An Employee Is Underperforming — What Should an Employer Do? From Improvement Plans to Record Keeping
An Employee Is Underperforming — What Should an Employer Do? From Improvement Plans to Record Keeping
“This employee keeps making mistakes. Can we dismiss them immediately?”
Hong Kong SMEs often face employees whose performance is below expectations. However, feeling that someone is “not good enough” does not by itself provide a complete and explainable basis for action. The company must first clarify whether the issue is a lack of ability, unclear work requirements, insufficient training, inadequate resources, or a knowing and continued refusal to follow requirements.
When dealing with underperformance, the safer approach is usually not to write a dismissal letter immediately. It is to establish a clear, reasonable and trackable improvement process.
For an SME without an in-house HR team, the most difficult question is often not whether performance should be followed up, but whether the issue should be handled through coaching, a PIP, a formal warning or another employment arrangement. If the company is dealing with a contentious case, or management is unsure whether the documents and process are sufficient, seeking professional HR support early is generally more practical than waiting until an employee complaint or employment dispute arises.
Important reminder: The legality of an individual dismissal, warning or disciplinary action depends on the employment contract, the facts, the evidence and the circumstances as a whole. This article provides a general HR management framework and is not legal advice for any individual case.
First, distinguish between a performance issue and a disciplinary issue
Performance issues
Examples include:
• Work accuracy consistently falls below the requirements of the position;
• Work is not completed within a reasonable deadline;
• The employee has not acquired basic skills that should have been obtained after training; or
• Similar problems repeatedly occur in client follow-up, reports or document handling.
The usual focus is to confirm expectations, provide guidance, allow a reasonable period for improvement and then review the result.
Disciplinary or conduct issues
Examples include:
• Refusing, without reasonable cause, to follow a lawful and reasonable work instruction;
• False, fraudulent or dishonest conduct;
• Serious violation of established company rules; or
• Habitual neglect of duties.
These cases may involve a disciplinary process, but the company should still verify the facts, preserve evidence and follow its company policy.
The Labour Department states that under Section 9 of the Employment Ordinance (Cap. 57), an employer may terminate a contract without notice or payment in lieu of notice in specific serious situations. However, the Labour Department also explains that summary dismissal is a serious disciplinary action and should be reserved for very serious misconduct or repeated failure to improve after warnings. Ordinary poor performance should not automatically be treated as grounds for summary dismissal.
Step 1: Confirm that the work requirements are clear enough
Before asking an employee to improve, management should ask:
• Has the employee received a clear job description?
• Are the targets reasonable for the position, length of service and available resources?
• Are there concrete examples or measures of what “good performance” means?
• Has the supervisor raised issues promptly instead of allowing them to accumulate until the year-end review?
• Are other employees assessed against the same standards?
• Has the company provided reasonable training, tools, information and instructions?
For example, “improve your work attitude” is too abstract. “Submit the completed client follow-up report by 5:00 p.m. every Friday, with no more errors than the specified standard” is easier to understand and track. Targets should reflect the nature of the role. The company should not add arbitrary or unreasonable figures simply to create a record.
Step 2: Hold a formal and documented performance meeting
The first formal performance follow-up can be a meeting between the supervisor and the employee. It should:
1. Identify when the issue occurred, which work was involved and what impact it had;
2. Give the employee an opportunity to explain and identify any support they may need;
3. Explain the reasonable expectations for the position;
4. Agree on improvement targets, a timeframe and the next review date; and
5. Confirm both parties’ understanding by email or meeting record afterwards.
Records should focus on facts. For example, write “the report submitted on 5 March was missing two specified items”, rather than simply “the employee was careless”. If the employee disagrees with the record, allow them to submit additional comments and keep those comments together with the record instead of deleting the disagreement.
