Performance Management And Employee Termination

As an employer, it’s probably obvious that you’ll benefit the most from having motivated staff who are performing at their best, meeting expectations, and satisfying the standards you’ve set for them.

Unfortunately, things don’t always work out so perfectly!

When your staff are underperforming, it can be difficult to know what to do or how to address the situation.

Although addressing issues of underperformance may seem uncomfortable or awkward, it’s crucial to manage these situations appropriately and sensitively. Otherwise, the situation could spiral into an unhealthy environment for the whole workplace.

So, what should you do? In this article, we’ll touch on what constitutes ‘underperformance’ and why an employee might be underperforming. We’ll also go through the steps you should take if your employee isn’t performing adequately and you’re considering terminating their employment.

Employee termination is rarely a pleasant process for either party but, as you’ll find out in this article, it’s important you do it right.

A heads up: this article will only explore the termination process. You can find out more about the related process of redundancy here.

What Is Poor Performance?

Poor performance can encompass several facets of an employee’s behaviour. It could take the form of uncooperative conduct, a difficult attitude that impacts on other team members, not following workplace policies or the workplace handbook, or something as simple as not fulfilling one’s job description.

It’s important to note that underperformance is not to be confused with more serious behaviour such as harassment and other criminal conduct of an employee.

Can Poor Performance Be Explained?

In most cases, an employee’s underperformance has some underlying explanation.

Many factors can contribute to an employee’s poor performance, but some common ones are:

• The employee isn’t clear on what their day-to-day job is, compounded by a lack of understanding of the business’ objectives and policies
• There’s a toxic workplace environment, with the employee potentially being a victim of bullying, or there’s some other interpersonal conflict happening
• There are no regular check-ins between management and the employee, so the employee is not able to measure their performance
• The employee does not have the ability or training to properly complete their work
• The employee is experiencing personal issues unrelated to work

While it can be easy to feel frustrated when your employee is underperforming, it’s important to take a step back and consider how these above factors may explain their behaviour. This will give you context that will inform the next steps in your performance management process.

What Should I Do When An Employee Is Underperforming?

So, you’ve identified that an employee isn’t performing to the appropriate standards. What can you do about it?

It’s here that you’ll need to exercise effective performance management. This requires knowing which management problem you want to solve and choosing a performance management system that works for you and your employees. While this may sound complex, it’s made easier by implementing some clear guidelines that lay out what you expect of your employees and how they should behave.

The first step involves referring to your Workplace Policy and/or Staff Handbook. This should provide a clear outline of what performance management systems are in place in your workplace, the steps involved in these systems, and what these steps are meant to achieve. It should also outline what expectations and responsibilities are placed on the employee.

Making sure your employees have access to your Workplace Policy and/or Staff Handbook at the start of their employment will put you all on the same page about what’s expected. Plus, it will serve as a jumping-off point for discussions about underperformance.

When you and an employee are having a discussion about performance, an agenda for your initial and even second meeting can prepare and guide your conversation. An agenda gives the employee plenty of notice of what the meeting will be about, and it’s a useful recording tool should you encounter difficulties down the track.

If your employee isn’t meeting the standards laid out in the Workplace Policy and/or Staff Handbook, you may seek to progress from discussions and take disciplinary action.

Disciplinary action can take the form of a detailed warning or multiple warnings. The warning should both specify the problem and what action must be taken by your employee to address it. According to New Zealand’s Employment Relations Authority, the warning should be in a written format, and be ‘fair and reasonable in the circumstances’.

It can be difficult to gauge what ‘fair and reasonable’ is, so seeking advice from an employment lawyer is a good idea so you can make sure you get disciplinary action right.

How Do I Terminate An Employee?

If an employee’s performance does not improve to an acceptable standard, employers may look to terminate their employment.

Employers must remember that the termination cannot be harsh, unjust or unreasonable, as it might then constitute a Personal Grievance. The employer should give reasons for the termination, and the employee should get a chance to respond.

Generally, an employer can’t complete termination unless they’ve given the employee notice of their last day of employment.

The amount of notice an employee needs to be given may vary depending on their age and how long they’ve been employed. Employers may also need to take into account any stipulations about the termination process that were included in the employment contract.

Upon termination, an employee should also receive any outstanding remuneration and entitlements.

Can I Reduce Staff Hours?

Terminating employees isn’t always the most appealing option or path to take. Alternatively, if your business needs to, you can reduce staff hours.

To do so, you’ll need to check whether the Employment Agreement that your employee is under allows for these changes, and you need to comply with their requirements or processes.

If an Employment Agreement applies to your employee, then you are bound by the terms and conditions of their Agreement.

Every Employment Agreement contains a standard consultation clause that requires employers to consult employees if they intend to put significant changes into effect — which can include changes to their regular roster, work hours, or termination.

The Agreement also requires you to consult your employee’s representative (who can be another elected employee or a representative from a union).

So, if you are intending to reduce your permanent employee’s regular hours or terminate them completely, you must notify employees and their representatives.

You will have to discuss the changes and provide information in writing as soon as a definite decision has been made.

Takeaway

Ultimately, managing employee performance and considering employee termination is a delicate and stressful time for an employer. In these situations, having legal advice is crucial to making the best decisions and protecting your business from any claims that may be made against you. Get in touch with our friendly team on 0800 002 184 to ensure you handle the situation correctly.

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