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How to Manage an Employee’s Performance & Associated Disciplinary Action

1          ISSUE

You have an employee who is under-performing in their work or behaviour and you wish to manage their performance and monitor it moving forwards. You may consider that a failure to improve in accordance with set guidelines should result in some form of disciplinary action[1].

In doing so it is important to consider various factors.

This article does not cover situations where immediate dismissal as a result of serious / gross misconduct is appropriate.


2.1       The terms of the employment contract and any relevant industrial award

You need to consider the terms of the relevant employment contract and any other relevant provisions which may apply as a result of an applicable award. These may dictate part of the process which must be undertaken and/or the available disciplinary actions the breach of which may result in an unfair dismissal claim.

2.2       Policy and procedure for dismissal & adherence to policy

Ensure that you have in place a policy which covers performance management procedures and adhere to them. Contact us for assistance in this regard.

2.3       Unfair dismissal – Part 3-2 of the Fair Work Act 2009 (Cth) (Act)

Protected employees: National system employees are protected against “unfair” dismissal if they have completed at least 6 months of employment and a modern award or enterprise agreement applies to them. Alternatively if they have worked for more than 6 months for the employer and their income is less than the high income threshold then they will also be protected[2].

Unfairness: A person has been unfairly dismissed if:

  • the person has been dismissed[3];
  • the dismissal was harsh, unjust, or unreasonable[4];
  • the dismissal was not consistent with the Small Business Fair Dismissal Code; and
  • the dismissal was not a case of genuine redundancy[5].

Harsh, unjust or unreasonable: The Fair Work Commission can take into account any matter that it considers relevant but “must” take into account the following in deciding whether or not the dismissal was harsh, unjust, or unreasonable:

(a)       whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees);

(b)      whether the person was notified of that reason;

(c)       whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;

(d)      any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal;

(e)       if the dismissal related to unsatisfactory performance by the person, whether the person had been warned about that unsatisfactory performance before the dismissal;

(f)       the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g)       the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal.

Therefore, be upfront (don’t ambush), reasonable, clear, give warning(s), and allow the employee to have a support person present during discussion(s). Listen to the employee before making a decision.

Small businesses & unfair dismissal: Importantly, employers who employ fewer than 15 employees are covered by unique provisions contained in the Small Business Fair Dismissal Code. Furthermore, employees who have worked for less than 12 months for small business employers are not eligible to make a claim for unfair dismissal. Otherwise, small business dismissals which comply with the Small Business Fair Dismissal Code are deemed to be fair.

2.4       General protections provisions – Part 3-1 of the Act – adverse action and workplace rights

Briefly, a person must not take adverse action against another person in relation to the exercise of a workplace right by that other person.

The term “workplace right” is very broad in scope and includes, without limitation any process under a workplace law e.g. cashing out leave, making flexibility arrangements, taking parental leave, taking industrial action, temporary absences etc etc.

The term “adverse action” is also similarly broad, and includes, without limitation, dismissal or the alteration of the employees position to the employees prejudice.

Employees are also protected from coercion and undue influence as well as misrepresentation about workplace rights.

So, seek advice, and make sure your reasons for disciplining are only performance related.

2.5       Bullying – Part 6-4B of the Act

Behaving unreasonably towards the employee where that behaviour creates a risk to health and safety could also constitute bullying. However, reasonable management action carried out in a reasonable manner does not constitute bullying.

2.6       Discrimination legislation – protected attributes

Ensure that you do not implement your performance management program in an inappropriate manner where the employee has a protected attribute[6] to minimise the risk of falling foul of anti-discrimination legislation.

2.7       Proportionality of the disciplinary action

Any performance management program should be closely monitored. The disciplinary action taken should be proportionate to the conduct of the employee. Record and confirm everything in writing.


[1] For example in the form of a warning or dismissal

[2] s.382 of the Act. See also ss383 and 384.

[3] Either terminated by the employer or because the employee was forced to resign because of the employers conduct. See s.386 of the Act for further details.

[4] See s.387 of the Act

[5] See s.389 of the Act

[6] Race, colour, sex, sexual preference, age, physicial or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion or national extraction or social origin.


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