policies or the guidelines in your staff handbook, or simply not fulfilling the duties outlined in an employee’s job description.
It’s important to differentiate underperformance from more serious matters such as harassment or criminal conduct in the workplace.
Can Poor Performance Be Explained?
In most cases, an employee’s underperformance has an underlying cause.
Many factors can contribute to poor performance, including:
- The employee isn’t clear about their day-to-day responsibilities, compounded by a lack of understanding of the business’s objectives and policies
- A toxic workplace culture may be at play, where the employee could be a victim of bullying or involved in interpersonal conflicts
- Lack of regular feedback or check-ins with management, leaving the employee unsure about how to measure their performance
- Insufficient training or resources to perform their job effectively
- Personal issues unrelated to work that affect their overall performance
While it can be frustrating when an employee underperforms, taking a step back to consider these potential factors can provide valuable context for deciding your next steps in the performance management process.
In 2025, effective performance management is increasingly supported by digital tools and a proactive organisational culture. Regular feedback sessions, clear career development plans, and the use of modern HR software can help address issues before they escalate. For more insights into building robust legal foundations in your business, see our article on how small businesses handle their legal challenges.
What Should I Do When An Employee Is Underperforming?
Once you’ve determined that an employee isn’t meeting the appropriate standards, the next step is to implement effective performance management.
This involves identifying the management issues at hand and selecting a performance management system that works for both you and your employees.
While this might sound complex, clear guidelines about what you expect from your employees and how they should conduct themselves make the process more straightforward. Regular performance reviews and ongoing communication are key components of a strong performance management framework in today’s workplace.
The initial step is to refer to your Workplace Policy and/or Staff Handbook. These documents should outline your performance management systems, detail the steps involved, and explain the expected outcomes. They also set out the responsibilities and expectations for your employees.
Ensuring that your employees have access to your Workplace Policy and/or Staff Handbook from the onset puts everyone on the same page. It also forms a solid basis for discussions about underperformance – much like the detailed guidance found in our employment contracts resource.
When discussing performance issues with an employee, having a clear agenda for your initial meeting – and any necessary follow-up meetings – can be very beneficial. An agenda not only provides notice of what topics will be discussed but also serves as a record of the conversation, which can be invaluable if issues persist.
If the employee continues to fall short of the standards outlined in your Workplace Policy and/or Staff Handbook, you may need to progress to formal disciplinary action.
Disciplinary action typically takes the form of a written warning or a series of warnings. Each warning should clearly specify the performance issues and outline the corrective actions the employee needs to take. As per updated guidelines from Fair Work Australia, any warning must be documented in writing and be ‘fair and reasonable in the circumstances’.
If you’re uncertain about what constitutes fair and reasonable disciplinary action, it’s wise to seek advice from an employment lawyer to ensure your approach complies with current legal standards in 2025.
How Do I Terminate An Employee?
If an employee’s performance does not improve to an acceptable standard, termination of employment may become necessary.
It is crucial that any termination process is conducted in a manner that is not harsh, unjust, or unreasonable, as failure to do so could result in an unfair dismissal claim. You should provide clear reasons for the termination and ensure that the employee has an opportunity to respond.
Generally, termination cannot be finalised without giving the employee notice of their last day of employment. The required notice period may vary based on factors such as the employee’s length of service and any conditions specified in their employment contract.
In 2025, it is also essential to maintain meticulous digital records of all performance reviews, disciplinary actions, and termination procedures. Leveraging modern HR software not only ensures transparency but also helps protect your business from potential legal challenges. For further advice on managing workplace disputes, our employment law resource can be very useful.
Upon termination, ensure that the employee receives any outstanding remuneration and entitlements as required by law.
We’ve written more about the formal process and legal aspects of employee termination in our detailed guide.
Key Takeaway
Managing employee performance and navigating the termination process is both a delicate and challenging task. In today’s fast-evolving workplace environment – especially in 2025 – it is critical to seek robust legal advice to ensure your actions are compliant and your business is protected against potential claims.
If you would like a consultation on your options going forward, please reach out to us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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