How to handle an underperforming employee fairly

The unfair way to handle poor performance is familiar: the owner says nothing, the work stays poor for months, and then one day patience ends. The fair way is not complicated, but it starts earlier than most owners find comfortable.

Begin by being precise. Write down what the person was expected to do, what actually happened, and when. Use examples with dates, not impressions such as 'lazy' or 'careless'. Then ask whether the expectation was ever stated clearly. In many small businesses it was not: the person was shown the job once, in the first week, and nobody has talked about it since. If so, the first fix is to make the expectation clear, and that is your job, not theirs.

Next, think about the likely cause, and be ready to be wrong. Poor performance usually comes from one of five things. The person may not know what good looks like. They may lack a skill nobody taught them. They may lack the tools, information or authority to do the job. They may have lost interest in the work. Or something outside work, such as illness, family trouble or money worry, may be affecting them. Each needs a different response, and you will not know which it is until you ask. So the first conversation is partly for listening.

Hold it soon after you notice the problem, in private, and not in the middle of a rush. Start with the specific examples. Say what you expected and why it matters to the business. Then ask for their view, and let them finish. End by agreeing what each of you will do and when you will meet again. Write a short note afterwards.

If the problem is real and continues, put an improvement plan on one page. It should list two or three specific expectations, not a general instruction to do better. It should say what help you will give, such as a short training session, a checklist or a weekly review. It should set a realistic period, with review dates agreed in advance. Give the employee a copy and keep one yourself.

Keep records, and keep them honest. After each conversation, note the date, what was discussed and what was agreed. Record facts as facts. Record what the employee told you, including their explanation, as closely as you can. Record the support you gave, as well as the failings. These notes are not for building a case. They exist so that both of you remember the same thing, and so that there is an accurate account if a dispute ever follows.

Review on the dates you set. If there is real improvement, say so early and clearly. If there is no improvement despite clear expectations and real support, you have a hard decision to make.

Before you make it, pause and take advice. This is where owners most often go wrong. Ending someone's employment for performance has rules attached. What they are depends on your appointment letter or contract, the person's role, whether they are still on probation, the size of your business, your state and the labour rules in force. India's four labour codes came into force on 21 November 2025, and how they apply to a particular business and role is something a lawyer or an experienced HR professional should confirm. Check what your appointment letter says about notice and process, and follow it.

Take advice earlier, too, in a few situations. If the employee mentions illness or pregnancy, make sure the performance issue is not mixed up with something that needs different handling. If the employee has raised a grievance, deal with that properly and separately. If the complaint is about sexual harassment, it goes to your Internal Committee, or to the Local Committee where a business is too small to have one, and it needs professional guidance. If you have received a legal notice, stop and speak to a lawyer.

Be honest about fit as well. Sometimes the person is not failing; the role has changed, or they were placed in the wrong one. If a different role would suit them, and a real one exists, consider it. If the job has to end, tell the person directly and privately, with respect, in the way your letter and your advice require. Explain the reason without blame, agree a clear handover.

A hypothetical example may help. A shop owner is unhappy that a billing assistant keeps making entry errors. In conversation she learns that nobody trained the assistant on the new billing software. She writes a one-page checklist, arranges two practice sessions and agrees to review in three weeks. The cause was training, so the fix was training.

This week, you can do four things. Write down the three most important things one team member is expected to do. Check whether they would give the same three. Note one recent example of work that met the standard and one that did not. Then book a private fifteen-minute conversation built around those examples.

This is general guidance, not legal advice. Check your contract and current rules, and consult a professional before taking any step that could end someone's job.