Complex performance management issues often require HR to coach managers in how to help employees cope with uncomfortable challenges. Understanding the role of a reasonable management plan is key to this.

Daniel, a software developer, had recently begun missing deadlines and submitting work that didn’t meet expectations. Concerned about the shift, his manager approached HR for guidance on how to address the issue constructively.

Behind the scenes, HR coached the manager through every step of the process – helping them build confidence in having difficult conversations, apply the principles of procedural fairness, and ensure psychological safety was maintained throughout. Together, they worked to identify and clearly articulate the performance standards expected of Daniel, linking these back to the broader goals of the business. HR also supported the manager in recognising early signs of psychosocial risk – such as withdrawal, defensiveness or anxiety – and responding appropriately or escalating where necessary.

In preparing for the conversation, the manager was encouraged to give Daniel space to share any challenges he was experiencing, including wellbeing or workload-related issues. With HR’s support, the manager was also equipped to model key leadership behaviours – transparency, emotional intelligence, calm under pressure and a commitment to mutual accountability.

Rather than impose a rigid plan, the manager invited Daniel to co-design a performance improvement plan (PIP), setting meaningful, achievable goals and agreeing on regular check-ins. They also worked with HR to explore whether further training or development might be needed, such as on-the-job coaching, buddying, or external support.

Although Daniel initially felt the PIP was unfair, his concerns were heard and documented. The manager explained the intent of the process and reiterated the supports available, including access to EAP. Throughout, the tone remained focused on support and improvement – not blame or discipline.

When handled with empathy, structure and care, performance management can meet the threshold for reasonable management action while also strengthening trust, psychological safety and leadership capability across the organisation.

Determining fair and lawful behaviour

This is a common situation in performance management: what feels unfair to an employee can still be lawful and appropriate. Understanding this distinction is critical to managing legal risk and guiding managers to lead with clarity and care.

Risks to an employee’s psychological health and safety caused by poorly managed performance processes could be inconsistent with obligations under applicable work health and safety legislation and underpinning psychosocial hazard management regulations. 

In addition, poorly managed performance processes may give rise to workers’ compensation claims, which can serve to frustrate the process and result in poor health outcomes for the employee concerned. 

“A manager providing regular feedback about underperformance in a private setting, using objective language and offering support, would likely be considered reasonable, even if the employee feels stressed or stretched.”

In saying this, compensation may not be payable where the alleged injury arises from reasonable management action taken in a reasonable manner. Additionally, any employee who believes their performance management is unreasonable can apply to the Fair Work Commission for a stop-bullying order under the Fair Work Act. 

The Act defines workplace bullying as repeated and unreasonable behaviour directed towards a worker or a group of workers that creates a risk to health and safety.

Importantly, the Fair Work Act provides that reasonable management action doesn’t constitute bullying.  

In situations where performance does not improve and results in termination of employment, evidence of procedural fairness and reasonable management action would be useful in defending post-termination claims, such as unfair dismissal proceedings. 

Read HRM’s article on the difference between stretch, stress and strain when assessing psychosocial risk.

How to define what is considered ‘reasonable’

To manage legal risks and set performance management up for success, it’s critical that managers appreciate what constitutes reasonable management action. 

Essentially, it’s a legal concept that recognises that employers have a right – and a duty – to manage employees’ performance, behaviour and conduct in the workplace in a reasonable manner. 

Reasonable management action may include:

• Raising performance concerns in a direct but respectful manner.
• Setting clear expectations and holding employees accountable for outcomes (even if this stretches them out of their comfort zone). 
• Placing an employee on a PIP after raising performance concerns with the employee.

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Conversely, the following management actions have been held to be unreasonable in the context of bullying and workers’ compensation claims:

• Hostile or demanding phone calls and emails following underperformance.
• Repeated attempts to reduce an employee’s duties and responsibilities.
• Failing to follow established policies and procedures when managing performance.

Courts and tribunals assess reasonableness by considering factors such as:

• Procedural fairness: Were company policies and procedures followed? Did the employee have an opportunity to respond? If an investigation was conducted, was it impartial?
• Timeliness: The timing of the management action, taking into account any delays in taking action.
• Proportionality: Was the employer’s response appropriate to the situation?
• Transparency: Were reasons clearly communicated?
• Sensitivity: Was the process conducted respectfully and without humiliation?
• Consistency: Were similar cases handled similarly?
• Impact on the employee, including psychological health: While distress alone doesn’t make an action unreasonable, excessive or avoidable harm may be relevant.
  

For example, a manager providing regular feedback about underperformance in a private setting, using objective language and offering support, would likely be considered reasonable, even if the employee feels stressed or stretched.

An unreasonable response might look like a manager publicly criticising an employee, withholding necessary support or information, or conducting a biased or rushed disciplinary process.

 Managing performance 

Given the potential legal implications, HR should support and educate managers to conduct management processes reasonably. 

Key to the success of performance management is adopting a proactive approach to management – fostering an environment where communication and feedback are commonplace.

This not only encourages relationships of trust; it also provides a basis from which managers can escalate informal feedback to more formal performance management, if this is required.

While there is no one-size-fits-all approach to managing performance, the following practical tips can assist HR to coach and empower managers:

• Encourage early intervention: Address issues before they escalate, to provide early opportunities for development.
• Have clear and direct conversations, balanced with empathy: Ensure that conversations with employees are direct, firm and supportive, with expectations clearly communicated from the outset.
• Document discussions: Document all performance discussions – even the informal ones – to reinforce expectations and provide a document trail, should this be required in subsequent legal proceedings.
• Apply policies consistently: Ensure that established policies and procedures are followed consistently to avoid perceptions of bias or lack of procedural fairness.
• Allow time to improve: Set reasonable timelines for improvement and check in regularly.
• Implement systems that reduce ‘stressors’: Ensure systems of work such as rostering, adequate staffing and training, realistic timelines and KPIs are well-implemented to reduce barriers to improvement and parallel risks to health and safety.
  

Ultimately, reasonable management action is not just about managing legal risks. Well-managed processes will support employee engagement, productivity and employee retention, which will serve the organisation in meeting its commercial objectives. 

Georgie Chapman is a Partner, and Madeleine Mantegazza is a workplace relations and safety lawyer, at HR Legal.

This article first appeared in the June-July 2025 edition of HRM Magazine. All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such.