Based in Sydney, Raja is a law student enrolled in a Bachelor of Laws and Bachelor of Communications (Writing and Publishing) at the University of Technology Sydney. He is passionate about transferring knowledge in relation to businesses, legal advice and marketing direction. Raja has experience working in immigration law and is driven by the writing, editing and publishing process of content.
Introduction
Performance reviews are a workplace staple. Most Australian businesses conduct them in some form, whether it’s an annual sit-down, quarterly check-ins, or ongoing feedback conversations. They’re seen as a routine part of managing people, setting goals, and improving performance.
But here’s what many employers don’t realise: performance reviews aren’t just HR admin. They create employment records, influence decisions about pay and promotion, and can become critical evidence in legal disputes. When performance reviews are done poorly—or inconsistently, they can expose businesses to claims of unfair treatment, discrimination, or breach of contract.
Understanding the legal context around performance reviews helps employers avoid risk while building a fairer, more transparent workplace. Whether you’re a small business owner conducting your first review or an HR manager refining your process, getting the legal basics right matters.
Table of Contents
What is a Performance Review?
A performance review is a structured evaluation of an employee’s work performance, achievements, and future goals. It’s typically a conversation between an employee and their manager, covering what’s going well, what needs improvement, and what’s expected moving forward.
You’ll also hear terms like “performance appraisal,” “performance evaluation,” or “annual review.” These all mean roughly the same thing—a formal process for assessing and documenting how someone is performing in their role.
Performance reviews aren’t just informal chats. They create records that can be used to support decisions about pay rises, promotions, performance improvement plans, or even termination. If a dispute ends up before the Fair Work Commission or in court, performance review documents often become key evidence. That’s why treating them as a legal and operational tool—not just a tick-box exercise—is essential.
Are Performance Reviews Mandatory Under Australian Law?
The short answer: no, there’s no statutory requirement under the Fair Work Act or the National Employment Standards that mandates formal performance reviews.
Employers are not legally required to conduct performance reviews just because someone is employed. However, that doesn’t mean you can ignore them entirely.
Reviews may be required if your modern award, enterprise agreement, employment contract, or workplace policy specifically includes review obligations. For example, some awards require annual performance discussions tied to wage progression. Some contracts promise regular feedback or formal appraisals as part of the employment terms.
If your contract or policy promises reviews and you fail to follow through, this can lead to claims of breach of contract or unfair treatment. Employees may argue they’ve been denied opportunities for feedback, development, or salary progression that were contractually owed to them.
Even where reviews aren’t mandatory, conducting them consistently and fairly is good practice. They help manage performance, set expectations, and create a paper trail that supports defensible decision-making.
How Often Can (or Should) Reviews Be Conducted?
There’s no legal minimum or maximum frequency for performance reviews in Australia. How often you conduct them is largely up to your business, your industry norms, and what’s outlined in your contracts or policies.
In practice, most Australian employers follow one of these patterns:
- Annual reviews: the most common approach, often tied to salary reviews or end-of-financial-year planning.
- Quarterly or bi-annual reviews: used in fast-paced industries or for roles where performance shifts quickly.
- Probationary reviews: typically conducted at three months or six months for new hires.
- Ongoing feedback: informal but documented check-ins that replace or supplement formal reviews.
What matters more than frequency is consistency. If your policy or contract says you’ll conduct annual reviews, you need to do them. If you review some employees regularly but ignore others, you create inconsistency—and that inconsistency can become evidence in discrimination or unfair treatment claims.
If performance reviews are part of your performance management system or used to justify employment decisions like warnings, demotions, or terminations, conducting them regularly and fairly is critical.
Legal Considerations When Conducting Reviews
Performance reviews might feel informal, but they carry legal weight. Here are the key legal considerations every Australian employer should understand.
Procedural Fairness
Procedural fairness—also called natural justice—requires that employers act fairly and transparently when making decisions that affect employees. This principle applies whenever performance reviews influence employment outcomes like promotions, pay rises, performance improvement plans, or disciplinary action.
In practice, procedural fairness means:
- Giving employees notice of the review and what will be discussed.
- Allowing employees to respond to concerns or criticisms.
- Basing feedback on observable evidence, not assumptions or hearsay.
- Providing clear, specific examples of performance issues.
- Documenting the conversation and outcomes.
If a performance review leads to adverse action, like a written warning or termination—and the process wasn’t fair, the employee may have grounds to challenge the decision. The Fair Work Commission regularly considers whether employers followed a fair process before taking action, and poorly conducted reviews can undermine your case.
