Best Practice for Managing Underperformance

March 13, 2026 · IR & Employee Matters

“Best-practice employers have regular discussions with employees about performance. They set clear goals and provide feedback and support to help employees perform at their best. If underperformance occurs, they take steps to manage it appropriately, sensitively and promptly.” (Fair Work Ombudsman, Managing Underperformance Best Practice Guide)

The Fair Work Ombudsman, Managing Underperformance Best Practice Guide is a valuable tool for employers in managing performance.

Underperformance is not the same as serious misconduct and can include:

  • Not performing duties, or not performing them to the required standard
  • Displaying negative or disruptive behaviour in the workplace
  • Failing to comply with workplace policies, rules or procedures

There are a variety of reasons that poor performance may occur, including employees not understanding what is required of them due to unclear goals and expectations, personal issues and low morale or a poor work environment.  

It is important to manage underperformance in a structured way and to keep records of all performance-related meetings, emails and discussions. Underperforming employees should be clearly advised of the performance concerns and be given support to improve within a reasonable timeframe.

As underperformance may lead to termination or other disciplinary action, it is vital that all processes are followed and records are kept showing that the management of underperformance is procedurally fair.

Employers should:

  • Implement a performance system
  • Address underperformance
  • Train managers and employees on dealing with underperformance

A robust performance management system assists employers in setting expectations with employees and with managing underperformance.

For further assistance, please contact CCF NSW on 9009 4000 or ccfnsw@ccfnsw.com