Performance Management That Holds Up: Why a Valid Reason Is Only Half the Defence

An engineer with thirty years’ experience was dismissed for genuinely substandard work. Missed deadlines. Quality problems. A welding error that halted a production line. 

The Fair Work Commission accepted there was a valid reason to dismiss him. He won anyway — and was awarded compensation of $21,471.15 plus superannuation — because the employer had no formal performance management process and gave him no real opportunity to respond. 

That is the shape of most performance management failures we see. Not a wrong decision. A right decision, reached badly. 

What’s the real issue? 

The real issue is that performance management is treated as an event when the law treats it as a process. 

Most employers begin managing performance at the point they have decided to end it. By then it is too late to build the record that makes the decision defensible — because the record has to be contemporaneous, and the opportunity to improve has to be real. 

Performance management is properly understood as an ongoing conversation between a manager and an employee: clarifying expectations, setting objectives, giving feedback and reviewing results. When it works, most matters resolve at the coaching stage and never become legal problems at all. When it is skipped, a genuine performance concern arrives at the disciplinary stage with no foundation underneath it. 

What this looks like in practice 

An anonymised composite, not a real person or organisation. 

A Queensland organisation had concerns about a long-serving coordinator’s output for the better part of a year. Managers discussed it among themselves frequently and with her almost never. 

• The concerns were real. Deadlines slipped, quality was inconsistent, and colleagues were absorbing the shortfall. 
• The record was not. There were no file notes, no documented conversations, and one meeting eight months earlier that nobody had minuted and which had not explained what would happen if things did not improve. 
• Her duties were quietly reduced to simpler tasks. Nobody explained why. 
• The end came fast. A meeting was called at short notice, without notice of its purpose and without the offer of a support person, and she was dismissed. 

She had a strong claim, notwithstanding that the underlying concerns were legitimate. And because her duties had been altered and a warning issued along the way, the matter carried adverse action exposure as well as unfair dismissal risk. 

The organisation’s mistake was not the decision. It was managing the performance problem privately for eleven months and formally for one afternoon. 

What does the law say — and how must it be applied? 

Performance management sits at the intersection of five regimes at once. 

1. Unfair dismissal

The Commission asks whether the dismissal was harsh, unjust or unreasonable, considering among other things whether there was a valid reason related to capacity or conduct, whether the employee was notified of that reason and given an opportunity to respond, whether any request for a support person was unreasonably refused, and whether the employer had dedicated human resources expertise. 

A dismissal is more likely to be found sound, defensible and well-founded where there is: 

• Persistent underperformance — a sustained failure to meet reasonable and clearly communicated standards after a reasonable opportunity to improve; or 
• Serious performance failure — a failure to perform core duties or comply with critical requirements, particularly where the deficiency continues after formal warnings. 

Conversely, findings of unfairness commonly turn on evidence that did not support the conclusion reached, an outcome disproportionate to the concerns, or the economic and personal consequences for the employee. 

2. General protections and adverse action

Adverse action is much broader than dismissal. It includes issuing a warning, demoting, and altering the position of an employee to their prejudice — so a formal warning or a quiet reduction in duties is itself adverse action. The central question is always why the action was taken, and a prohibited reason need only be a substantial and operative reason, not the only one. 

Workplace rights that regularly appear in this context include making a complaint or inquiry about employment, requesting flexible working arrangements, lodging a workers’ compensation claim, seeking compliance with workplace laws and participating in a dispute settlement procedure. Under the reverse onus, once adverse action is established it is presumed to have been taken for the prohibited reason unless the employer proves otherwise. 

There is also a specific protection: an employee must not be dismissed because they are temporarily absent due to illness or injury, where they provide a medical certificate within a reasonable time and comply with notice requirements. An absence generally ceases to be temporary once it exceeds three months, or where total absences over a twelve-month period exceed three months. 

3. Discrimination

Under the Anti-Discrimination Act 1991 (Qld) and equivalent legislation, direct discrimination occurs where a person with a protected attribute is treated less favourably than a person without it in the same or not materially different circumstances. Indirect discrimination occurs where an unreasonable term is imposed with which a person with the attribute cannot comply and a higher proportion of people without the attribute can. Protected attributes include sex, relationship status, age, race, impairment, parental status, gender identity and religious belief. 

