A team member misses another deadline, argues whenever feedback is raised, or creates tension that everyone else has to work around. For an SME, managing difficult employees Australia-wide is not simply a personality issue. Left unchecked, it can affect customer service, productivity, turnover and the confidence of your good people.
The temptation is to act quickly because the behaviour feels obvious. But a rushed conversation, an inconsistent response or poorly kept records can turn a manageable performance issue into a costly employee relations problem. The better approach is direct, fair and documented: identify the issue, set a clear expectation, give the employee a genuine opportunity to respond and improve, then take proportionate action if they do not.
Managing difficult employees in Australia starts with facts
“Difficult” is a useful description of how a situation feels, but it is not a performance standard and it should not appear in your documentation. Start by separating the employee’s conduct from your reaction to it.
Is the problem repeated lateness, incomplete work, rude communication, refusal to follow a reasonable and lawful direction, conflict with colleagues, absenteeism, poor quality work or a breach of policy? Be specific. Record dates, examples, the business impact and any previous conversations. If customer complaints are involved, retain the complaint and investigate what happened rather than relying on assumptions.
This step matters because different issues require different responses. A capable employee who has become withdrawn may be dealing with an injury, family pressure, bullying, workload concerns or a mental health issue. An employee who lacks skills or clarity may need training and closer supervision. Deliberate misconduct, on the other hand, may require a formal process sooner.
Managers should also check whether the same standard is being applied across the team. If one person is disciplined for arriving late while others are routinely allowed to do the same, your position becomes harder to defend and morale can deteriorate quickly.
Address concerns early, but do not ambush the employee
Minor concerns are usually best dealt with through an informal, timely conversation. Waiting for frustration to build often means the eventual discussion becomes emotional, vague and unfairly broad. A short private meeting can reset expectations before the issue becomes entrenched.
Explain what you have observed, why it matters and what needs to change. For example: “You have arrived after your rostered start time on four occasions this month. This has left the opening shift short-staffed. From tomorrow, you are expected to be ready to start work at 8.00 am. Is there anything affecting your ability to meet that requirement?”
Then listen. There may be an explanation that changes the next step, such as unclear rostering, a medical condition, a workplace conflict or an unreasonable workload. Listening does not mean accepting poor conduct. It means making a decision based on proper information rather than assumption.
Follow up the conversation in writing, even if it remains informal. A brief email confirming the concern, agreed expectation and review date can prevent disagreement later about what was said. Keep the language factual and professional. Do not make accusations you cannot support.
Know when a formal performance or conduct process is needed
If the issue continues, is serious, or the employee rejects reasonable efforts to resolve it informally, move to a formal process. The exact process will depend on the employment contract, applicable modern award or enterprise agreement, workplace policies and the nature of the concern.
For performance concerns, a performance improvement plan can be appropriate. It should not be a document designed to push someone out. It needs clear and achievable standards, practical support, realistic timeframes and scheduled review meetings. An employee cannot reasonably be held accountable for vague directions such as “improve your attitude” or “be more proactive”. Specify the required behaviour or output instead.
For conduct concerns, particularly allegations of bullying, harassment, theft, serious safety breaches or dishonesty, an investigation may be required before any finding is made. In these situations, avoid promising an outcome at the start. Give the employee details of the allegations, a fair opportunity to respond and sufficient time to prepare where appropriate. They may be entitled to bring a support person to formal meetings.
Suspension is not an automatic response to an allegation. It may be justified where there is a genuine risk to safety, evidence, the investigation or workplace relationships, but it should be considered carefully and handled consistently. Taking someone off the roster simply because the issue is uncomfortable can create further risk.
Procedural fairness protects the business and the employee
A fair process does not mean you must tolerate unacceptable conduct indefinitely. It means the employee understands the concern, has a meaningful chance to respond and knows what could happen if the issue is substantiated or does not improve.
Before issuing a warning or making a termination decision, make sure you can answer several practical questions. Has the employee been told the specific concern? Have you considered their explanation? Was the expectation reasonable, lawful and clearly communicated? Have they been given appropriate support and a reasonable opportunity to improve, where performance is the issue? Is the proposed response consistent with the seriousness of the conduct and with how similar matters have been handled?
For Australian employers, procedural fairness is particularly relevant where an employee may later make an unfair dismissal claim. Depending on the circumstances, other risks may also arise, including general protections or adverse action claims, discrimination concerns, workers compensation issues and breaches of an award or enterprise agreement. This is why a manager’s handwritten notes, emails and meeting records often matter more than a strongly worded final warning.
Do not let a concern about an employee’s illness, pregnancy, parental responsibilities, age, disability, race, religion or other protected attribute influence a management decision. Focus on the legitimate workplace requirement, the evidence available and any reasonable adjustments that may need consideration.
Keep the conversation firm and respectful
Difficult conversations can go wrong when managers over-explain, argue or try to win agreement. Your role is to communicate the issue clearly, hear the employee’s response and set the next step.
Use calm, neutral language. Rather than saying, “You are negative and impossible to work with”, explain the observed behaviour: “In Monday’s team meeting, you interrupted two colleagues and raised your voice after being asked to follow the new process. That behaviour is not acceptable and it needs to stop.” This is easier for the employee to understand and easier for the business to substantiate.
If the employee becomes angry, do not match their tone. Pause the meeting if necessary, confirm that respectful conduct is required and arrange to continue when it is appropriate to do so. Where there is a safety concern or a credible threat, prioritise the safety of staff and seek immediate specialist advice.
Managers should avoid making promises in the room, particularly about whether someone will keep their job. Say that you will consider the information provided and confirm the outcome after the relevant process has been completed. This preserves fairness and gives the business time to review the facts.
Support managers so they do not create avoidable risk
Many employee issues become more complicated because the manager has never been trained to give feedback, document conversations or distinguish poor performance from misconduct. They may either avoid the issue for months or issue an overly harsh warning without checking the facts.
Give managers a clear escalation point. They should know when to involve a director, operations leader or external HR adviser, especially if the matter involves protected attributes, a complaint about a manager, a mental health concern, an allegation of serious misconduct, a workplace investigation or potential termination.
It also helps to have usable policies and templates in place before a problem arises. A code of conduct, performance management process, bullying and harassment policy, leave procedure and disciplinary correspondence should reflect how your business actually operates. Templates are a starting point, not a substitute for tailoring the process to the circumstances.
For SMEs without an internal HR team, external support can provide an objective view at the point where decisions carry real legal and operational consequences. The HR Department Consulting Group assists employers with practical employee relations advice, documentation, investigations and fair, commercially sensible processes.
Act with purpose, not frustration
The aim is not to make every employee easy to manage. It is to create a workplace where expectations are understood, concerns are addressed early and people are treated fairly when things go wrong. Some employees will respond well to direct feedback and support. Others may not improve despite a fair opportunity.
When that happens, do not let the matter drift because a decision feels uncomfortable. Take advice, follow a considered process and make the decision your business can explain with confidence. That protects your team, your operations and the standard of workplace you are trying to build.