Dealing with difficult employees can feel daunting, but with the right approach, you can turn workplace tension into teamwork. This article walks you through how to manage difficult employees in your small business; without losing sleep or staff morale.
Why Every Business Faces Difficult Employees
Every small business owner eventually faces this challenge: a team member who resists change, clashes with others, or just isn’t pulling their weight. Left unchecked, it can harm productivity, culture, and even your reputation with clients.
At Accountants 2 Business, we’ve seen this story play out many times. A local trade business owner once told us,
“I just didn’t want to rock the boat—until I realised the rest of the crew were starting to check out.”
Ignoring the issue costs more than just time—it impacts your best people too. Addressing it early protects your team and your bottom line.
Step 1: Identify the Behaviour, Not the Person
Understand What’s Really Happening
“Difficult” can mean different things:
- Negative attitude or constant complaining
- Resistance to direction or feedback
- Interpersonal conflict or gossip
- Poor performance or reliability
Before you react, pause. Ask yourself:
- Is this behaviour new or ongoing?
- Could it be linked to workload, personal stress, or unclear expectations?
Understanding the “why” behind the behaviour is the first step toward change.
Step 2: Set Clear Expectations
A lot of workplace conflict stems from miscommunication. The Fair Work Ombudsman advises that every employer should have a clear process for managing employee performance, including job descriptions, measurable goals, and documented reviews.
Here’s a simple framework:
- Clarify the role – make sure both sides know what success looks like.
- Set goals – specific, measurable and realistic targets.
- Communicate expectations – not just outcomes, but behaviours and teamwork.
Example:
Instead of saying “Be more professional,” try “Arrive on site by 7:30am ready for toolbox talks and safety checks.”
It’s about making expectations visible and fair.
Step 3: Have the Conversation—Don’t Avoid It
This is where many small business owners hesitate. But early, respectful conversations are key.
How to Approach the Meeting
- Prepare: Write down examples of the behaviour and how it affects the team or customers.
- Be direct, not harsh: Focus on what’s happening, not who they are.
- Stay calm and professional: Avoid blame and keep the discussion centred on solutions.
For instance, say:
“When you missed last week’s client call, it created extra work for the admin team. How can we make sure this doesn’t happen again?”
Team management preparation is vital. Go in with facts, not frustration.
Step 4: Document and Follow Up
Once you’ve had the discussion, document what was agreed, especially if you’re setting a performance improvement plan. Follow up regularly to keep progress on track.
If things improve, recognise it! Acknowledging effort reinforces positive behaviour.
If there’s no change, move to formal steps: written warning, official review, or termination if necessary.
The Fair Work Ombudsman provides templates for formal warnings and guides on fair process, these protect both you and your employee.
💡 Tip: Documentation is your best defence against unfair dismissal claims and confusion later on.
Step 5: Keep It Legally Safe
You’re not just managing people, you’re managing risk.
Under the Fair Work Act 2009, you must follow a fair and consistent process before taking disciplinary action.
Checklist for compliance:
- Give the employee a chance to respond.
- Keep written records of discussions and outcomes.
- Follow notice and termination requirements under their Award or contract.
- Seek professional advice if you’re unsure.
Managing a difficult employee isn’t just about “getting rid of them”, it’s about protecting your business while giving them a fair chance to improve.
For a deeper guide, visit the Fair Work Ombudsman’s Managing Performance page.
Step 6: Prevent Problems Before They Start
Good management starts before you ever have a “difficult” employee.
Hire Right
Recruit for attitude and cultural fit as much as skill. A new hire who aligns with your business values will adapt faster and cause fewer issues.
Communicate Regularly
Schedule quick team check-ins or one-on-ones to give feedback before problems escalate. Employees appreciate honesty; even when it’s constructive criticism.
Set the Tone
As the leader, your calmness and consistency influence everyone else. When you handle issues fairly and quickly, it shows that accountability matters.
“I realised my team watched how I handled conflict and that set the culture,” one local café owner told us.
Strong leadership prevents most performance issues before they take root.
Step 7: When It’s Time to Let Go
Sometimes, despite your best efforts, the employee doesn’t improve. When this happens:
- Make sure you’ve documented every step.
- Check compliance with Fair Work rules.
- Keep the termination meeting brief, factual, and respectful.
- Support the rest of your team afterwards because change affects everyone.
- Get professional help.
While it’s never easy, ending a difficult employment relationship the right way protects your team’s morale and your reputation as a fair employer.
Turning Problems into Progress
Managing difficult employees isn’t about confrontation, it’s about clarity, fairness, and leadership. With a structured approach, you can transform tension into trust and keep your business moving forward.
When you handle challenges proactively, your people will respect you more and your business will run smoother than ever.
Need Help Managing Staff Issues?
At Accountants 2 Business, we help small business owners like you strengthen your teams, reduce HR risk, and improve performance. Whether you need help documenting a process, having that tough conversation, or planning for growth, we’re here to help.
👉 Book a meeting today: Schedule a free consultation
📘 Download our free guides: Guides