Step 3: Is a PIP necessary? Understand the purpose of an improvement plan
A PIP, or Performance Improvement Plan, is not a “pre-dismissal letter”. It is a management document that sets out the direction and arrangements for improvement. It may include:
Element | Suggested approach |
|---|---|
Areas requiring improvement | Link them to job responsibilities and specific examples |
Expected standard | Make it understandable, observable and relevant to the role |
Support arrangements | Training, demonstrations, resources and supervisor follow-up |
Improvement period | Set a reasonable period according to the nature of the issue |
Review schedule | For example, weekly or fortnightly reviews |
Possible consequences | Explain that further action may be considered, without predetermining the outcome |
Record-keeping method | Preserve meetings, work results and the employee’s responses |
The value of a PIP is to help the employee understand what must improve and how the company will assess it, while giving management a consistent follow-up rhythm. If a PIP only says “failure to improve will result in dismissal” but contains no clear targets, support or review records, it loses its value as an improvement tool.
Step 4: Follow up continuously instead of filing the document and waiting
During the improvement period, the supervisor should review, at the agreed intervals:
• Whether work results have improved;
• Which problems continue to recur;
• Whether the original targets need clarification;
• Whether the company’s support has been sufficient; and
• Whether new facts affect the assessment.
Each review should record the date, discussion, work examples, employee response and next steps. If the employee has achieved some targets, clearly record what has improved and what still needs follow-up. This avoids leaving behind only a negative record.
Step 5: What can the company do if performance still does not improve?
After a reasonable improvement and review process, the company may consider several options:
• Extend the improvement period where there is a reasonable basis and clear new targets;
• Adjust the work arrangement or provide additional training if the issue relates to job fit or skills;
• Issue a formal warning under the company’s disciplinary policy if the matter also involves a breach of work requirements or rules;
• Before considering termination, check the contract, notice period, payment in lieu of notice, unpaid wages and other termination payments; and
• Obtain an HR and legal compliance review for high-risk or contentious cases.
Under Section 6 of the Employment Ordinance (Cap. 57), an employment contract may generally be terminated by notice, subject to the contract and statutory requirements. If payment in lieu of notice is used, the applicable conditions and calculation should also be checked.
The Labour Department also states that when an employment contract ends, an employer generally needs to settle outstanding wages, payment in lieu of notice where applicable and other sums due. Under Section 25 of the Employment Ordinance (Cap. 57), sums payable to an employee on termination must, unless otherwise provided by the Ordinance, be paid as soon as practicable and in any event not later than seven days after the date of termination. The specific case must still be checked against the applicable provisions, contract and length of service.
Do not look at performance alone: check for protected situations
Before issuing a warning, demoting, reducing pay or dismissing an employee, the company must confirm that the action is not connected to a legally protected situation, such as:
• The employee is taking statutory paid sickness days;
• The employee has notified the company of pregnancy or is within a relevant protection period;
• The employee has suffered a work injury and statutory protection may apply;
• The employee has participated in trade union activities or provided information about labour legislation; or
• The proposed treatment may amount to discrimination based on sex, disability, family status or race.
For example, the Employment Ordinance (Cap. 57) restricts termination during a period of paid sickness days, except in situations such as summary dismissal for serious misconduct. For discrimination risk, the Equal Opportunities Commission explains that the Sex Discrimination Ordinance (Cap. 480), Disability Discrimination Ordinance (Cap. 487), Family Status Discrimination Ordinance (Cap. 527) and Race Discrimination Ordinance (Cap. 602) cover the employment field.
If an employee raises issues involving sickness absence, pregnancy, disability, family care or discrimination during the improvement period, management should not treat the issue simply as an obstacle to the process. It should separately consider the performance matter and the relevant protection or support needs.
What should be retained in performance-management records?
Depending on the case, the company can maintain a complete but necessary set of records, including:
• The job description, targets and relevant policy versions;
• Work instructions, training and support arrangements;
• Specific work results, errors or examples of missed standards;
• Meeting dates, participants and the employee’s response;
• The improvement plan, review results and next steps;
• Warnings or other formal documents;
• Approval and reasons for the final decision; and
• Termination documents and payment records, where applicable.
Under Section 49A of the Employment Ordinance (Cap. 57), an employer must keep a wage and employment record for each employee. Labour Department materials state that employment records may include the date employment began, position, wages, leave, notice period and termination date. Performance-management documents may not all be statutory wage records, but clear, accurate and consistent records can help the company explain its decision-making process if an employment dispute arises.
Access to these records should be limited to managers or HR personnel who need it. They should also be managed in accordance with the company’s data-retention and privacy arrangements. Where personal data is involved, refer to the Personal Data (Privacy) Ordinance (Cap. 486) and relevant guidance from the Office of the Privacy Commissioner for Personal Data.
Three common but high-risk approaches
1. Listing every problem at the end of the year
If an employee does not know for months that their performance is below standard and then receives a long list of negative comments before a review or contract renewal, the approach does not support improvement and may make it harder for the company to show that it managed the issue promptly.
2. Telling the employee to “figure out how to improve”
An improvement request without targets, support, a timeframe and a review method is difficult to treat as a clear improvement process.
3. Describing a performance issue as serious misconduct
Poor performance, a lack of skills and intentional misconduct are different concepts. In particular, when summary dismissal is being considered, serious disciplinary action should not be used as a substitute for basic fact-finding and compliance review.
When should a company seek help from an HR consultant?
A supervisor should not handle the matter alone where:
• The company has no formal performance appraisal or improvement process;
• The supervisor wants to dismiss the employee immediately but cannot clearly explain the reason or records;
• The employee has made a complaint or mentioned discrimination, sickness absence, pregnancy, work injury or another protected situation;
• The matter involves several supervisors, client information or sensitive personal data;
• The company needs to draft a PIP, warning letter or termination document but is unsure whether the wording is consistent; or
• Management knows there is a performance issue but different supervisors have been applying different standards.
Get More can help the company organise the case timeline, review job requirements and existing evidence, design a performance-improvement process and support management with follow-up. Where needed, we can also provide ongoing HR outsourcing support. The purpose is not to make every employment decision on the company’s behalf, but to help the company establish a clear process, appropriate records and consistent management standards before making a decision.
A practical process for Hong Kong SMEs
The overall process can be simplified into six steps:
1. Check the job requirements and actual work resources;
2. Explain the issue to the employee using specific examples;
3. Listen to the employee’s explanation and confirm whether training or reasonable support is needed;
4. Set clear targets, a timeframe and a review arrangement;
5. Keep objective records and give the employee an opportunity to respond; and
6. If a warning, contractual change or termination is being considered, obtain an HR and legal compliance review first.
Conclusion: Performance management is not simply about finding a reason to dismiss someone
Effective performance management should protect three things at the same time:
• The employee’s understanding of the company’s expectations and the direction for improvement;
• The supervisor’s access to a consistent and workable management process; and
• The company’s ability to rely on complete and reliable facts before making an employment decision.
For an SME without a dedicated HR team, it is not necessary to wait until a dispute arises before seeking support. From building a performance-appraisal framework and designing a PIP to reviewing warning and termination procedures, a professional HR consultant can help the company make its management decisions clearer and more consistent.
Need Professional HR Advice? Let Get More Help You Stay Compliant
Hong Kong employment regulations continue to evolve, creating increasingly demanding challenges for businesses in compliance management and HR operations. With more than 15 years of professional consultancy experience, Get More Resources Limited provides comprehensive HR strategy and compliance solutions. Our services cover employment contract drafting, employee handbook preparation, company policy development, compensation and benefits structure design, and working arrangements during adverse weather. We help businesses build compliant internal management systems, reduce operational risk and improve the effectiveness of employee management.
If your company is dealing with an underperforming employee but is unsure whether to start with a PIP, a formal warning or another HR arrangement, speak to Get More for an initial HR review. We can help organise the facts, review the process and documents, and provide performance-management framework, PIP design, case follow-up or HR outsourcing support according to your company’s needs.
Let a professional team support your business. Contact us to arrange a complimentary business consultation:
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Further Reading
• Labour Department: Employment Ordinance (Cap. 57)
• Labour Department: Chapter 2 of the Employment Ordinance — The Employment Contract
• Labour Department: Termination of Employment Contract
• Labour Department: Keeping Proper Employment Records
• Hong Kong e-Legislation: Employment Ordinance, Cap. 57
• Equal Opportunities Commission: Good Management Practices
Disclaimer
This content is for general informational purposes only and does not constitute legal advice. For specific situations, please consult a qualified HR consultant or legal professional.
