Managing underperformance fairly

• Put duties and standards in the position description and in measurable terms where you can (output, accuracy, deadlines, behaviours).
• Raise issues early, in a private conversation, rather than saving them for an annual review.
• Ask whether something is getting in the way: workload, tools, training, a disability or illness, or caring responsibilities. Each of these changes what a fair response looks like.
• Separate performance (capacity to do the job) from conduct. Serious misconduct, such as theft, fraud or assault, follows a different path.

The Fair Work Ombudsman’s managing performance guidance recommends a written performance management policy that explains what underperformance is, how it is handled and the possible consequences, applied consistently.

1. Prepare examples: dates, pieces of work, targets missed, feedback already given.
2. Invite the employee in writing, stating the purpose and that they may bring a support person.
3. In the meeting, describe the gap between what is expected and what is happening. Ask for their explanation and take it seriously.
4. Agree what support you will give (training, coaching, adjusted workload) and what they need to achieve, by when.
5. Send a short written summary afterwards and keep a copy on file.

The Fair Work Ombudsman publishes a free improvement plan template and underperformance checklists on its performance page. Hold the review meetings you schedule, record the outcome of each, and recognise improvement when it happens.

• State the reason for the warning and the details of the performance concern.
• Set out what must change and by when.
• Say plainly that failure to improve could lead to termination of employment.
• Leave a genuine period between the warning and any decision, so the employee can understand the risk and try to improve.

A warning that is vague, or a dismissal that follows a warning almost immediately, gives the employee little real opportunity to improve and weakens your position if the dismissal is challenged.

There is no obligation to offer a support person unprompted, but the Ombudsman recommends asking, and doing so removes an easy point of dispute.

• High income threshold: an employee not covered by an award or enterprise agreement who earns above the threshold cannot claim. For dismissals on or after 1 July 2026 the threshold is $190,100 and the compensation cap is $95,050 (Fair Work Commission).
• Casual employees count only if they worked on a regular and systematic basis and reasonably expected that to continue.
• Small business employers (fewer than 15 employees, counting associated entities and regular casuals) can rely on the Small Business Fair Dismissal Code. If you follow it, the dismissal is not unfair.

For a performance dismissal, the Code requires a warning that the employee’s job is at risk if there is no improvement, a valid reason based on conduct or capacity, an opportunity to respond, a reasonable chance to fix the problem, and allowing another person (not a lawyer acting professionally) to be present in discussions where dismissal is possible. Keep the Code checklist and your records, because you must show you complied. For notice, final pay and paperwork, see ending employment lawfully.

Performance processes often start soon after an employee raises a pay query, lodges a complaint or takes personal or parental leave. That timing does not stop you managing genuine performance issues, but you need evidence that the concerns existed independently and that the decision was made for those reasons. The general protections also cover employees who are temporarily absent because of illness or injury.

• Record when performance concerns were first raised, and by whom.
• Have the decision made by someone who can explain the reasons from the documents.
• Pause and get advice if the employee has just made a complaint, taken leave or disclosed a health condition.