Managing Underperformance and Performance Improvement Plans in Australia

Table of Contents

1. The direct answer
2. What is underperformance?
3. Common forms of underperformance
4. Underperformance versus misconduct, incapacity, redundancy and conflict
5. Why employees may underperform
6. Role clarity, standards and lawful directions
7. Identifying the actual performance gap
8. Informal feedback and coaching
9. Preparing for the first performance meeting
10. Giving the employee an opportunity to respond
11. Health, disability and reasonable adjustments
12. Leave, flexible work and caring responsibilities
13. Workplace complaints and protected rights
14. Bullying allegations and reasonable management action
15. When a workplace investigation is required
16. Performance warnings
17. What is a performance improvement plan?
18. Designing a defensible PIP
19. Reasonable PIP duration
20. PIP meetings, reviews and revisions
21. Outcomes — success, partial improvement and failure
22. Redeployment, altered duties and demotion
23. Termination for unsatisfactory performance
24. Small-business employers
25. Probationary employees
26. Unfair dismissal, general protections and discrimination risk
27. Recordkeeping and internal communications
28. Issue-classification table
29. Process table
30. PIP framework table
31. Evidence checklist
32. Performance meeting checklist
33. Common employer mistakes
34. Practical action plan
35. Worked examples
36. When urgent legal advice is needed
37. Conclusion
38. Frequently Asked Questions

What is underperformance?

Underperformance is the persistent failure of an employee to meet the legitimate, lawful performance standards that apply to the role. The Fair Work Ombudsman describes underperformance as including unsatisfactory work performance, failure to follow workplace policies, disruptive or negative behaviour, and non-compliance with reasonable instructions. The unifying feature is a measurable gap between expected and actual performance against documented standards.

Performance gaps must be measured against something. A position description, KPIs, the contract, the award or enterprise agreement, written policies, training materials and previous reviews are the usual sources of the relevant standard. Where a standard has never been communicated, the first step is rarely to discipline — it is to clarify and confirm what is expected.

A single mistake or isolated bad day is not, on its own, underperformance. Underperformance is concerned with patterns — repeated quality errors, persistent failure to meet output or attendance expectations, ongoing inability to follow systems, or consistent shortfalls against KPIs that the employee has had a genuine opportunity to meet.

Common forms of underperformance

Underperformance can present in a range of ways. The following categories help employers identify the issue and choose the right pathway:

• Quality. Repeated errors, rework, customer complaints or quality-assurance failures.
• Quantity. Persistent shortfalls against measurable output, sales, billable hours or volume targets.
• Timeliness. Missed deadlines, late delivery, slow response times or chronic lateness.
• Reliability. Unpredictable attendance, unexplained absences and failure to plan or hand over work.
• Knowledge or skill. Inability to perform required tasks despite training and reasonable opportunity to learn.
• Behaviour. Behaviour that is unsatisfactory but does not amount to serious misconduct — for example, poor communication, defensiveness or failure to collaborate.
• Policy compliance. Failing to follow reasonable workplace procedures and systems consistently.
• Customer or client outcomes. Recurring complaints, poor satisfaction scores or loss of clients linked to the employee's work.

Some matters present as a mix of types. A salesperson missing targets may have a knowledge gap, a workload problem or a behavioural issue. The right intervention depends on diagnosing the cause, not just the symptom.

Underperformance versus misconduct, incapacity, redundancy and conflict

One of the most common employer mistakes is treating every workplace problem as a performance issue. Underperformance must be distinguished from a number of related but legally distinct concepts.

Underperformance versus misconduct. Misconduct involves a wilful or careless breach of the rules — disobeying a lawful direction, breach of policy, dishonesty, abuse, unsafe work practices and similar conduct. The remedy is usually a disciplinary process. Where the employee knows what is required and chooses not to do it, performance management is the wrong tool.

Underperformance versus serious misconduct. Serious misconduct under regulation 1.07 of the Fair Work Regulations 2009 covers conduct such as theft, fraud, assault, intoxication and refusal to carry out a lawful and reasonable instruction. Where serious misconduct is alleged, summary dismissal may be available after proper inquiry, but the framework is different. See the dedicated guide to terminating employment for serious misconduct. Ordinary underperformance does not ordinarily justify summary dismissal.

