Nobody enjoys this part of managing people. You've noticed someone isn't pulling their weight, you know you need to do something about it, and you're not sure where to start, or how to do it without landing yourself in trouble. If that's you, you're in good company. Most managers learn performance management the hard way, usually at 9pm the night before a difficult conversation.
The good news is that managing underperformance fairly isn't complicated. It just needs to be done properly, and in the right order. Here's how to do it the way Fair Work expects, without a law degree and without an HR department behind you.
Why getting the process right actually matters
In Australia, it's not enough to have a good reason to act. You also have to follow a fair process. An employee who's been managed or dismissed can apply to the Fair Work Commission for unfair dismissal, and the Commission looks closely at how you handled it, not just whether the performance was genuinely poor.
There's a timing element worth knowing. An employee generally can't lodge an unfair dismissal claim until they've completed a minimum employment period: six months, or 12 months if you're a small business with fewer than 15 employees. That window isn't a free pass to be careless, but it does mean you've got time to manage someone properly rather than rushing.
If you're a small business, the Small Business Fair Dismissal Code is your friend. Follow it, keep your records, and you've got real protection if a dismissal is ever challenged. It exists precisely because small employers don't have an HR team to lean on.
Step 1: Get clear on the problem before you say anything
Before the conversation, get specific. "Their attitude isn't great" won't cut it, but "three reports in the last month were submitted two days late, and two had errors the client picked up" will. Write down what the issue actually is, what good looks like, and what evidence you've got. If you can't describe the gap clearly to yourself, you're not ready to describe it to them.
Step 2: Have the first conversation
Keep it private, and keep it calm. The point of the first chat isn't to deliver a verdict. It's to understand why performance has slipped and to agree on what happens next. Sometimes there's a reason you didn't know about, such as unclear expectations, a training gap, something going on at home, or a health issue.
Lay out what you've observed, then actually listen. By the end, you both want to walk away with the same understanding: what needs to change, what support you'll provide, and when you'll check in. Jot down what you agreed while it's fresh.
Step 3: Put it in writing with a performance improvement plan
If the issue is more than a one-off, a written performance improvement plan (PIP) is the fairest thing you can do for both of you. It removes the guesswork and gives the person a clear, documented chance to turn things around.
A good PIP spells out the specific concern, the expectations they need to meet, the support you'll give, a realistic timeframe, and the dates you'll review progress. This is also the document that protects you. If things don't improve and it ever gets formal, a clear PIP is the evidence that you gave a fair go.
Step 4: Give a genuine chance to improve
Set a reasonable period, commonly four to eight weeks depending on the role and the issue, and then actually support the person through it. Check in on the dates you agreed, not just at the end. And let them bring a support person to any formal meeting. It's best practice, and refusing can count against you later.
Step 5: Use formal warnings if it's still not working
If performance hasn't improved despite genuine support, it's appropriate to move to a formal written warning. There's no magic number of warnings required by law, but the principle is simple. The person should clearly understand that their job is at risk, and they should have had a fair opportunity to fix things. Surprises are the enemy of a fair process.
Step 6: Dismissal, only as a last resort
If you've done all of the above and it still hasn't worked, dismissal may be on the table, but it's the final step, never the first. You need a valid reason relating to the person's capacity or conduct, and you need to have followed a fair process to get there.
Give them a chance to respond before you make the final call, allow a support person, and put your reasons in writing. If you're a small business, work through the Small Business Fair Dismissal Code checklist before you act.
Document everything as you go
If it isn't written down, it didn't happen, at least as far as the Fair Work Commission is concerned. Keep:
- Notes from every performance conversation, including the date, who was there, and what was discussed and agreed
- The performance improvement plan and any updates to it
- Any written warnings
- The termination letter and your reasons, if it comes to that
This isn't about building a case against someone. It's about being able to show, plainly, that you were fair.
The mistakes that catch managers out
- Being vague about the problem, so the person never really knows what to fix
- Skipping straight to a warning or a dismissal without a fair chance to improve
- Not writing anything down, then having no evidence the process was fair
- Moving too fast under pressure and tripping over your own process
- Letting the issue drift for months, then acting suddenly out of frustration
A note on legal grounding
This guide reflects Fair Work Act 2009 principles and Fair Work Ombudsman best practice guidance. It's general information, not legal advice. Every situation is different. For complex or high-risk cases, or anything you're genuinely unsure about, get professional advice before you act.
Want the whole process ready to use? Our Performance Improvement Plan Template Pack gives you the PIP template, plain-English guidance notes, a sample language guide, review trackers, and a meeting record template, all built on Fair Work principles and editable in Word. So you're not staring at a blank page when it matters.