6 Performance Management Mistakes That Cost Employers at Fair Work

Most unfair dismissal claims that succeed at the Fair Work Commission have one thing in common. The employer had a valid reason to let the person go. But they got the process wrong.

That is the part that catches a lot of business owners off guard. You can have an employee who is genuinely underperforming, or who has done the wrong thing, and still lose a Fair Work claim if the way you handled it did not meet the standard of procedural fairness.

With unfair dismissal applications up 41% and general protections claims surging even higher, the margin for error has never been thinner. AI tools have made it easier than ever for a dismissed employee to lodge a claim within minutes. That means the quality of your process is now your single biggest line of defence.

Here are six of the most common performance management mistakes we see employers making, and what the Fair Work Commission does when it finds them.

1. Vague Allegations

Telling an employee their "attitude is poor" or they "need to lift their game" is not enough. The Fair Work Commission expects employers to be specific: what happened, when it happened, and why it is a concern.

There is a big difference between saying "Your performance is not meeting expectations" and saying "On 10 March and again on 14 March 2026, you failed to complete the required client reports by the 3:00 pm deadline, despite prior direction from management."

The second version is specific, factual, and dated. It gives the employee a fair chance to understand and respond to the concern. The first version leaves the door open for the employee to argue they were never told what the actual problem was.

2. Pre-judging the Outcome

This is one of the fastest ways to lose at Fair Work. If the Commission forms the view that you had already decided to terminate before the disciplinary meeting took place, the process is treated as a sham, regardless of how strong your reason for dismissal was.

In the 2025 case of Murphy v Xavier College Ltd, a long-serving teacher was dismissed for misconduct. The employer had a valid reason. But the Commission found the dismissal was unfair because communications from the school led the employee to reasonably believe the decision had already been made before he had a chance to respond. The principal had acted as both investigator and decision-maker, and prior performance management created a perception of bias. The employer was ordered to pay compensation.

The lesson is straightforward. Go into every disciplinary meeting with an open mind. The meeting exists to hear the employee’s response. If the outcome is already decided, the meeting is just theatre, and the Commission will see through it.

3. Not Offering a Support Person

Under section 387(d) of the Fair Work Act, the Commission considers whether the employer unreasonably refused to allow the employee to have a support person present during discussions about the dismissal. If you do not offer one, you hand the employee a procedural fairness argument on a platter.

The fix is simple. Every invitation to a disciplinary meeting should expressly advise the employee they may bring a support person. Clarify that the support person’s role is to provide emotional support, not to advocate or answer questions on the employee’s behalf. Document it in the letter. If the employee chooses not to bring one, that is their decision, but you need to show you offered.

4. No Documentation

This is the one we see most often and it is the most damaging. If it is not written down, it did not happen. That is how the Fair Work Commission sees it.

Employers regularly tell us they had multiple conversations with an employee about their performance before deciding to terminate. But when we ask to see the records, there are none. No file notes, no emails confirming what was discussed, no written warnings. Without documentation, you cannot prove the employee was ever told there was a problem, let alone given an opportunity to fix it.

Every stage of the process should produce a document: a note to file after an informal conversation, a formal warning letter, a disciplinary meeting invitation, and an outcome letter. These documents are not red tape. They are your evidence if a claim lands.

5. Treating Underperformance Like Misconduct

Underperformance and misconduct are fundamentally different issues that require different processes. Getting the category wrong can undermine your entire approach.

Underperformance is usually a capability issue. The employee is not meeting the standard of the role, but not necessarily through any deliberate act. It requires a staged process: feedback, support, warnings, a genuine opportunity to improve, and then termination if improvement does not occur.

Misconduct involves a conscious act or choice by the employee. It may justify a more immediate disciplinary response. Serious misconduct, such as theft, assault, or serious safety breaches, can support termination in the first instance.

If you treat an underperformance issue as misconduct and move straight to termination without giving the employee a chance to improve, the Commission is likely to find the dismissal was unfair. Conversely, if you treat genuine misconduct as underperformance and drag out a lengthy improvement plan, you risk losing control of the situation and sending the wrong message to your team.

6. Rushing to Termination Without Warnings

Unless you are dealing with serious misconduct, the Fair Work Commission expects to see evidence of a staged process before termination. That means prior warnings. Not just informal chats, but documented, formal warnings that clearly set out the concern, the expected improvement, the timeframe, and the consequences of failing to improve.

In a widely cited 2025 case, a Services Australia employee lost her unfair dismissal claim after the employer demonstrated a 15-month performance management process with full procedural fairness. The Commission upheld the termination specifically because the process had been thorough, documented, and fair. That is the standard that protects employers.

Skipping steps might feel faster in the moment. But if a claim follows, you will spend far more time, money, and stress defending a weak process than you would have spent getting it right in the first place.

What Good Process Actually Looks Like

The Fair Work Commission is not looking for perfection. It is looking for a genuine, fair process. Employers who can demonstrate the following are in a far stronger position:

•      The issue was clearly identified and communicated to the employee

•      The employee was given a genuine opportunity to respond

•      The response was genuinely considered before any decision was made

•      A support person was offered

•      The process was proportionate to the issue

•      Everything was documented at every stage

That is the framework the Commission applies under section 387 of the Fair Work Act. If your process ticks those boxes, you are well positioned to defend a claim. If it does not, you are exposed, no matter how strong your reason for dismissal was.

Download Our Free Employer Guide

We have put together a free Employer Guide to Disciplinary and Performance Management that walks you through the entire process, step by step. It includes a decision flowchart for identifying whether you are dealing with underperformance, misconduct, or serious misconduct, a quick-reference table showing what the FWC examines under section 387, and a pre-action checklist you can use before every disciplinary process.

Need Help With a Workplace Issue?

At Blackstone Business Group, we work with employers across Australia to build the structures, documentation and processes that protect your business. Whether you need to review your employment contracts, set up a performance management framework, or navigate a termination, we are here to help.

We are pro-employer, commercially practical, and we give you straight answers.

Call us on 07 3869 4743 or email advice@blackstonebg.com.au