Underperformance versus incapacity. Incapacity refers to a present inability to perform the inherent requirements of the role, often because of illness, injury or disability. The analysis turns on medical evidence, reasonable adjustments, consultation and discrimination law. Treating disability-related limitations as ordinary poor performance is a serious legal risk and should not be done without specific advice.

Underperformance versus redundancy. Redundancy occurs where the employer no longer requires the role to be performed by anyone. It is a problem of role design, not the incumbent. Using a PIP to manoeuvre an employee out of a role that is in fact being eliminated is a recipe for both an unfair dismissal claim and a finding that the redundancy was not genuine under section 389 of the Fair Work Act. The dedicated guide to genuine redundancy and consultation sets out the correct framework.

Underperformance versus workplace conflict. Interpersonal conflict between staff members is not performance management. Conflict resolution, mediation, supervision changes or — where allegations are serious — a workplace investigation is the right approach. Using a performance process to address what is really a conflict produces poor results and increases legal risk.

Why employees may underperform

Before designing an intervention, the employer should consider why the performance gap exists. The Fair Work Commission frequently asks what the employer did to understand and address the cause, not just the symptom. Common causes include:

• insufficient or outdated training on systems and processes;
• unclear or undocumented role requirements;
• unrealistic or shifting expectations and targets;
• excessive workload or conflicting priorities;
• inadequate equipment, systems or information;
• poor supervision, feedback or coaching;
• changes to the role, team or technology that have not been managed;
• health, disability, caring or personal-life pressures;
• workplace conflict or culture problems affecting the employee's capacity to work; and
• genuine skill or judgement gaps that may or may not be remediable.

Diagnosing the cause does not excuse the underperformance — it shapes the intervention. A training gap is not solved by a final warning; a workload problem is not solved by a PIP; a health issue is not solved by either.

Role clarity, standards and lawful directions

Performance management is only meaningful against a documented standard. The starting point is therefore the role itself. Employers should be able to point to:

• a current position description that reflects what the employee is actually expected to do;
• measurable performance standards — KPIs, targets, quality measures or service levels;
• reasonable, lawful directions and instructions communicated during the employment;
• the relevant award or enterprise agreement and any classification descriptors; and
• internal policies that bear on the role, such as quality, customer service, attendance or conduct policies.

Where the standard is purely subjective — for example, "professionalism" or "attitude" — the employer should translate it into observable behaviour before raising it as an issue. "Attitude" problems framed without specific examples are difficult to manage and difficult to defend if challenged.

Identifying the actual performance gap

The employer should be able to articulate, in writing, three things before taking any formal step:

1. what the required standard is and how it is documented;
2. what the employee's actual performance is, with specific examples; and
3. what the gap between the two is, expressed measurably wherever possible.

That framing forces useful questions. Has the standard been communicated to the employee? Has it been applied consistently across the team? Has the employee had the training, resources and time to meet it? Are there workload, supervisory or system issues that have contributed? A gap that cannot be described concretely is rarely a gap that can be defended as a reason for disciplinary action.

Informal feedback and coaching

Many performance concerns can be resolved through informal feedback. A timely, candid conversation that identifies the concern, offers support and invites the employee's perspective will often produce improvement without a formal process. Notes of those conversations should be kept, because they may become relevant if matters do not improve.

Informal feedback is not appropriate where the issue is serious, where it has been raised before without improvement, where misconduct is suspected, where safety is engaged or where the contract, policy or award requires a particular process. Skipping informal stages is not, by itself, unfair — but doing so without good reason often is.

Preparing for the first performance meeting

The first formal performance discussion is the foundation of everything that follows. The employer should:

• identify the specific concerns and the supporting evidence;
• review the position description, KPIs, contract and applicable award or agreement;
• consider any known health, leave or workplace-right issues;
• give the employee adequate notice of the meeting and its purpose;
• offer the employee the opportunity to bring a support person;
• arrange a private, neutral location and reasonable time; and
• prepare to listen, not just to deliver a message.

Procedural fairness requires that the employee know what concerns are being raised, in enough detail to respond meaningfully. Generic statements that performance is "not where we need it to be" are not enough. Specific examples, dates, documents and comparisons with the required standard should be available.

