Managing underperformance: what employers need to know

Underperformance is one of the toughest people issues to manage. Especially in small businesses where every role matters.

When someone isn’t meeting expectations, it impacts productivity, morale, and puts added pressure on the rest of the team.

It’s also one of the areas where employers are most likely to get into trouble if it’s handled poorly.

The question I get asked all the time is:

Can I terminate someone for underperformance?

The short answer is yes, but how you do it matters.

In most cases, underperformance is handled through termination without cause, meaning the employment ends with appropriate notice or pay in lieu. This is the most common and lowest-risk option because the bar for termination for cause is extremely high.

Poor performance on the employee’s part is rarely intentional. Most employees are trying to do a good job. They may just be struggling with the role, missing targets, or not meeting expectations. That’s why many employers choose to move on without cause rather than trying to prove misconduct.

So, before making that decision, it’s important to:

• Review the employment agreement

• Understand notice or termination obligations

• Consider length of service

• Be aware of applicable employment legislation

Clear, well-written agreements go a long way in reducing risk.

Termination for cause should be approached with caution. Underperformance alone almost never qualifies. Cause is generally reserved for serious situations involving intentional or reckless behaviour, or a fundamental breakdown in trust. Mistakes, lack of skill, or poor judgment (no matter how frustrating) usually don’t meet that threshold.

In limited cases, ongoing underperformance can lead to cause, but only if you’ve taken the right steps:

• Set clear expectations from the start

• Provide ongoing feedback and coaching

• Document concerns

• Use a formal performance improvement plan (PIP)

• Clearly warn that termination may result

Trust me when I say that if an employee is genuinely surprised by their termination, it’s usually a sign the process wasn’t handled properly.

There are also rare situations where immediate termination may be justified. Things like theft, fraud, violence, or harassment. Even then, careful investigation and documentation are critical. Seek legal advice or reach out to a professional.

Underperformance should never be handled impulsively. Terminating someone is a business decision, but it comes with legal, financial, and human consequences. Please tread careful

ly. Set expectations early. Address issues as they come up. Document your efforts. Use performance plans thoughtfully. And treat termination as a last resort.

And if you’re unsure how to handle a situation, getting advice early is always better than trying to fix things after the fact. As always, I’m here to help.