How to manage an underperforming employee

Here's what to do to get your employees back on track and performing!

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February 10 2017
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Do you have an employee that is underperforming? This is how you get them to reach their potential! 

Identify the problem

How is the employee underperforming? How long has it been happening? Why are they not reaching their goals? This has to be specific and based on their work performance. If you make it personal, you're leaving yourself open to legal action.

Write down everything

If you don’t write it down, it can be argued that it didn’t happen. Keep emails, write down conversations (make sure to include the date!) and keep copies/take photos of examples of work that your employee needs to improve upon.

Meet with the employee

Give the employee a heads up about why you want to meet with them so they have a chance to prepare, just like you have. Make sure the meeting is in a private space away from other employees.

Tips for this meeting:

  • Outline what is required for the role, and where the shortfalls are.
  • Remember: talk about the issue, not the person.
  • Ask what is causing the issue (e.g. personal reasons, confused about role).
  • Clarify with the employee, reiterate what they’ve just said to you so they know you’ve understood.

Come up with a solution

Work together to figure out how you can best solve the problem e.g. more training or guidance, less work allocated to the employee etc. Give tips and provide ongoing feedback. 

Document a clear performance plan

Again: document everything. Set out a very clear performance plan with specific goals, realistic dates to achieve them, and how you’ll help the employee get there. Have your employee sign off on it as well, they need to be in the know.

Click here for a performance improvement template

Monitor performance

Give continual feedback and set up a meeting down the track to check back in. If performance hasn’t improved, you might need to take more serious action like counselling or formal warnings. Give your employee any formal warnings in writing, and state that they risk being dismissed if there is no improvement in performance.

Click here for a formal warning template.

Terminate employment

This should be an absolute last resort. There are two types of dismissals: summary and ‘other’.

  • Summary dismissal 
    When you dismiss an employee without notice or warning. This can only be done if there is some serious misconduct (i.e. theft, fraud, violence or serious safety breaches). Summary dismissals are quite rare.

  • Other dismissal 
    When you have to give a valid reason why your worker is being dismissed, i.e. the reason must be based on the employee’s conduct or ability to do their job.

Here we're focusing on 'other' dismissals. You need to be confident you have done everything in your power to retain your employee. Performance-based terminations should never come as a surprise to the worker. 


Here is a letter of termination template.

Know your employees’ rights

Provide the employee with their entitlements such as their notice of termination and any annual leave that they have accrued. 

Know your rights and responsibilities

Employers with less than 15 staff are covered by special dismissal arrangements. You need to strictly follow the Small Business Fair Dismissal Code. Follow the code then fill out the Small Business Fair Dismissal Code Checklist.

Keep the Checklist with your records, it will help you if an employee makes an unfair dismissal claim.

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