Giving the employee an opportunity to respond

Listening to the employee's response is not a formality. The employee may identify factors the employer did not know about — health issues, workload pressures, system problems, bullying, supervisory failures or misunderstandings about the standard. Those factors may change the diagnosis entirely.

The employer should consider the response carefully, check anything that can be checked and, where the employee's explanation has merit, adjust the approach. Where the explanation does not resolve the concern, the employer can proceed — but it should record both the explanation and the reasons for proceeding. Decisions made without considering the response are a hallmark of predetermination, which the Fair Work Commission treats as a serious procedural failure.

Health, disability and reasonable adjustments

If a health condition, injury or disability is or may be affecting performance, the matter cannot be managed as ordinary underperformance. Multiple legal frameworks come into play:

• the Disability Discrimination Act 1992 (Cth) and state and territory equivalents;
• the general protections under Part 3-1 of the Fair Work Act, including protections against adverse action because of disability or because the employee exercised workplace rights;
• the temporary-absence protection under section 352 of the Fair Work Act;
• workers compensation and return-to-work obligations under state legislation; and
• work health and safety duties under the relevant WHS Act.

The employer should distinguish unwillingness from inability, temporary illness from longer-term incapacity, poor performance from disability-related limitations, and inherent requirements of the role from preferred methods of working. Appropriate medical information — relevant, current and properly authorised — should be sought, with consent, where necessary. Demanding unrestricted medical records, or treating an employee's use of personal leave as evidence of underperformance, is the kind of conduct that turns a performance matter into a discrimination or general-protections claim.

Reasonable adjustments must be considered where a disability is engaged. An adjustment is reasonable unless it would impose unjustifiable hardship in all the circumstances. Adjustments may include modified duties, flexible hours, assistive equipment, altered supervisory arrangements or, in some cases, a transition to a different role. The duty to consider adjustments is not a duty to remove the inherent requirements of the role.

Leave, flexible work and caring responsibilities

Employees retain their entitlements to personal/carer's leave, parental leave, compassionate leave, family and domestic violence leave and other National Employment Standards entitlements during a performance process. Taking lawful leave is itself a workplace right; treating it as evidence of underperformance, or timing a PIP to coincide with leave, is high-risk.

Section 65 of the Fair Work Act gives certain employees the right to request flexible working arrangements. Refusing a request must be on reasonable business grounds and the employer must engage with the request. A performance process commenced shortly after such a request will attract scrutiny.

Workplace complaints and protected rights

Part 3-1 of the Fair Work Act protects employees who exercise workplace rights — including making complaints or inquiries in relation to employment, participating in lawful processes, accessing entitlements and being a member of a union. Section 340 prohibits adverse action because of, or for reasons that include, the exercise of a workplace right. Section 361 reverses the onus of proof: the employer must prove that the action was not taken for a prohibited reason.

Where a performance process is commenced or escalated shortly after a complaint, leave, request or other protected activity, the employer should expect close scrutiny. That does not mean performance management is impossible — it means the employer should be able to point to documented, pre-existing concerns and an objective decision process. Conflating the complaint with the performance issue is one of the surest paths to a general-protections claim.

Bullying allegations and reasonable management action

Employees sometimes characterise performance management as bullying. Section 789FD(2) of the Fair Work Act provides that reasonable management action carried out in a reasonable manner is not workplace bullying. The exception is fact-sensitive: performance management that is excessive, disproportionate, secretive, retaliatory or based on unsubstantiated allegations may fall outside it.

Where allegations of bullying, harassment, discrimination or other serious workplace conduct arise, the employer should address them on their merits, separate from the performance process wherever practical, and consider whether a workplace investigation is required. See the guide to procedural fairness in workplace investigations for the broader framework.

When a workplace investigation is required

Performance management and workplace investigations are different tools. Performance management addresses an employee's ability or willingness to meet a standard; investigations address disputed allegations of misconduct, bullying, harassment, dishonesty, discrimination or breach of policy. Trying to address misconduct allegations through a PIP — or to address a performance gap through a misconduct investigation — is a category error.

Where allegations need to be tested, refer to the dedicated guides to workplace investigations in Victoria and common mistakes in workplace investigations. They explain who should investigate, how procedural fairness operates and the errors that most often produce adverse Commission findings.

