Meeting with an unsatisfactory performer? 8 steps to consider

ELM: Almost half of Australia’s employers intend to change their approach to performance management within the next 18 months, according to research from Mercer. In doing so however, there is a strong need for them to also understand their legal obligations around the underperformance of employees. Can you provide us with some guidance on when and how to terminate an underperforming employee from a legal and ER perspective Helene?

Helene: These general principles apply to the termination of any employee’s employment:

1. Follow any policy or procedure that applies at your workplace to performance management and termination of employment. If you do something differently from what is set out in the policy, be satisfied that you have reasonable grounds for doing so.
2. Keep in mind that there is no fixed time for when an employee’s performance should improve as it will depend on the particular employee (including their position and seniority) and their performance problems. Some performance issues, such as tardiness, should be able to be addressed immediately while others, such as communication skills, will take longer to improve.
3. Provide the employee with the opportunity to have a support person with them and, before any discussion, clarify and confirm the role of the support person in that meeting.
4. Prepare scripts for meetings with the employee, take notes during meetings with the employee and in written warnings or letters of termination, set out the reason for the warning or the termination of the employee’s employment.
5. Before terminating the employment of an employee who is eligible to bring an unfair dismissal claim, be satisfied that they have had an opportunity to respond to the concerns regarding their performance and they have been warned that if their performance did not improve, their employment may be terminated.
6. Be satisfied that the employee’s employment is being terminated because of their poor performance and not because of a reason that is unlawful (or reasons that include an unlawful reason).
7. Ensure that the decision maker is clearly identified and that they understand the lawful reasons for terminating the employee’s employment.

ELM: HR teams can rely on several sources when developing their strategy to manage underperforming employees; what steps would you suggest for our readers who are looking to conduct the meeting with an unsatisfactory performer?

Helene: I suggest the following:

1. Prepare. It is critical that HR and the manager conducting the meeting prepare for it.
2. Identify the problem. Be able to explain to the poor performer the gap between the employer’s expectations of them and what they are actually doing.  Provide examples to the employee of where their performance is inadequate or requires improvement.
3. Buy in. Where possible, have the employee suggest and agree to what can and should be done to improve their performance.  This will include what they need to do themselves and what the employer will do to assist them.
4. Timeframe for review. Set up a time for the next meeting with the employee to discuss their performance.  The employee should know when their performance will next be reviewed and by when they need to demonstrate an improvement.
5. An employer should warn an employee that a potential consequence for them if their performance does not improve is further disciplinary action, up to and including the termination of their employment.  This is particularly important where the employee is eligible to bring an unfair dismissal claim.
6. Confidentiality. In managing an employee, ensure that only those who need to know are aware that the process is underway or that discussions are taking place.  If the employee brings a support person with them to the performance discussions, remind the support person that the obligation of confidentiality applies to them also.
7. Respect. Always treat the employee with respect and offer them support throughout the performance management process.  Employees may find it very difficult and upsetting.   Managers may need support from HR too.
8. Regular. Discussions about performance (both good and poor) should ideally occur regularly.

ELM: Performance management vs termination? There is a lot of discussion around this topic. What are your views on this based on experiences you’ve been part of.

Helene: It depends on a whole range of factors including the circumstances of the individual employee, their terms and conditions of employment, the employer’s policies and procedures and the particular performance concerns.

Where an employee is able to bring an unfair dismissal claim, a good performance management process before any decision is made to terminate the employee’s employment, is an important part in successfully defending any such claim.

In the case of an employee who alleges that their employment was terminated for a prohibited reason or who alleges that they have been bullied, evidence of the performance management process that was followed by the employer can assist in successfully defending those claims.

Importantly, not all performance management processes will result in the termination of the employee’s employment: employees can and do improve.

ELM: No company wants to be held accountable for being non-compliant to their legal obligations in this space. What are some practical steps you would provide for those who want to avoid liabilities associated with performance management?

Helene: As a matter of fairness and best practice (and particularly where an employee is eligible to bring an unfair dismissal claim), an employee who is being performance managed should have a clear understanding of:

• their employer’s expectations of them
• where they are falling short of those expectations
• what they need to do in order to improve their performance
• what the employer will do to support them in improving their performance
• the timeframes in which an improvement is required and how their improvement will be measured
• the risk that their employment may be terminated if their performance does not improve.

It is important that notes are made of discussions with employees.  Contemporaneous notes are the best evidence of discussions with an employee in the event that a claim is subsequently made against the employer.  Where appropriate, the outcome of that discussion and the expectations of the employee should also be confirmed in writing.

Before terminating the employment of any employee, the employee should have the opportunity to respond to the proposed decision to terminate their employment.  Any response that they provide to that proposed decision should be taken into account by their employer before the decision to terminate is confirmed.  It may be appropriate to have a short break while the employee’s response is considered.

Finally, it is critical that the employer follows any applicable performance management policies and procedures that apply.  If an employee makes a workers’ compensation claim as a result of the performance management process, it will assist the employer in responding to that claim if it is able to establish that it followed its own policies and procedures (or that any departure from those policies was a reasonable).

ELM: Underperformance is only one reason an employee’s employment may be terminated. In your opinion, what are you seeing as trending other reasons; why these?

Helene: An employee’s employment may also be terminated for misconduct or serious misconduct.  This potentially includes a broad range of inappropriate conduct engaged in by an employee, including sexual harassment or bullying, theft, misuse of an employer’s confidential information and posts on social media that are detrimental to the employer’s business.

There can be a correlation between the reasons for termination of employment and the introduction of new technology.  For example, when employees were first provided with access to the internet in the workplace, there were a number of cases that considered whether the termination of employment for viewing or distributing inappropriate material was harsh,  unjust or unreasonable.   More recently, the cases have considered terminations where employees have used social media inappropriately.   As the line between work and out of work activities continues to be increasingly difficult to identify, we are likely to see more situations where an employee’s employment is terminated for reasons they maintain are unrelated to their work.

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About Helene Lee:

Helene is an employment and labour lawyer based in Melbourne, and Partner at Norton Rose Fulbright.

Helene advises employers on all areas of employment, industrial relations and anti-discrimination law. This includes advising clients on contracts of employment, performance and conduct management issues, restructuring and termination of employment. She is also experienced in advising on the employment aspects of mergers and acquisitions and transfer of business. Helene’s industrial experience includes strategic industrial relations planning, industrial action and negotiating and drafting enterprise agreements. She also conducts workplace investigations and litigation on behalf of her clients (including unfair dismissal, adverse action and breach of contract claims).

Her experience in-house, including three years as General Counsel, HR Legal Services at Telstra, provided Helene with an invaluable insight into clients’ drivers and requirements and the benefits of clear, timely and practical advice. She adopts a commercial and pragmatic approach in advising clients while maintaining the highest standard of legal advice.

Helene was one of the top performing speakers at Employee Performance Management & Development in February, and joins the August edition as Chair person for day two. She will also be moderating one of the rotating roundtables at the event (a new feature to promote open discussion for all participants).