Managing employee underperformance at work

Authored by Rebecca Preston, Senior Associate, Corrs Chambers Westgarth. Updated by the LexisNexis Legal Writer team.

An introduction to performance management

“Performance management” can refer to a number of things. It can mean the day-to-day supervision of an employee’s work, with regular, informal communications about work expectations and delivery of work, coaching and providing informal feedback on performance.

Performance management can also refer to a formal process through which an employee’s performance is reviewed and monitored, usually as a result of the identification of some shortcoming in their work performance. These processes would commonly include putting in place specific performance targets and monitoring the individual’s progress towards attainment of those targets. Failure to achieve targets may result in disciplinary action up to and including termination of employment.

It is the latter meaning of “performance management” that is the focus of this guidance note.

Performance management must not “manage out” employees

It is important for employers to remember that while performance management may often lead to dismissal, the process itself cannot be used to “manage out” an employee.

See, eg Moretti v HJ Heinz Co Australia Ltd. After 18 years of employment, Mr Moretti underwent a performance review in May 2011. In a meeting in June 2011, it was alleged that Mr Moretti was told that Heinz did not have a job for him and that he should resign otherwise he would be performance managed out of the business — no evidence was provided regarding this.