Managing underperformance well has two goals, and they are not in conflict. The first is to give someone a genuine chance to improve, because that is usually cheaper and better for everyone than replacing them. The second is that if improvement does not come, the process you followed can stand up to scrutiny. A fair process serves both.
Before you start a formal process
Ask honestly whether the person knows there is a problem. Very often the answer is no — the concern has been discussed in your head and with other managers but never clearly with them. Starting a formal process without that groundwork is unfair and, if it ends in dismissal, is exactly the sort of thing the Fair Work Commission looks at.
Also ask what is causing it. Underperformance has a small number of recurring causes: unclear expectations, missing skills or training, inadequate tools or resources, a personal circumstance, or genuine unsuitability for the role. Only the last one is a performance problem in the sense people usually mean. The others have different and often easier fixes.
The steps
- Have the informal conversation first. Specific, documented in a short follow-up email, with a clear expectation and a date. See how to run a performance conversation. Many issues stop here.
- If it continues, hold a formal meeting. Give notice of the meeting and its purpose in writing, and tell the employee they may bring a support person. Not offering a support person is one of the most common procedural failures.
- Explain the concerns with evidence. Specific examples, specific dates, specific impact. Then give them a genuine opportunity to respond — and genuinely consider what they say before deciding anything.
- Agree a plan. What needs to change, how it will be measured, what support you will provide, and over what period. The period must be realistic for the role. Two weeks to fix something that takes a month to demonstrate is not a genuine opportunity.
- Confirm it in writing and give them a copy.
- Actually check in during the period. A plan you set and then ignore until the deadline is not support; it is a countdown.
- Review at the end. If it has improved, say so clearly. If it has partly improved, consider extending. If it has not, move to the next step with a clear warning about the possible consequences.
Warnings
There is no legal requirement for “three warnings” — that is workplace folklore. What matters is whether the person was made aware of the problem, given a real chance to fix it, and warned that their job was at risk. One clear, well-documented warning can satisfy that. Three vague ones may not.
Where small businesses need to be careful
The minimum employment period for a small business employer is twelve months, and the Small Business Fair Dismissal Code provides a defined pathway. But neither protects against a general protections claim, and those have no qualifying period. If a performance process starts shortly after an employee took personal leave, raised a pay query, made a complaint or exercised any other workplace right, the timing alone invites a claim that the real reason was the protected activity.
That does not mean you cannot manage performance in those circumstances. It means the documentation showing the concern pre-dated the protected activity — or exists entirely independently of it — becomes very important.
Keep the records
Every step: the notice of meeting, who attended, what was discussed, what the employee said, what was agreed, and the written confirmation. Contemporaneous notes carry far more weight than a reconstruction written after a claim arrives.
If the process is heading toward dismissal, it is worth getting a second opinion before the final meeting rather than after it. The cost of a conversation at that point is trivial compared to the cost of getting the last step wrong.