“Performance management” can refer to a number of things. It can, for example, mean the day-to-day supervision of an employee's work, with regular, informal communications about work expectations and delivery of work, coaching and providing informal feedback on performance.

Relevantly for present purposes, performance management can also refer to a formal process through which an employee’s performance is reviewed and monitored, usually as a result of the identification of some shortcoming in their work performance. These processes would commonly include putting in place specific performance targets and monitoring the individual’s progress towards attainment of those targets. Failure to achieve targets may result in disciplinary action up to and including termination of employment.

Effective performance management in this second sense is an important part of the effective operation of a business. If it is mismanaged, it can give rise to significant legal exposures for employers both at common law and (especially) under statute.

These statutory exposures can include claims for reinstatement (with back pay) or compensation under unfair dismissal laws, alleged breaches of the General Protections in Pt 3-1 of the Fair Work Act 2009 (FW Act), and claims under federal and state anti-discrimination legislation. Furthermore, both Pt 3-1 and most anti-discrimination legislation, contain ‘reverse onus’ provisions which have the effect that once an applicant (employee) establishes that they have been subjected to adverse treatment in the relevant sense, it is then for the respondent (employer) to show that that adverse treatment did not take place for a proscribed reason.

The nature and extent of these exposures are such that it is important that employers put in place appropriate Performance Management Policies and Procedures. Just as important as adopting such Policies and Procedures is adhering to them in practice. Putting in place Policies and Procedures that are not adhered to can have significant adverse consequences in any subsequent legal proceedings.

See Performance management.

Performance management of employees who are ill or injured is a particularly difficult and sensitive issue in both legal and practical terms - especially if the performance management process leads to termination of employment. Nevertheless, it is important to appreciate that it is possible lawfully to performance manage employees who are ill or injured, and that in appropriate circumstances it is possible lawfully to terminate the employment of such employees. Nevertheless, it must be recognized that s 352 of the FW Act does severely curtail the capacity lawfully to terminate employment in circumstances where an employee is on paid leave.

Effective performance management of employees who are ill or injured must start from a recognition that all employees have entitlements to take paid personal or sick leave under the FW Act. It is quite likely that they will also have entitlements under one or more of an award, enterprise agreement, contract of employment or employer policy. Where the illness or injury is work-related, then the employee may well be entitled to periodic and/or lump sum payments, and a measure of job protection, under workers’ compensation legislation.

As indicated, this does not mean that it is not possible lawfully to performance manage employees who are ill or injured, and to terminate their employment if necessary. However, it does mean that any performance management program must take proper account of the fact that the employee is ill or injured, and if employment is to be terminated it is important to take proper account of the requirements of s 352 of the FW Act and of relevant anti-discrimination legislation.

See Managing employee injury/illness.