Managing employees whilst trying to successfully run a business can be challenging, particularly when trying to differentiate how to manage an employee who is underperforming, compared to an employee who is engaging in misconduct.

Dealing with each type of issue requires a subtly different approach and in this blog we provide some guidance on both matters, to hopefully give you confidence on how to manage either situation.

When looking into what is the most appropriate action to take, a question to ask yourself as a starting point is “Is this a will issue, or skill issue?”. To put it simply, a “will” issue is one where the employee is wilfully / deliberately doing something wrong and should lead to disciplinary action for misconduct. A “skill” issue is where an employee is not currently exhibiting sufficient skills to perform the role effectively, and should lead to a performance management process.


What is Disciplinary Action for Misconduct?

If an employee is behaving improperly in the workplace, an employer may need to address issues with the employee’s conduct formally by means of a formal disciplinary process.

Disciplinary action is usually taken to address misconduct, which is generally defined as behaviour in the workplace which is generally unacceptable, or contrary to the employment contract, or the policies and procedures of a company.


Some Examples of Misconduct Include:

  • unauthorised absences
  • lateness
  • bad language
  • poor presentation
  • misuse of company equipment


It is a good idea to include examples of unacceptable conduct in a workplace policy such as a Code of Conduct that makes clear the business’ expectations of behaviour at work and outlines the potential outcome that the employee will face if they choose to engage in any of these actions.

Generally, where an employee has engaged in any form of misconduct the issue should initially be addressed informally, ie by having a “quiet word” with the employee. The outcome of which can be confirmed in an email or letter (if appropriate).

With more serious or repeated instances of misconduct an employee should be required to attend a formal disciplinary meeting, where they are advised in writing in advance of the issues to be discussed. They should also be allowed to bring a support person to the meeting.

At the meeting the employee should be given an opportunity to address their bad behaviour, and following the meeting the employer should decide on the appropriate action to take. This could involve the employee being given a formal written warning advising them that if their behaviour does not improve they could be issued with a final written warning or in some circumstances they could be dismissed.

There is no magic number of warnings that need to be given before an employee can safely be dismissed, it will depend on the nature of the misconduct in question. Where dismissal is being considered as an option, an employee should always be given an opportunity to say why they do not consider this is appropriate.


Serious Misconduct

Serious misconduct is a special type of misconduct defined as wilful and deliberate behaviour that is inconsistent with the continuation of the employment contract or causes serious and imminent risk to the reputation, viability or profitability of the business, or health and safety of a person.


Some Examples of Serious Misconduct Include:

  • Theft
  • Fraud
  • Assault
  • Sexual Harassment
  • Refusal to carry out lawful and reasonable instruction that forms part of the role.

Provided a fair disciplinary process is followed, serious misconduct can usually constitute grounds for immediate termination without any notice period being provided to the employee. But it is very important that employees are given an opportunity to say why they don’t consider summary dismissal is appropriate in a formal meeting.


What is Performance Management?

Performance management is used to address poor performance from an employee. An employee should be made aware at the engagement of their employment of the job description that will form the requirements of their role. This should be a written document and can include things such as key performance indicators, targets, project completion requirements, etc. If you have an employee who is failing to meet any of the above requirements, an employer may consider entering the employee into a performance management process.

As a part of the process, we would always recommend addressing the performance issues informally with the staff member, prior to entering a formal process. This can be done by way of informal meeting followed by an email to the employee recapping the discussion points, and areas of improvement.

If you are past the first ‘informal’ stage and there is no improvement with the employee, you can invite the employee to a formal meeting and identify the issue e.g., where skills are lacking, and offer to provide further training where appropriate.

The employer should develop an ‘action plan’ often called a ‘performance improvement plan’ (or ‘PIP’) which sets out the expectations of performance going forward. The employer should work with the employee to establish where they are sitting at currently with their performance, and where the employer expects the employee to be within a certain time frame. Typically, a performance management plan should be a minimum of 4 weeks duration, as this often provides a reasonable time for the employee to improve their performance, and for the business owner to measure performance against goals initially set.

It is important that throughout the performance management process that the employer checks in regularly and provides any additional training / support if required. The purpose of this plan is to further assist and develop the employee to get on track, or for there to be consequences if they do not.

Where the employee does not meet the requirements of the plan, they should be invited to a further formal performance meeting to discuss why they have failed to meet expectations. The outcome of the meeting may be that they are issued with a formal warning letter which confirms that if their improvement does not improve they may face dismissal. The PIP should then be repeated.

In appropriate circumstances the outcome of the PIP process will be termination of employment where the employee has continually failed to improve, or the performance issues have been really severe.


What’s the Difference Between Managing Poor Performance and Misconduct?

A performance management process involves a plan being implemented which aims at improving an employee’s performance. It may involve extra training or coaching to assist an employee to reach the required level.

A disciplinary procedure due to misconduct typically will not result in a behavioural management being implemented as the issuing of a formal warning should generally be sufficient to warn employees that they have engaged in unacceptable behaviour and that this should not be repeated.


Other Articles of Interest

If you require a step-by-step guide to managing poor performance or misconduct, please see our free resources:


About HR Connect

HR Connect is one of Australia’s leading providers of HR and workplace safety advice service, designed to help small business owners make confident and compliant business decisions.



The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact HR Connect for advice.

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