I know what is keeping many business owners awake at night – it’s when they have an employee who is not performing. They want to exit them but they don’t know how to go about it and are scared about getting sued. Here are some of the most commonly asked questions:

Can you terminate someone for poor performance?
Yes and you should – but also know that many employees can turn around their performance and, if given the opportunity, many will do so.

Can you terminate someone because they don’t fit the culture of the business?
No, you cannot legally terminate on a culture mismatch, although typically this mismatch makes the arrangement unsuitable in the long term for both parties. Often the individual will resign having also recognised this.

What is the process to actively manage someone’s performance?

• Offer a support person – of the employee’s choice – to attend the meeting with them
• Describe the performance issue and why this level of performance is unacceptable
• Determine whether the employee knows what is expected of them
• Ask whether there are any extenuating circumstances, e.g. illness of a loved one
• Give the employee an opportunity to respond to the feedback
• Ensure that sufficient resources, support and training have been provided
• Agree a performance improvement plan, and document this

Can they bring a friend into the performance management or termination meetings?
Yes, they may bring a support person to any performance-related discussions. This person is purely for emotional support and cannot actively respond on their behalf. If they reject the offer to have a support person, make a note of the offer and their refusal and ideally have them sign it.

What is the most common mistake business owners make?
From my experience, many business owners put up with bad performers and then lack the patience to exit them properly, often calling it a redundancy. This is untrue, more costly and has implications for replacing the role within twelve months. Sometimes, employees will resign at the first hint of performance management, either because they have known for some time that their performance was below par, or they just find it too confronting to go through the process. Most business owners’ reasons for termination are justified and are often supported by the FWA Ombudsman; however, not following the correct process makes it illegal.

What does ‘repudiation of contract’ mean?
This is where an employer either demotes an employee or makes significant changes to his working conditions. An example would be, if you had been continually promising a promotion to the Head Developer (with an increase in pay and conditions), and then you put an alternate candidate into that role. It could be argued that you have repudiated their contract. The moral here is to be careful what you promise, both verbally and in writing.

What does ‘constructive dismissal’ mean?
Dismissal means that the termination was at the employer’s discretion rather than the employee. Constructive dismissal occurs when it is deemed that you have left the employee with no other course of action due to your actions or choice of words. The classic case here is where the employer says, ‘resign or I will fire you.’ This approach means that the employer forced the termination.

Can you fire someone on the spot and have them leave immediately?
Yes, if you are very sure (and have evidence) that they have committed gross misconduct — that is they committed assault, fraud, exhibited drunkenness or drug use, absenteeism, abusive behaviour or sexual harassment, or acted in an unsafe manner. I would recommend, where appropriate, reporting this to the Police. This termination would be with immediate effect and without notice pay.

Can you suspend someone without pay?
In most cases, no (this is generally covered in your Modern Award); but if someone was accused of gross misconduct, you could suspend them on full pay while you conducted an investigation. This is largely due to the presumption of innocence.

What is the risk if I just fire them the old-fashioned way? Or like Mark Bouris – “You’re fired!”
The risk is that the employee will put in a complaint to the FWA Ombudsman (at a personal cost of $60), and it is highly likely you will be formally investigated with the risk of large fines, which can cover both lost earnings and an estimate of future earnings, and you may even be ordered to reinstate them to their role.

Business is hard enough – even worse if you don’t have an ‘A’ team, make sure that you hire slowly and fire fast – BUT legally.