Formal ways to manage a performance issue

In some cases, informal meetings, development and support are not effective in raising an employee’s performance to the required standard. If this happens, you’ll need to consider a more formal approach with your employee.

Once you start down the path of performance improvement, it should be a forward-looking process.

You set out what the issues or concerns are and focus on these. If you try later to raise different, older issues then the process could be seen as being unfair and not in .

Check the and before doing anything. Many employment agreements or workplace policies have a set process to follow when a performance issue is identified which you will need to follow. 

Different to a disciplinary process

Managing a performance issue is different to managing a issue. Performance management — not disciplinary action — is needed to fix most performance issues. 

Disciplinary action is appropriate in the case of an employee’s misconduct. It’s important to use the correct process for the issue you have with your employee.

It’s an employer's obligation to try to resolve problems in good faith.

In cases of performance issues, good faith means giving an employee a real opportunity to improve their performance and helping them to do so, while making sure that they know and understand their performance expectations.

In cases of misconduct, this means conducting a fair and full investigation and giving the employee an opportunity to be heard. 

Misconduct

Managing formal intervention

Performance Improvement Plan

A (PIP) is a formal tool managers can use to help under-performing employees improve their work performance. 

A PIP should:

• document the manager’s concerns about the employee’s performance, including if there’s anything that might be affecting their ability to meet the required standard at work, for example, personal circumstances
• encourage constructive conversations
• offer solutions to the issues that have been identified
• support the employee by giving them clear, practical steps they can take to improve their performance, and a realistic timeframe for this
• describe what additional training the employee might get
• help the employee understand the process for resolving the PIP or escalating the issues that have been identified.

Managers can use these resources through the performance improvement process.

• Performance Improvement Plan (PIP) process map [PDF, 169 KB]
• PIP template [DOCX, 21 KB]
• PIP step-by-step guide [PDF, 156 KB]
• Sample letter - meeting to discuss putting in place a performance improvement plan [DOCX, 26 KB]
• Sample letter - putting in place a performance improvement plan [DOCX, 20 KB]

Warnings 

There is no specific requirement in employment law to give employees a series of warnings before . However, in a performance management situation a series of warnings is the most appropriate approach as it allows the employee to fully grasp what the performance gaps are and gives them time, with support, to get to the standard required.

Where the number and type of warnings are not specified, we recommend giving at least a written warning and a final written warning before terminating an employee.

What is appropriate must be what a fair and reasonable employer would do in the circumstances. Try to stand back and consider things objectively.

When making decisions on the nature, type, and number of warnings, you need to consider things like:

• the difficulty and type of tasks involved
• the impact of any ongoing performance issues on the organisation — for example, the size of the organisation and its ability to carry the underperformance
• the employee’s length of service
• the employee’s effort and progress toward improvement
• whether the performance issue was contributed to by the employer — for example, because of lack of role clarity, job structure, unclear expectations or cultural misunderstandings
• whether there were personal issues — for example, a physical or mental health condition.

Verbal warnings

Some employment agreements require the use of verbal warnings before any written warnings are issued. If this is required, follow this process.

If it’s not required, then it’s best to avoid verbal warnings because it’s difficult to ensure a clear process has been followed, and they could be contested. If you feel the need to ‘warn’ an employee informally, you may choose to say that you are issuing them with a ‘caution’.

Managers can use these sample letters through the formal performance management process.

• Sample letter - written warning for continued performance issues [DOCX, 28 KB]
• Sample letter - termination of employment on notice for poor performance (preliminary decision) [DOCX, 23 KB]
• Sample letter - termination of employment on notice for continued poor performance [DOCX, 20 KB]

Bullying or harassment claims in performance process

Sometimes employees say that the management of performance issues is not reasonable, and they might claim that the process itself is bullying or harassment. If this happens, consider the following:

• getting another person, like a manager, HR or external person, to investigate the claim
• using a different manager to manage the performance issues — don’t stop the performance management process. If the investigation shows there is no bullying, the initial manager can return to take over manging the performance issue
• offering an , counselling or similar support.

Generally, if good processes are followed, then it is not bullying or harassment when:

• issuing reasonable and lawful verbal and/or written work-related instructions and requiring them to be carried out
• insisting on high and consistent standards of performance in terms of quality, safety and team cooperation
• explaining concerns about work performance
• giving negative feedback, as long as it helps the employee understand what the issue is and how to improve their work performance
• warning employees in line with organisation performance policies.

The approach to managing a bullying or harassment claim — or stress claim, which often accompanies a claim of bullying — is to make sure that:

• all employees understand:
  • what is, and what is not, workplace bullying and harassment
  • the difference between bullying or harassment and the reasonable actions that managers can take.
• all managers have a good understanding of, and training, in:
  • the organisation’s performance management policies and procedures
  • giving feedback
  • reasonable actions that managers can take
  • a fair process
  • the process steps and possible outcomes for employees who are not achieving the required level of performance.

This will make it easier and less stressful on everyone when managing employees who are not fully performing in their role.

Handling stress claims

During formal or informal performance management, or when a manager gives negative feedback, an employee might say that:

• their performance issues are due to stress
• the performance management process is causing stress.

If an employee says their performance issues are due to stress, the manager can:

• reconsider review dates
• offer EAP, counselling or similar support
• ask for medical evidence
• consider other relevant circumstances — like personal issues or workplace issues the employee has raised — when deciding whether to issue a warning or dismiss the employee.

If an employee says that the performance management process is causing stress, the manager should:

• review their expectations and process to make sure they’re reasonable — it might be worth getting someone else to check this
• determine if any steps can be put in place to reduce stress (using medical evidence)
• offer EAP, counselling or similar support.

As long as the process followed is fair and reasonable, there is no reason to stop. Managers cannot force an employee to meet with them if they are away from work because they are genuinely sick. However, managers could request a medical certificate.