Performance warnings

A warning is not a magic incantation. A warning that is to count for the purposes of section 387(e) of the Fair Work Act — which asks whether the employee was warned about unsatisfactory performance before dismissal — should:

• identify the unsatisfactory performance specifically;
• state the required standard;
• explain what improvement is required;
• state the consequences if performance does not improve, including the possibility of further disciplinary action up to and including dismissal;
• be supported by evidence and consistent with the employer's contemporaneous records; and
• be given to the employee in circumstances that allowed them to respond and seek support.

There is no universal three-warning rule. Some matters warrant only one substantive warning. Others may justify several. The question is whether the process, taken as a whole, was procedurally fair and gave the employee a meaningful opportunity to improve. Equally, a final warning should not be issued as a formality after the decision to dismiss has effectively been made — that is predetermination dressed up as process.

What is a performance improvement plan?

A performance improvement plan (PIP) is a structured, time-limited document recording the performance concerns, the required standard, the measurable targets, the support and training to be provided, the review dates, the manager responsible, the possible consequences of failure to improve and the employee's comments. A PIP is the operational tool by which the employer demonstrates that it has communicated the standard, provided support and given a genuine opportunity to improve.

A PIP is not the only way to manage performance, and it is not a legal precondition to dismissal. It is, however, the most common practical method of satisfying the procedural fairness requirements the Commission examines under section 387 of the Fair Work Act. Used well, a PIP is a genuine improvement tool. Used as a procedural device to prepare for dismissal, it usually fails on both fronts — it does not produce improvement, and it does not withstand scrutiny.

Designing a defensible PIP

A defensible PIP shares certain core features:

• Specific concerns. The performance gap is described with reference to the role, the standard and concrete examples.
• Measurable targets. The improvement required is expressed in terms the employee can understand and the manager can assess — outputs, error rates, deadlines, service levels.
• Evidence sources. The PIP identifies what evidence will be used to assess progress (work samples, quality reviews, KPI reports, customer feedback) and how it will be collected.
• Support and training. The employer commits to specific support — coaching, mentoring, refresher training, system access, supervision changes, peer support.
• Review schedule. Regular review meetings are scheduled at sensible intervals, not just an end-of-period assessment.
• Consequences. The PIP states clearly that failure to meet the targets may result in further action up to and including dismissal.
• Employee comments. The PIP invites the employee to record comments, raise issues and suggest adjustments.
• Outcome record. A defined process for recording the final outcome — successful completion, extension, further action — is in place from the start.

PIPs containing vague slogans ("improve attitude", "be more proactive", "demonstrate leadership") without observable behavioural definitions are weak both as management tools and as evidence. So are PIPs that load all responsibility onto the employee without any reciprocal support obligations on the employer.

Reasonable PIP duration

There is no statutory PIP duration. A reasonable review period depends on the role, the complexity of the skill, training time, sales or project cycles, safety or customer impact, the seniority of the employee, the seriousness of the concerns, the employee's history and how frequently performance can be observed. Common periods are between four and twelve weeks, but the figure is not the test — the opportunity to improve is.

Templates promising that a 30-, 60- or 90-day PIP is legally sufficient in all cases should be treated with scepticism. The Commission has criticised employers for setting unrealistically short PIP periods given the nature of the role, and equally for stretching PIPs out indefinitely so that the employee cannot move past them. The right period is the one that gives a genuine opportunity to demonstrate improvement against the agreed standard.

PIP meetings, reviews and revisions

The PIP should be reviewed against the agreed evidence at the scheduled intervals. Review meetings should:

• be planned in advance with notice and a stated purpose;
• be supported by the evidence collected since the previous review;
• give the employee an opportunity to comment and raise issues;
• document agreed actions, support and any adjustments to targets;
• record any matters that the employee disputes; and
• be confirmed in writing afterwards.

A PIP can be revised where new information emerges, where workload changes, where support that was promised was not delivered or where targets prove to have been set incorrectly. Revisions should be documented and explained. PIPs should not be made progressively harder without justification, nor should milestones be moved silently.

Outcomes — success, partial improvement and failure

PIPs produce three broad outcomes. The first is successful completion: the employee meets the targets, the PIP closes and ordinary management resumes. Successful completion should be recorded properly and acknowledged.

