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Performance management for your business’s employees

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Real world examples demonstrate what not to do 

An unfortunate but necessary part of running or managing a business is performance management. And generally of course, when we talk about “performance management”, we really mean the process of managing underperformance.

Examples of underperformance include an employee’s failure to perform the duties of their position or to the required standard; non-compliance with workplace policies, rules or procedures; unacceptable behaviour in the workplace; or disruptive or negative behaviour that impacts on their co-workers.

Underperformance may occur when an employee:

  • Doesn’t know what is expected of them, because goals and standards or workplace policies and consequences are not clear, or don’t exist
  • Experiences personality differences at work
  • Doesn’t have the knowledge or skills to undertake the role
  • Is not provided with positive feedback or constructive criticism as necessary
  • Experiences a poor work environment or culture
  • Is suffering from personal issues such as family stress, or health problems
  • Is subjected to workplace bullying

In this news post, MDL’s Employment Law team take you through the steps needed for an effective performance management process, and give you some real-world examples of what not to do when you think an employee is underperforming. 

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How to manage underperformance in your business

As we spoke about in our previous blog post, there is a formal process you should follow when managing underperformance. Ensure you:

  • Promptly identify the problem
  • Assess and analyse the problem (eg how serious it is; how long it has existed)
  • Meet with the employee to discuss the problem and how it impacts the workplace
  • Allow the employee to have a support person attend the meeting, and focus on the problem without making it personal
  • Jointly devise a solution if possible – it can significantly improve the chances of an employee improving their performance if they consider they had an active role in the process
  • Monitor the employee’s performance, and ensure you provide continued, regular feedback

How to approach termination of employment

Obviously, the end of the line in performance management is termination of employment. If you’ve reached this position with an employee, the guiding principle is to ensure they receive “a fair go all round”.

Termination of employment is all about the process. It should only occur if every box is ticked and procedural fairness is provided.

The three examples below show cases where, for different reasons, the employment termination process wasn’t correctly followed, and the Fair Work Commission ordered various different means of redress for the affected employees. 

Real-world case example #1

Why the proper performance management procedure must be followed

In our first example, the reservations assistant at a well-known Sydney restaurant was dismissed because of her poor telephone manner in a conversation with a key customer, who later complained to the business.

The restaurant’s owner immediately ordered the employee to be terminated, making the subsequent meeting with the General Manager “a complete sham” according to the Fair Work Commission.

The employee was summarily dismissed that same day, without warning or notice for her alleged misconduct.

The outcome

The Fair Work Commission found that the employee’s treatment was “nothing short of appalling” and “manifestly unfair”. She was not told of the reason for the meeting; had no reasonable opportunity to respond to the allegations; and wasn’t given the opportunity to have a support person present.

She was shocked and distressed, yet was given no chance to compose herself and respond appropriately to the allegations. The employee was not provided with any written warning regarding her conduct, nor a letter setting out the reasons for her dismissal.

The Fair Work Commission held that reinstatement was not appropriate, and the employee was offered 12 weeks full pay as compensation; which was the period from the time of the incident to when she would have taken maternity leave. 

Real-world case example #2

Why performance management investigations need to be fair and thorough

Our second real-world example involves an employee who worked in the freezer section of a national supermarket chain’s warehouses. Employees were provided with Milo during their breaks, and the employee in question regularly took his allocated Milo home to prepare his own mix to bring to work.

When the employer was made aware of this, the employee was searched and Milo was found. The employee told the security officer that he brought the Milo and the container from home. His conduct was then subject to an investigation. 

The employee later confessed that the Milo came from the work lunchroom. He said he had initially given an untruthful answer because he’d been shocked when asked about the Milo.

The employer then summarily terminated the employee’s employment for serious and wilful misconduct for taking the Milo home and then lying about it.

The outcome

The Fair Work Commission held that there was no valid reason for dismissal. It found that the employee’s shocked and confused state contributed to his inconsistent responses.

The employee was reinstated and was compensated for his lost income during the period of his dismissal. 

Real-world case example #3

Why there must be a valid reason for performance management

In perhaps our most straightforward example of what not to do, the general manager of a Chinese language radio station was dismissed due to her ‘religion’.

The employer even confirmed with the employee that the decision was not for financial issues or relationship issues but because of her religion(!).

The outcome

Unsurprisingly the Fair Work Commission found that there was no valid reason for the employee’s dismissal, and awarded her the statutory maximum of 6 months’ pay. 

The Fair Work Commission also noted that as well as being unfair, the employee’s treatment was also discriminatory, and that the employer required immediate education regarding this conduct.

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What you can take out of these real world examples of poor performance management

As an employer you should ensure that you have appropriate policies and processes in place to manage alleged misconduct – and also make sure that you enforce those policies.

Furthermore, note that failure to follow appropriate policies and procedures, and failure to provide procedural fairness, can result in employers being ordered to reinstate employees and/or being ordered to pay substantial compensation to the effected employees.

Need advice on performance management at your business?

If you’d like more advice on the performance management process, including but not limited to the potential termination of employees, MDL’s Employment Law team can help.

To discuss your situation, contact McCarthy Durie Lawyers on 07 3370 5100 or fill out the contact form here.


We have assembled a highly experienced, capable team of legal practitioners, committed to delivering you expertise across all legal services. Find your local office: