How to manage a poor-performing employee

Article Published : 26.03.2013
If the employer is concerned about the poor performance, then the employer must treat the employee in good faith.

Managing poor performance by an employee can be fraught with difficulty and there is a considerable process employers need to follow. Ideally, all new employees should be properly employed under a 90-day trial period. 

However, there are circumstances when an employer discovers they have hired a poor performer, but did not have the employee on a 90-day trial period.  That employer might instead have hired the employee on a probationary period. These are usually for up to three months. 

In that scenario, the probationary clause of the employment agreement will outline the procedure to be followed. 

It is important not to confuse a probationary period with a 90-day trial period. They are two very different contractual arrangements. Similarly, the employer might have a specific poor performance management clause in the employment agreement, which clause would bind the employer. 

How to manage poor performance when there is no specific contractual clause

This article explores what an employer must do if the poor performer is neither subject to a 90-day trial period, a probationary period or poor performance management clause.

  1. It is essential that the employee is clear as to what is expected of them at the outset of employment. Documenting clear and precise standards or Key Performance Indicators is a must. 
  2. The employer must have evidence of the poor performance. Again, documentation is critical.
  3. If the employer is concerned about the poor performance, then the employer must treat the employee in good faith. This means being honest, transparent, responsive and communicative about the concerns. Practically, the employer should outline the concerns in writing and first invite the employee to attend a meeting, with a support person or legal representative, to discuss the concerns. All the concerns and supporting evidence must be disclosed in the letter.
  4. The first meeting is to provide the employee with an opportunity to discuss the concerns and express their point of view on the matters that have been raised. At the end of the meeting, the employer should review what has been said and decide whether to continue managing the perceived lack of performance.  

It may be that the process need not progress any further. But, if the concerns are still alive, then the employer should put the employee on a performance management plan. 

A performance management plan

This plan is aimed at assisting the employee with meeting the accepted standard. The proposed plan should be circulated to the employee for comment first before a second meeting is held. 

The plan should outline specific tangible targets and periodic reviews. (Weekly reviews are recommended). At those reviews it is important to give the employee documented feedback. 

Ideally, the plan would include any assistance the employer considers reasonable for the employee to reach the required targets. Performance management plans vary in length of time but a usual rule of thumb is four to six weeks. 

The letter also needs to outline the potential outcomes of the plan. Once the employee reaches these outcomes, the plan would be terminated. If they do not reach the agreed outcomes within the specified time frame, a first warning and an extension to the plan will be put in place. 

If extending the plan, the employer should further notify the employee that if at the end of the extended period, the employee does not reach the required standard; a disciplinary meeting may be held which depending on the gravity of the poor performance may conclude with a final written warning or dismissal. 

If the employer has reached the stage where a final written warning or dismissal is fairly warranted, then the employer is entering into the area of discipline. Section 103A of the Employment Relations Act 2000 imposes on the employer a duty to act fairly and reasonably. The good faith obligations still remain. 

The Employment Relations Authority makes clear that employers must give employee all fair and reasonable opportunities to reach the required standard. It is also crucial that the standard that is required is also fair and reasonable. If it is found that the standard is unachievable, then that could give rise to a legitimate personal grievance against the employer. 

To avoid getting into this - properly hire new employees under a 90-day trial period. If a new employee is a poor performer, then they can be let go quickly without fuss.