The second is partial improvement: the employee meets some targets but not others, or shows improvement that is meaningful but not yet sufficient. Options here include extending or revising the PIP, recalibrating expectations against new information, providing additional support or, in some cases, issuing a warning and continuing. Dismissal in the face of meaningful improvement is hard to defend.

The third is failure to improve: despite clear standards, support and a fair opportunity, performance remains unsatisfactory. The employer should then consider the full record, alternatives (such as redeployment or altered duties), the employee's response and the legal risks before deciding whether dismissal is appropriate.

Relapse after improvement is a separate scenario. Where an employee has improved and then slipped, the employer should consider whether the decline is a new issue requiring fresh process, whether previous warnings remain relevant and whether the cause has changed (workload, health, role changes). Reopening an old PIP is not always the right answer.

Redeployment, altered duties and demotion

Before dismissing for unsatisfactory performance, the employer should consider whether there are reasonable alternatives. These may include:

• redeployment to a role the employee can perform;
• altered duties that remove the tasks the employee struggles with;
• a change of team, supervisor or work pattern;
• demotion to a lower-graded role, by agreement and subject to contract; and
• flexible work or transition arrangements where appropriate.

Demotion or significant change of duties carries contract law risk — a unilateral demotion may amount to a repudiation of the contract or a constructive dismissal. Any demotion should be supported by clear contract or policy authority and, where possible, by the employee's informed agreement in writing.

Termination for unsatisfactory performance

Termination for unsatisfactory performance is available where there is a valid reason related to the employee's capacity or conduct (within the meaning of section 387(a) of the Fair Work Act), where the employee has been notified of the reason and given an opportunity to respond, where the employee has been warned about unsatisfactory performance and where the employer has considered the full record, including alternatives.

Before taking the decision, the employer should:

1. review the evidence collected during the process;
2. review the employee's most recent response;
3. consider any matters that have arisen since the last review (leave, complaints, health, role changes);
4. consider redeployment or altered duties;
5. consult HR and, where appropriate, legal advisers;
6. conduct a final meeting at which the employee is informed that dismissal is being considered and given an opportunity to respond before the decision is made;
7. document the decision, the reasoning and the alternatives considered; and
8. prepare a termination letter that accurately reflects the reason, notice arrangements and final-pay calculation.

The decision should be made by a manager with authority and based on the documented record. Deciding to dismiss before the final meeting takes place is one of the most common procedural errors the Commission identifies.

Small-business employers

A "small business employer" under section 23 of the Fair Work Act is one that employs fewer than 15 employees. Small business employers are subject to a longer minimum employment period of twelve months (rather than six) and to the Small Business Fair Dismissal Code. Compliance with the Code, in substance and procedure, is the central question for the Commission in unfair dismissal claims brought against small businesses for non-serious-misconduct dismissals.

The Code requires, broadly, that the employee be warned about unsatisfactory performance (verbally or in writing), that they be given an opportunity to respond and to improve, that they be allowed a support person at any meeting where dismissal is possible, and that the employer hold a reasonable belief, supported by evidence, at the time of dismissal. Compliance with the Code does not guarantee the outcome — it is one factor — but non-compliance is usually fatal.

A small employer's lack of dedicated HR expertise may be relevant to the standard expected in process, but it does not remove obligations under the general protections, anti-discrimination law, workers compensation, work health and safety or the employment contract. Small employers should still seek advice before dismissing for performance.

Probationary employees

Probation is a contractual concept used to manage the early stage of employment. It is separate from the statutory minimum employment period that controls unfair-dismissal access. An employee within the minimum employment period cannot bring an unfair dismissal claim, but the general protections, the anti-discrimination laws, contract claims and the unlawful-termination provisions are all still available.

Even within the minimum employment period, employers should communicate concerns clearly, give the employee a fair chance to improve and document the reasons for the decision. Dismissing a probationary employee with no warning and no record of the issues is poor practice and can attract claims that do not depend on the minimum employment period.

Unfair dismissal, general protections and discrimination risk

A poorly managed performance process can give rise to several different claims, sometimes simultaneously. The Parke Lawyers cornerstone guide to unfair dismissal claims in Australia explains the broad framework — eligibility, the 21-day deadline, the Fair Work Commission process and remedies. This article focuses on how the performance management process itself drives those risks.

