Best Practice for Managing Employee Performance

“You’re fired!” – This is a phrase which we often hear in American television or movies.  But under New Zealand employment law, it is illegal to fire an employee on the spot due to poor performance.

If an employee is under performing, a rigorous process must be followed before that employee can be dismissed.

In addition, the employer must carefully document each step of the performance management process, otherwise the employer will not be able to prove that it had followed due process later in the Employment Relations Authority.

Performance Management Process

As a general principle, an employer must follow these 5 steps:

1. The employer must formally notify the employee in a meeting that he or she is under performing.
   2. The employer must give the employee an objective and measurable performance standard which he or she is required to achieve.
   3. The employer must provide the employee with training and/or counselling to help the employee to achieve the objective standard.
   4. The employer must give the employee reasonable time to achieve the objective standard.
   5. Lastly, repeat the steps set out above.  We recommend repeating steps 1 to 4 at least 2 more times.  By doing so, the employer would be able to confidently say to the Employment Relations Authority that it had done everything reasonable to assist the employee to improve his or her performance.

Finally, if all of these steps have been followed and documented, and if that employee can’t be redeployed to another role, then the employer may consider dismissing that employee.  This means the employer can’t pre-determine the outcome before hearing the employee’s point of view.

Therefore, at the final meeting with the employee, the employer must listen to the employee’s explanation with an open mind.  After the employer has carefully considered the employee’s response, it is only then that the employer may make the final decision to dismiss the employee.

If you have any questions about the proper process for managing employee performance, speak to us at Capstone Law, and we would be happy to assist you.