Managing Poor Performance NZ: What Managers Must Know Before the Conversation

Poor Performance Is Not a Dismissal Decision — Not Yet

Most managers who get performance management wrong do so because they treat the first conversation as the last step rather than the first. Under the Employment Relations Act 2000 and MBIE guidance, an employer must follow a fair process before dismissal is even on the table — and that process starts long before any formal action.

Getting this wrong costs money. Personal grievance claims for unjustified dismissal or unjustified disadvantage are filed with the Employment Relations Authority (ERA), and even where an employer wins on the merits, the legal costs of defending a claim can exceed $20,000. Settlements to avoid litigation are common. Most of the risk is preventable with the right process and the right training.

What the Law Requires

The Employment Relations Act requires an employer who wants to manage an employee's performance to act in a way that a fair and reasonable employer would. The ERA applies a two-stage test: was there a genuine reason for the action, and was the process followed fair?

Fair process in a performance context typically means:

• Clear expectations: The employee must know what is expected of them. If you have never documented performance standards or had a clear conversation about expectations, your starting position is weak.
• Notice of the concern: The employee must be told, specifically, what the performance concern is — not a vague reference to "attitude" or "not fitting in."
• Opportunity to respond: Before any formal step is taken, the employee must have a genuine opportunity to explain, dispute the facts, or put forward their perspective.
• Support and time to improve: Where underperformance is the issue rather than misconduct, the employer is generally expected to provide support, additional training if appropriate, and a reasonable time to improve.
• Written record: Every significant conversation, every commitment to improve, every warning — documented and confirmed in writing.

Skipping any of these steps creates vulnerability to a personal grievance claim, even if the underlying performance concern is legitimate.

The Common Mistakes NZ Managers Make

Avoiding the conversation: Managers often put off addressing performance issues, then try to accelerate a formal process after months of problems. The ERA looks at the full history. If you tolerated poor performance for eight months without raising it formally, it weakens your position.

Informal warnings that are not documented: A verbal "chat about performance" that is not confirmed in writing is almost impossible to rely on later. The employee can credibly say it never happened, or that they understood it as feedback rather than a formal concern.

Conflating performance and misconduct: Poor performance and misconduct are different legal tracks. Treating a performance issue as misconduct (or vice versa) derails the process and creates procedural vulnerabilities.

Not seeking advice early: Employment lawyers and HR professionals consistently report that employers who seek advice at the start of a performance concern have far better outcomes than those who seek advice after the situation has deteriorated.

What a Performance Improvement Process Looks Like

A robust performance improvement process (PIP) in a NZ context typically includes:

1. Initial conversation: Raise the concern specifically. Listen to the employee's perspective. Document the meeting outcome and send a written summary.
2. Formal written notice: Set out the performance concern in writing, referencing specific examples, the expected standard, the gap, and the consequences if improvement is not achieved.
3. Support plan: Agree on what support the employer will provide — coaching, additional training, changed workload or tools — and document it.
4. Review period: Set a clear timeframe (typically 4–8 weeks for most roles) with defined milestones and checkpoints.
5. Review meetings: Hold structured check-ins during the review period, documenting progress or lack thereof.
6. Outcome: At the end of the review period, make a documented decision — whether the standard has been met, whether the process continues, or (if all steps have been followed and improvement has not occurred) whether termination is being considered.

If termination is being considered, a further fair process step — a show cause meeting — is generally required before the decision is made.

The Right to Representation

At any formal stage of a performance process, the employee has the right to have a support person or representative present. This includes a union delegate, colleague, or lawyer. Managers who deny this right — or who make the employee feel that bringing a representative is unwelcome — are creating procedural vulnerabilities.

See employment relations training for managers for a detailed look at the legal obligations around representation, disclosure of information, and the employee's right to be heard.

Why Training Matters Before You Start

Most managers are not trained employment law practitioners. They manage performance based on instinct, what they have seen done before (which may itself have been flawed), or what they think is fair. The gap between "what feels fair" and "what the ERA considers fair" is where most personal grievance claims originate.

Structured training on performance management processes in NZ — covering the legal framework, documentation requirements, what to say in difficult conversations, and when to escalate to HR or legal advice — is one of the most cost-effective risk management investments a business can make.

WyzAZ includes performance management training modules designed for NZ managers, covering ERA obligations, PIP process, documentation, and managing difficult conversations.