The headline risks are:

• Unfair dismissal. The Commission asks whether there was a valid reason and whether the dismissal was harsh, unjust or unreasonable having regard to the criteria in section 387.
• General protections. Under section 340 of the Fair Work Act, the employer must not take adverse action because the employee exercised a workplace right. Section 361 reverses the onus.
• Discrimination. Federal and state laws prohibit dismissal or other adverse action because of protected attributes, including disability.
• Adverse action and burden of proof. The reverse onus under section 361 means the employer must positively prove that prohibited reasons did not contribute to the decision.
• Workers compensation. Dismissing an employee on workers compensation may breach state-specific restrictions and can expose the employer to claims and orders.

None of these risks is a reason not to manage underperformance. They are reasons to manage it properly — with evidence, consistency, procedural fairness, attention to protected rights, and documented decision-making by people who actually considered the matter.

Recordkeeping and internal communications

Performance management cases are won and lost on documents. Employers should retain a clean file containing the position description, the contract, the relevant award or agreement, performance reviews, specific examples of the work, instructions, meeting notes, the PIP and revisions, review records, the employee's written responses, training records, any medical or adjustment material that has been lawfully obtained and the final decision document.

Internal emails and chat messages are evidence. Phrases like "let's build a paper trail", "we need to manage him out" or "document everything so we can move" turn up in discoverable correspondence and have featured in adverse Commission decisions. Managers and HR should assume that anything they write may be read by a Commissioner. Predetermination communicated in writing is hard to walk back.

Records relating to employees engage privacy and employee-records obligations. Medical and sensitive information should be stored securely and accessed only by those who need it. Backdating, altering or destroying performance records to assist the employer's position is not just unethical — it can amount to misconduct and may produce adverse inferences in any litigation.

Issue-classification table

Categorisation depends on the evidence and more than one issue may be present. The following table is a starting point only, not a substitute for analysis.

Process table

The following stages are common but are not a mandatory sequence for every matter. The right sequence depends on the role, the concerns and the evidence.

PIP framework table

The following framework is illustrative, not a template. A defensible PIP should be drafted for the actual role, employee and concerns.

Evidence checklist

The defensibility of any performance decision depends on the file. The following items should be retained and accessible:

• employment contract;
• applicable modern award;
• enterprise agreement (if any);
• position description;
• policies and procedures relevant to the role;
• previous performance reviews;
• KPIs and targets;
• work samples;
• quality records;
• customer complaints (or the absence of them);
• productivity records;
• training records;
• system or equipment issues raised by the employee;
• workload records;
• emails and instructions relevant to the standard;
• meeting notes;
• employee explanations and written responses;
• medical or adjustment information where lawfully obtained;
• warning letters;
• PIP documents and revisions;
• progress-review records;
• comparator evidence, used cautiously and only where like-for-like;
• termination-decision record;
• notice and final-pay calculations.

Performance meeting checklist

• identify who will attend and why;
• give adequate notice of the meeting;
• state the purpose of the meeting clearly;
• provide the specific concerns to be discussed;
• allow a support person where appropriate;
• explain the required standard;
• invite the employee's response;
• ask about barriers, training and support needs;
• avoid argumentative, sarcastic or accusatory language;
• do not announce a predetermined outcome;
• record agreed actions;
• set follow-up dates;
• provide documents to the employee after the meeting;
• correct any inaccurate minutes promptly.

Common employer mistakes

• raising the concern for the first time at the dismissal meeting;
• using a PIP as a procedural device to prepare for a decision that has already been made;
• setting vague or moving targets;
• failing to provide promised support or training;
• treating leave, complaints or flexible-work requests as performance issues;
• treating disability-related limitations as ordinary poor performance;
• using a redundancy or restructure as a substitute for managing performance;
• relying on stale or unrelated warnings;
• writing internal emails that disclose predetermination;
• failing to consider redeployment or altered duties;
• conducting the final meeting after the decision has been made; and
• dismissing without obtaining advice on unfair dismissal, general protections and discrimination risk.

