Termination of employment is one of the most common issues facing businesses today, with unfair dismissals representing one of the biggest areas of concern for employers. Employers are confronted with a number of challenges when managing employees who are not performing to the required standard.
Terminating an employee based on unsatisfactory performance or misconduct at work is known as ‘terminating with notice’. It is essential that a formal performance process is instigated in cases of poor performance or misconduct.
Missing one step in this process could mean you have to start the procedure again from the start, otherwise an employee could lodge an unfair dismissal claim, which can result in penalties and costs for the employer.
Businesses should follow procedural fairness guidelines when an employee is not performing their job to the required standard. ‘Procedural fairness’ is the process of treating all employees fairly and consistently and ensuring all decision-making is transparent. Employers should also make sure they are acting on evidence and have considered all of the extenuating circumstances as well as the employee’s response.
To ensure a fair and consistent process when managing poor performance or conduct, employers should follow these guidelines:
- in the case of poor performance, make no immediate decisions;
- there must be a valid and lawful reason for termination;
- react promptly and timely to any issues;
- give an employee the chance to respond to any claims of poor performance or behaviour;
- always give an employee the right to bring a support person along to any interviews or meetings;
- give the employee written warnings and time to improve;
- act only on evidence and not rumours or gossip;
- consider factors such as the employee’s explanation and their past performance; and
- notify the employee, in writing, of any decision to terminate their employment contract.
Employers should make sure they adhere to the recommended process and not skip any steps in order to fulfil the process of procedural fairness. The most appropriate course of action in the case of terminating an employee for poor performance or misconduct is following the practice of issuing three formal warnings. This approach is an essential element of the termination with notice process and should include a series of witnessed verbal warnings confirmed in writing. The formal warnings should also outline the reason for the warning, the form of performance or conduct that is required and ways that the employee can improve. In some instances, three warnings may not be necessary. However, when determining how many warnings are needed, employers should consider:
- the impact of the behaviour on the business;
- the employee’s work history;
- the performance level required;
- any recent warnings relating to the issue;
- history of formal or informal counselling; and
- contrition of the employee.
Issues to consider
The following are critical factors that should be taken into account as part of the decision to terminate with notice because of poor performance or misconduct.
- Has the employee received adequate training or work instructions?
- Has the employee been allowed to bring a support person to any meetings or interviews?
- Did management organise a witness to attend the interviews or meetings?
- Has management considered all extenuating circumstances and the employee’s explanation?
- Has the employee been warned in writing of the poor standard of their performance or conduct?
- Has the employee been given a fair period of time to improve their work performance or conduct?
- Has the required notice or payment in lieu of notice been provided?
- Have all relevant termination payments been provided to the employee?
If the answer is ‘no’ or ‘not sure’ to any of the questions above, the correct process may not have been followed, opening employers up to receiving an unfair dismissal claim from the employee.
How can Business SA help?
Business SA can help you at any stage of the termination process through our free, member-only, Telephone Advisory Service. The team of business advisers can guide you through each step to ensure you follow the correct procedures. Contact the Business Advisory Centre on: 08 8300 0101.
Business SA has a Terminating Employment in South Australia Booklet – 2nd Edition available, providing detailed information on forms of termination, as well as procedural and disciplinary guidelines. The Booklet contains relevant pro forma documentation such as sample warning letters and termination checklists to help your business comply with the various legislative guidelines associated with the different types of termination.
There is also the Terminating Employment in South Australia Booklet – 2nd Editionwith CD-ROM, which is ready for you to tailor the sample documentation to suit your business’ individual needs and requirements.
Business SA is also running a training course on Disciplining and Terminating Staff to Avoid Unfair Dismissals on 12 September at Enterprise House.
To order your Terminating Employment in South Australia Booklet – 2nd Edition or to register for the Terminating training course, visit our Publications section.