One of the most common mistakes employers make is confusing misconduct with poor performance. While both may justify disciplinary action—or even dismissal—they require very different legal processes.
As employment and industrial relations lawyers, we’ve advised many businesses that found themselves facing wrongful dismissal claims simply because they took action without distinguishing the two. Understanding the difference is crucial to protect your company from costly disputes at the Industrial Court.
Misconduct vs Poor Performance: What’s the Difference?
Misconduct | Poor Performance |
Employee did something wrong | Employee failed to meet expectations |
Involves behavioural issues | Involves work quality or output |
May justify immediate disciplinary action | Requires support and time to improve |
E.g., insubordination, theft, absenteeism | E.g., low sales numbers, slow output, poor work quality |
Legal Process: One Size Does Not Fit All
Misconduct: Issue a Show Cause Letter
If an employee commits misconduct, the correct first step is to issue a show cause letter asking them to explain their behaviour. If the explanation is unsatisfactory, the employer may proceed to: –
- Conduct a domestic inquiry, and
- Take disciplinary action, including suspension or dismissal if warranted
Poor Performance: Issue a Warning, Not a Show Cause
In contrast, poor performance is not a disciplinary issue—it’s a performance management issue. The employee must be: –
- Informed of their underperformance
- Given a formal warning or performance improvement plan (PIP)
- Allowed a reasonable time to improve
Dismissing an employee for poor performance without these steps is likely to be deemed unfair and unlawful, especially if they have served for more than a few months.
Why This Matters: Legal Risk for Employers
The Industrial Court has consistently ruled that terminating an employee for “poor performance” using misconduct procedures is procedurally unfair.
Even probationers are entitled to procedural fairness. A knee-jerk reaction without proper warnings, documentation, or support can result in:
- Wrongful dismissal claims
- Compensation orders
- Reputational damage
How Can Employers Protect Themselves?
- Have proper HR policies and contracts that clearly set out expectations
- Document warnings and communications with the employee
- Engage an industrial relations lawyer before terminating any staff
At our law firm, we offer retainer packages for SMEs and corporate clients who need timely, compliant HR legal support.
Final Word
If your employee is underperforming—support and manage.
If your employee has committed misconduct—investigate and discipline.
Knowing the difference is not just good management; it’s the law.
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