Practical action plan

1. define the required performance standard and identify how it is documented;
2. gather objective examples and records of the gap;
3. confirm the correct legal pathway — performance, misconduct, incapacity, conflict or redundancy;
4. identify training, system or workload causes that may be contributing;
5. notify the employee of the concerns in writing;
6. hold a genuine discussion and consider the response;
7. provide reasonable support and clear expectations;
8. document a proportionate PIP or warning where appropriate;
9. conduct scheduled reviews using reliable evidence;
10. address health, adjustment or protected-right issues as they arise;
11. consider alternatives and proportionality before any dismissal decision;
12. provide a final opportunity to respond before deciding to dismiss;
13. document the decision, notice and final pay correctly; and
14. preserve the file for possible litigation, including all relevant emails and internal communications.

Worked examples

The following examples are illustrative only. They are not decided cases and should not be treated as guaranteed outcomes.

1. Salesperson repeatedly missing targets where market allocation is unequal. The salesperson's territory has half the potential of comparator territories. Before any performance step, the employer should investigate the allocation, normalise the target and address the real issue. Treating the gap as personal underperformance without that analysis is unfair and indefensible.

2. Junior employee lacking training for a new software system. A new system was deployed with limited training. The employee's errors are predictable. The intervention is training and coaching, not warnings. A PIP focused on system competence without corresponding training commitments is not credible.

3. Experienced employee producing repeated quality errors. The employee has the skills and the support and is making the same errors despite feedback. After informal feedback, a focused PIP with measurable quality targets and review meetings is appropriate. Improvement should be assessed honestly.

4. Employee refusing a lawful task rather than being unable to perform it. This is conduct, not performance. The employer should clarify the facts, consider whether the instruction was lawful and reasonable, and use a disciplinary process, not a PIP.

5. Underperformance caused by excessive workload and conflicting instructions. The gap is real but the cause is managerial. A PIP without addressing workload and supervision will not produce improvement and will be exposed if challenged.

6. Employee disclosing a medical condition during a PIP. The matter shifts to incapacity and adjustments. Appropriate medical information should be sought, adjustments considered and the PIP paused or recalibrated. Continuing as if nothing had been disclosed is high-risk under discrimination and general-protections law.

7. Employee making a workplace complaint shortly before performance management. The timing creates a presumption that needs to be rebutted. The employer should be able to point to documented pre-existing concerns and an objective, consistent process. Conflating the two is a clear general-protections risk.

8. Probationary employee whose concerns were never communicated. Even within the minimum employment period, dismissing without telling the employee what was wrong is poor practice and can attract general protections or discrimination claims.

9. PIP with vague objectives such as "improve attitude". The PIP is hard to assess and easy to attack. The objectives should be rewritten in observable behavioural terms.

10. Employee improving partially but not fully. Dismissal is likely to be harsh. Extension or recalibration of the PIP, additional support or a warning are usually the right next steps.

11. Employer deciding to dismiss before the final meeting. The Commission has repeatedly found this approach unfair. The final meeting must be a genuine opportunity to respond before the decision is made.

12. Role genuinely disappearing during a performance process. The matter is redundancy, not performance. Switching tracks honestly — with proper consultation and process — is far safer than dressing one up as the other.

When urgent legal advice is needed

Urgent advice should be obtained in any of the following situations:

• before dismissing for unsatisfactory performance;
• before issuing a final warning;
• where a complaint, leave, flexible-work request or other workplace right has been exercised shortly before or during the process;
• where any health, injury, disability or workers compensation issue arises;
• where a long-serving or vulnerable employee is involved;
• where the matter overlaps with bullying, harassment or discrimination allegations;
• where the employer is uncertain whether the process so far would withstand a Fair Work Commission challenge; and
• where a Fair Work Commission application has already been made.

Early advice is materially more useful than late advice. Once a dismissal decision has been communicated, the options narrow rapidly.

Conclusion

Managing underperformance well is a discipline. It requires clarity about what the role demands, honesty about what the evidence shows, fairness in how concerns are raised and discussed, genuine support to enable improvement, and disciplined decision-making before any termination. A PIP is a tool, not a talisman: properly designed it is the most practical way to demonstrate procedural fairness and to produce improvement; misused it does neither.

Australian employers should distinguish underperformance from misconduct, incapacity, redundancy and conflict, address each through its correct framework, and pay close attention to protected rights and health issues whenever they arise. The Parke Lawyers employment law team for employers can review performance concerns, design or stress-test a PIP, advise on warnings and dismissal decisions, and represent employers in Fair Work Commission applications.