Managing performance and warnings

Effective performance and behaviour management creates a harmonious and productive workplace, which is beneficial for both employees and employers.

Managing performance

The best businesses are always improving their operations to stay competitive in their industry. To be able to do this, employees and managers need to be performing to a high standard.

High performance in business means:

  • increased productivity
  • engaged and committed employees
  • retaining good employees.

Underperforming employees can have a negative effect on a business, such as:

  • unhappy customers or clients
  • decreased productivity
  • high turnover
  • unmotivated and underperforming employees.


Underperformance is when an employee isn't doing their job properly or is behaving in an unacceptable way at work. It includes:

  • not carrying out their work to the required standard or not doing their job at all
  • not following workplace policies, rules or procedures
  • unacceptable behaviour at work (for example, telling inappropriate jokes)
  • disruptive or negative behaviour at work (for example, constantly speaking negatively about the company).

There is a difference between underperformance and serious misconduct.

Serious misconduct

Serious misconduct is when an employee:

  • causes serious and imminent risk to the health and safety of another person or to the reputation or profits of their employer's business
  • deliberately behaves in a way that's inconsistent with continuing their employment.

For more information about how to manage serious conduct, see Notice and final pay.

Preventing underperformance

The best way to manage underperformance is to make sure it doesn't happen in the first place. Communication is the key.

Steps that employers can take to help prevent underperformance include:

  • listing behavioural and outcome expectations in position descriptions
  • addressing any issues as soon as possible
  • having regular performance reviews to outline expectations from the beginning
  • encouraging employees to talk to a manager or employer if they have any questions or concerns.

Best practice tip

Employers should consider creating and sharing with employees a written performance management policy. The policy should outline what underperformance is, how underperformance will be managed and the possible consequences of underperformance. Employers should also make sure they keep the policy up to date and apply it consistently in the workplace.

A policy can help to make clear what the employer’s and employees’ expectations and responsibilities are and what can happen if underperformance occurs. It can also help prevent employees feeling they’ve been treated unfairly if an issue does come up.

Addressing underperformance

Before taking steps to manage underperformance, employers should consider if there are any rules they need to follow under their award or registered agreement, a contract of employment or a workplace policy.

If an employee underperforms, then as a first step it's a good idea to arrange a private meeting for the employee and employer to discuss the situation. The employer should tell the employee what the meeting is about and ask them if they want to bring a support person along. Everyone in this meeting should be encouraged to:

  • be clear about what the issues or concerns are and listen to the other attendees
  • do their best to discuss and agree on a solution together, including clear and reasonable steps for improvement
  • document the meeting and outcomes.

Warnings and disciplinary action

Depending on the circumstances, an employer may decide to take disciplinary action against an employee because of their underperformance. For example, the employer may issue a written warning.

Disciplinary action should not be taken lightly. Before taking action, employers should ensure they:

  • have a valid reason
  • follow a fair process
  • consider seeking independent advice.

See also If performance hasn't improved.

There is no general rule that an employer has to give an employee 3 warnings, or even 1 warning, before ending their employment, but an employer should usually give the employee a chance to fix any performance issues. If an employer fires an employee who then makes an unfair dismissal claim, the Fair Work Commission external-icon.png will usually take this into consideration.

If an employer decides to issue an employee with a warning about their underperformance, the warning should be given in writing. The employer should also make sure:

  • they are clear about the reason for the warning
  • they write down all the details
  • they set clear expectations about what needs to be done differently
  • the warning is fair and reasonable in the circumstances.

Before taking disciplinary action, including issuing a warning, it’s best for an employer to get independent advice from an employer association, a lawyer or another workplace relations professional.

Following up after underperformance

After an employer has taken steps to manage an employee's underperformance, it may be appropriate to hold regular follow-up meetings. They can be used as an opportunity to talk about progress and see if there’s any further help or support the employee needs, such as formal or informal training. Where performance has improved, employers should make sure they recognise this.

If performance hasn't improved

If the employee continues underperforming, employers may think about:

  • if another meeting with the employee would be useful
  • issuing a first or additional warning
  • changing the employee’s duties (if appropriate) or providing additional training
  • if they have clearly explained the possible consequences of not improving, including if termination of employment is a possibility.

Termination of employment should only be considered as a final resort. If an employee is fired, the employer needs to make sure the employee:

The employer may also think about getting independent advice from an employer association, lawyer or another workplace relations professional.

Templates to help manage performance

Download our templates to help manage employee performance:

Tools and resources

Related information

Help for small business