Anti-Discrimination and Adverse Action
Performance reviews must not target employees based on protected attributes. Under Australian law, it’s unlawful to discriminate against someone because of their age, gender, race, disability, pregnancy, sexual orientation, religion, or other protected characteristics.
This doesn’t just mean avoiding overtly discriminatory comments. It also means ensuring that performance standards are applied consistently and that reviews don’t become a tool for pushing out employees in protected categories.
Using performance reviews as a pretext for adverse treatment can lead to claims under the Fair Work Act. For example, giving an employee negative reviews after they take parental leave, make a workplace complaint, or exercise a workplace right could be considered adverse action, even if the review itself seems neutral on its face.
The key is fairness and evidence. Performance feedback should be based on objective criteria, role requirements, and observable behaviour, not subjective opinions or bias.
Record Keeping
Performance reviews create employment records, and employers have legal obligations to retain those records. Under Australian business record-keeping rules, employment records must generally be kept for seven years.
This includes:
- Written performance review documents.
- Notes from performance discussions.
- Employee self-assessments or feedback forms.
- Performance improvement plans or warnings linked to reviews.
These records can become critical if a dispute arises. If an employee claims they were unfairly dismissed, discriminated against, or denied a promotion, your performance review records may be the evidence that supports your defence or undermines it.
Employers should also be mindful of privacy obligations. Performance reviews often contain sensitive personal information, and they must be stored securely and shared only with authorised personnel.
Documentation and Evidence
While Australian law doesn’t require performance reviews to be in writing, documenting them is strongly recommended. Written summaries create clarity, reduce misunderstandings, and provide evidence if issues escalate.
Best practice includes:
- Preparing a written summary of the review discussion.
- Sharing the summary with the employee and allowing them to comment or add their perspective.
- Asking the employee to sign or acknowledge the document (not as a legal formality, but as confirmation they’ve seen and discussed it).
- Keeping the document on file as part of the employee’s employment record.
Documentation doesn’t have to be complex. A simple summary covering what was discussed, what was agreed, and what the next steps are is often enough. The goal is to create a clear, defensible record that both parties can refer back to.
Performance Reviews and Performance Management
Performance reviews often intersect with broader performance management processes, especially when an employee is underperforming.
While performance reviews are generally forward-looking and developmental, performance management deals with specific conduct or capability issues that need correction. This might include performance improvement plans (PIPs), formal warnings, or in serious cases termination.
Here’s where legal risk increases. If an employer wants to terminate an employee for poor performance, they generally need to show they gave the employee a fair opportunity to improve. This is where documented performance reviews become crucial.
Under Australian unfair dismissal law, warnings are not strictly mandatory. However, the Fair Work Commission expects employers to have raised concerns, provided feedback, and given the employee a reasonable chance to meet expectations before dismissing them. Performance reviews—especially those that document ongoing issues, help demonstrate this process was followed.
Importantly, you can’t use a single bad review to justify termination. There needs to be a pattern of underperformance, documented discussions, and evidence that the employee was aware of the issues and given support to improve. Skipping this process, or fabricating negative reviews after the fact—can make a dismissal unfair.
Policy and Procedure Recommendations
If your business conducts performance reviews, having a clear policy and procedure is essential. It sets expectations, ensures consistency, and reduces legal risk.
A strong performance management policy should include:
- The purpose and frequency of reviews.
- Who conducts them and who participates.
- The criteria or competencies being assessed.
- How feedback will be documented and shared.
- Employee rights to respond or appeal.
- How reviews connect to other employment decisions (pay, promotion, development).
Training managers on legal compliance is equally important. Many performance review issues arise not from bad policy, but from poor execution. Managers need to understand procedural fairness, anti-discrimination laws, and how to document performance conversations properly.
Finally, ensure consistency across similar roles. If one team conducts annual reviews and another doesn’t, or if some employees are held to stricter standards than others, you create grounds for claims of inconsistency or unfair treatment. Consistency doesn’t mean rigidity, it means applying the same principles and processes fairly across your workforce.
Conclusion
Performance reviews are flexible in Australia, but the legal framework shapes how they should be conducted. While there’s no law requiring formal reviews, the way you design and implement them can expose your business to risk or protect it.
Consistent, documented, and fair performance reviews support better employee development, clearer expectations, and stronger legal defences if disputes arise. They also help create a workplace culture built on transparency and accountability.
If you’re reviewing your performance management processes or setting them up for the first time, understanding the legal basics is the best place to start. Performance reviews aren’t just good HR—they’re a legal safeguard when done right.