Performance standards that appear neutral can operate indirectly — a requirement that has a disproportionate effect on employees with a disability or carer responsibilities, for example. 

4. Bullying

A worker who reasonably believes they have been bullied at work may apply to the Commission for a stop bullying order. The Commission may make such an order where it is satisfied the worker has been bullied and there is a risk it will continue. Reasonable management action carried out in a reasonable way is not bullying — but the qualifier does real work. Management action that is unreasonable in its manner can fall outside the protection even where the underlying decision was justified. 

5. Work health and safety

Performance management is a recognised source of psychosocial hazards — through low role clarity, poor organisational justice, inadequate support and poor change management. The employer’s primary duty to eliminate or minimise psychosocial risk so far as is reasonably practicable applies to how a performance process is run. Workers, including managers, also owe a duty to take reasonable care that their acts do not adversely affect others. 

And before any of it — check your own documents 

Ask first what your contract of employment and your workplace policies require. Where a policy sets out a performance management procedure, failing to follow your own process is one of the most reliable ways to undermine an otherwise defensible decision. 

The three-stage process 

Performance management works best when the stages are distinct and the employee knows which one they are in. 

• Stage 1 — Coaching. Clear communication of expectations and standards, with ongoing training, support and feedback. Most issues should resolve here. 
• Stage 2 — Corrective action. Informal or formal agreements about what will change, with progress tracked. This is where a performance improvement plan sits. 
• Stage 3 — Disciplinary action. Formal warnings and, if necessary, termination of employment. 

A performance improvement plan is a structured version of stage two, and it has four parts: plan (clearly identify the specific areas requiring improvement); meet (explain what the employee needs to do and how, give them a reasonable time to improve, set review dates, and explain what happens if performance does not improve); monitor (regular check-ins on progress); and review (meet at the scheduled times and update the plan so it stays current). The Fair Work Ombudsman publishes a usable template. 

What are the risks and pain points for employers? 

• Managing privately, formally too late. Concerns discussed among managers for months and with the employee for minutes. 
• No contemporaneous record. A conversation that was never documented, confirmed or minuted did not happen, as far as a tribunal is concerned. 
• Not explaining consequences. A performance meeting that does not say what will happen if performance does not improve is not a warning. 
• Quietly reducing duties. Removing responsibilities without explanation is adverse action, and it destroys the argument that the employee had a fair opportunity to improve. 
• Ambush meetings. No notice of the purpose, no chance to prepare, no support person offered. 
• Failing to consider mitigating circumstances. Health or family health issues, personal or financial pressures, addiction, length of service, seniority, whether similar issues were managed consistently in the past, whether company procedures were followed, and the availability of other suitable employment all bear on proportionality. 
• Ignoring the psychosocial dimension. A drawn-out or poorly communicated process is itself a hazard — and can generate a psychological injury claim regardless of the dismissal outcome. 
• Managing performance while an employee is on a claim or has just complained. Defensible, but it demands a clean, well-evidenced reason and a documented decision trail. 

Our top five tips: what every employer should do 

1. Start on day one and review monthly. Set clear standards and expectations at recruitment, confirm the employee has the skills to meet them, and build regular honest feedback into normal management. Reinforce good performance as deliberately as you address poor performance. The organisations that rarely have performance disputes are the ones where feedback is unremarkable. 
2. Document as you go, and confirm in writing. After each performance conversation, record what was discussed, what examples were given, what was agreed and by when — and send the employee a short email confirming it. Contemporaneous notes made on the day carry weight; a chronology reconstructed after a claim is filed does not. 
3. Be specific, give examples, and say what happens next. Vague feedback is unfair and unhelpful. Identify the specific deficiency, give concrete examples, explain the standard required, provide the support and training needed, allow a reasonable period to improve — and state plainly what the consequence will be if performance does not improve. Have the conversation in private. 
4. Run a genuine process before you decide, and consider mitigation. Give notice of the meeting and its purpose, offer a support person, put the concerns to the employee and give them a real opportunity to respond, and consider their explanation before deciding. Then weigh the mitigating circumstances — health, personal pressures, length of service, seniority, consistency with how you have treated similar issues, and whether other suitable employment exists. Proportionality is where employers most often fall short. 
5. Separate the deciding from the investigating, and check your reasoning. Where possible, have someone other than the manager raising the concerns make the final decision. Before you act, ask three questions: can I articulate the genuine reason clearly and evidence it? Has this employee recently exercised a workplace right or does a protected attribute bear on this? Would our own policy say we followed our process? If any answer is uncertain, get advice before you act, not after. 

