Dismissing employees for poor performance: how to get it right

With record-low unemployment rates of 3.4 per cent carrying well into 2023, Kiwi businesses are still desperate for workers – though they still have the right to protect themselves if employees are underperforming or not meeting contractual standards.

Provided you follow a careful process and seek guidance from HR experts like Citation HR, when it comes to the potential need to terminate an employee, there is a way to do this while keeping your business and your people safe.

Here, our experts guide you through the safest method to manage poor performance, leading potentially to dismissal – but done in the safest way.

1. Begin with an informal conversation

What’s really causing your employee to fail? Miscommunication? Misunderstanding instructions? A workload that’s already at full capacity?

Having a chat with your employee allows you to begin with an informal discussion, identify specific areas requiring improvement and work out whether the employee is experiencing a personal crisis at home that is affecting their work, or if they require assistance to get the job done.

Seeing what appears to be substandard performance at work from your employee’s perspective can sometimes allow you to identify and highlight inefficiencies and problems within systems, processes, or equipment. Discovering these issues allows you to fix them – and in the end, you’ll be glad the conversation happened. Understanding that the business can also be contributing to poor performance is important because employees shouldn’t bear the consequences entirely if the employer is also partly to blame.

Pro-tip: remember to take notes and document that the conversation took place.

2. Draft a plan to improve performance, known as a Performance Improvement Plan

Did the informal discussion improve your employee’s performance? If not, you’ll need to have a more formal discussion. Begin by setting up the formal meeting, and investigating the issues more fully. You will need to give the employee time and sufficient details to prepare and have a representative present. After hearing their response to the issues, you should, if necessary, issue a Performance Improvement Plan (PIP).

3. It’s time to look at the employee’s performance

If the employee’s performance still hasn’t improved sufficiently after a PIP, you can look at starting a formal performance review hearing. It’s best practice to give the employee a written letter before inviting them to a hearing. If a written warning is required, Citation HR has your guide to what should be in a letter.

The following are essential steps at the performance meeting:

• Listen to the employee’s explanation of the situation and the reasons why the outcomes were not achieved.
• Make sure the employee understands their rights under employment law.
• Go through the history of the matter, showing the employer’s perspective on the performance issue.
• Use the formal PIP as important evidence of the employee’s understanding and agreement with the process.
• Decide if the reasons are worthy of an outcome less than termination (remember, the strong possibility of termination has been “on the table” since the start of the PIP).

Termination of employment may require assistance from our workplace experts

Terminating employees for underperformance or misconduct is unfortunately, a part of running any business, but it’s the way it’s handled that makes all the difference. Getting this process right is crucial for businesses of all shapes and sizes. Our experts have written a step-by-step guide to writing a termination letter, find it here.

Talk to Citation HR for deeper guidance about extending PIPs and how to utilise them in relation to written warnings, as well as potential leeway

No approach to managing performance will be the same. In particular, if you need to compassionately manage the performance of staff with mental health issues, Citation HR has a guide for this. While the approach you take should be based on the nature of the issue and the individual, if you follow the process we’ve laid out you’ll be giving your employee every chance to improve and reduce the risk to your business. The bonus is you’ll also build your reputation as a firm, constructive, and fair employer.

If this article has raised any questions or concerns or you’d like to learn more about how we can help your business, please reach out to our workplace relations experts via our 24/7 HR Advice Line.