Managing Underperforming Employees: Fair Work Compliant Process
A step-by-step guide for Australian employers on managing underperforming employees within the Fair Work framework. Covers informal feedback, formal performance improvement plans, support person rights, reasonable timeframes, documentation, and when dismissal is justified.
Informal feedback first: address issues early
The most effective — and legally safest — approach to managing underperformance starts with informal, early intervention. When you first notice performance falling below expectations, address it promptly through a private conversation. Be specific about what the performance issue is, provide concrete examples, explain what the expected standard is, and ask the employee if there are any factors affecting their performance. Many performance issues have underlying causes that can be resolved: unclear expectations, inadequate training, personal difficulties, health issues, or workplace conflicts. An informal conversation often resolves the issue without the need for a formal process. Document the conversation in a file note — record the date, what was discussed, and what was agreed. Follow up in a reasonable timeframe (usually 2-4 weeks depending on the issue) to check whether performance has improved. If it has, acknowledge the improvement. If not, a second informal conversation with a clearer message about the seriousness of the issue is appropriate before moving to a formal process. The Fair Work Commission consistently looks at whether the employer made genuine efforts to address the issue informally before escalating — jumping straight to formal warnings or termination without any prior feedback is one of the most common reasons employers lose unfair dismissal cases.
Formal performance improvement plan (PIP)
If informal feedback does not resolve the performance issue, the next step is a formal Performance Improvement Plan (PIP). A PIP should be a structured, written document that clearly sets out: the specific performance deficiencies (with examples and evidence), the expected standard of performance (referenced to the position description, KPIs, or award classification requirements), the actions the employee must take to improve, the support and resources the employer will provide (training, mentoring, adjusted workload, additional supervision), a reasonable timeframe for improvement (typically 4-8 weeks, depending on the complexity of the role and the nature of the issues), how progress will be measured and reviewed, and the consequences if performance does not improve (which may include further warnings or termination). Present the PIP to the employee in a formal meeting and allow them to bring a support person. Give the employee time to read and consider the PIP before signing it. The employee's signature indicates they have received the PIP, not necessarily that they agree with its contents. If the employee refuses to sign, note this on the document and have a witness sign instead. Schedule regular check-in meetings during the PIP period to discuss progress, provide feedback, and adjust support measures if needed.
Support person rights: what employees are entitled to
Under the Fair Work Act, an employee who is called to a meeting that could result in a warning or termination has the right to request a support person. This right applies to formal performance management meetings, disciplinary meetings, and any meeting where the employee is being told their employment may be at risk. The support person can be a colleague, union representative, family member, or friend. The support person's role is to provide emotional support and witness the proceedings — they are not an advocate and generally should not speak on behalf of the employee or answer questions directed to the employee, though they may request breaks or clarification. Refusing to allow a support person is a factor the Fair Work Commission considers in assessing whether a dismissal was procedurally fair. If an employee requests a support person, you must allow a reasonable delay (typically a few days) for them to arrange one. You should inform the employee of their right to a support person in the meeting invitation letter. You are not required to pay for the support person's time or travel costs. If the chosen support person is unavailable for an unreasonable period, you can proceed with the meeting provided you have made genuine efforts to accommodate the request and the employee has been given sufficient notice.
Reasonable timeframes: how long to give
The timeframe you allow for improvement is a critical factor in whether a subsequent dismissal is found to be fair. The Fair Work Commission assesses whether the employee was given a 'reasonable opportunity to improve,' and what is reasonable depends on the nature of the performance issue, the complexity of the role, and the employee's length of service. For straightforward issues (such as punctuality, meeting basic administrative deadlines, or following established procedures), a 2-4 week improvement period is generally reasonable. For more complex performance issues (such as developing new skills, improving the quality of professional work, or addressing interpersonal issues), 4-8 weeks is more appropriate. For senior roles with complex responsibilities, up to 12 weeks may be warranted. During the improvement period, provide regular feedback — at least weekly for short PIPs, and fortnightly for longer ones. If the employee is making genuine progress but has not fully met the standard by the end of the PIP, extending the timeframe by 2-4 weeks demonstrates good faith. If the employee shows no improvement or the performance has worsened, you may not need to extend. The key is that the employee had a genuine, reasonable opportunity to improve with adequate support — not that they were set up to fail with an unrealistic timeline.
Documentation requirements: what to record and keep
Thorough documentation is the foundation of a defensible performance management process. Without it, an employer's account of events is simply one person's word against another's — and the Fair Work Commission will draw adverse inferences from a lack of documentation. At each stage of the performance management process, document: the date and time of each meeting or conversation, who was present (including any support person), what was discussed (specific performance issues, examples, and evidence), what the employee said in response, what was agreed or directed, and the next review date. For formal stages, provide the employee with written confirmation of the key points within 1-2 business days of the meeting. Keep copies of all documents — performance reviews, PIPs, warning letters, file notes, relevant emails, and any evidence of the performance issues (such as customer complaints, error reports, or missed deadlines). Store these securely and in accordance with your privacy obligations. If you ultimately dismiss the employee, this documentation will be your primary evidence in any unfair dismissal claim. The Fair Work Commission will examine whether the documentation shows a fair, consistent, and genuine performance management process — or whether it appears to be a retrospective justification for a decision already made.
When you can dismiss for underperformance
Dismissal for underperformance is justified when the employer has followed a fair process and the employee has failed to improve to an acceptable standard despite being given a genuine opportunity. To minimise unfair dismissal risk, ensure the following elements are in place before proceeding with termination: you have a valid reason (the employee is not meeting the inherent requirements of the role), the employee was notified of the specific performance issues, the employee was given a reasonable opportunity to improve (with support), the employee was warned that failure to improve could result in termination, the employee was allowed a support person at relevant meetings, and you genuinely considered the employee's responses and any mitigating factors. When you decide to proceed with dismissal, meet with the employee, explain the decision and the reasons, and provide the required notice (or payment in lieu). Issue a letter of termination confirming the date of termination, the reason, the notice period, and details of final pay including accrued leave. Process the final pay within 7 days or the next regular pay cycle. Use our Notice Period Calculator to determine the correct notice and our Leave Calculator to calculate accrued leave balances. Keep all records of the performance management process for 7 years. If the employee files an unfair dismissal claim, your documentation of a fair, thorough process is your best defence.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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