Frequently asked questions 

Can we dismiss someone for poor performance without a formal process? 

Even where there is a valid reason, a dismissal can be found harsh, unjust or unreasonable if the process was inadequate. Persistent underperformance after clearly communicated standards and a reasonable opportunity to improve is defensible; the same underperformance with no documented process often is not. 

Is issuing a warning “adverse action”? 

Yes. Adverse action includes issuing a warning, demoting an employee and altering their position to their prejudice — not just dismissal. That does not make warnings unlawful; it means the reason for the warning must be genuine and defensible, and you should be able to prove it. 

Do we have to offer a support person? 

You should. Unreasonably refusing to allow a support person to assist at discussions relating to dismissal is expressly relevant to whether a dismissal was unfair. Offering one to everyone at every formal meeting is simple, cheap and materially strengthens your position. 

How long is a “reasonable opportunity to improve”? 

It depends on the role, the nature of the deficiency and what support is provided. The better question is whether the period allowed was long enough for a person genuinely trying to improve to demonstrate change, and whether you monitored and reviewed during it. A two-week plan for a complex, longstanding capability issue rarely qualifies. 

Can we performance-manage an employee who has made a complaint? 

Yes — avoiding necessary management action is not compliance. But the timing invites scrutiny of your real reason, so the underlying concerns should be documented before the complaint where possible, the process should be scrupulous, and the decision-making should be recorded in a way that demonstrates the complaint played no part. 

Can we performance-manage someone who is on sick leave or a workers’ compensation claim? 

With care, and with advice. Dismissal because of a temporary absence due to illness or injury is prohibited, and an absence is generally temporary up to three months. Managing capacity issues for an ill or injured employee engages a separate set of obligations, including suitable duties and reasonable adjustments. 

What is a performance improvement plan and do we need one? 

A structured plan identifying the specific areas requiring improvement, what the employee must do, how long they have, when progress will be reviewed and what happens if performance does not improve. It is not legally mandatory, but it is the clearest evidence that you gave a genuine opportunity to improve. 

Is performance management bullying? 

Reasonable management action carried out in a reasonable way is not bullying. The risk lies in the manner: a process that is aggressive, humiliating, conducted publicly, unreasonably prolonged or inconsistent with your own policy can fall outside that protection even where the underlying concerns are legitimate. 

Can a performance process create a psychological injury claim? 

Yes. Performance management is a recognised psychosocial hazard, and how it is conducted — the notice given, the privacy of the discussion, the clarity of expectations and the support offered — has been central to claims that succeeded and claims that failed. Running a fair, well-communicated process is a safety control, not just a legal one. 

How Harrisons can help 

Get performance management wrong and a legitimate concern becomes an unfair dismissal claim, a general protections claim with a reversed onus, and potentially a psychological injury claim — all arising from a decision that was substantively correct. Get it right and difficult conversations stay conversations. 

We help Australian employers — SME business owners, Queensland local government councils, and community and not-for-profit organisations — build that capability: 

• Design practical performance management frameworks, policies and performance improvement plan templates that managers will actually use. 
• Train your managers to give specific feedback, document contemporaneously and run a fair process. 
• Guide you through individual matters, from the first documented conversation to a defensible decision. 
• Pressure-test a decision before you make it, including the adverse action, discrimination and psychosocial dimensions. 

Don’t let a valid reason be undone by a rushed process. Get in touch with our team today and start with a review of your performance management framework and manager training. 

This article provides general information for Australian employers and is not legal advice. Workplace laws change and how they apply depends on your specific circumstances. For advice tailored to your organisation, contact Harrisons.