Psychosocial Harm in Workplace Performance Management NZ | Caroline Silk

 

When Process Causes Harm: Psychosocial Risk in Workplace Performance Management

There’s an increasing focus in workplaces on psychosocial harm.

Often, that gets talked about in the context of bullying or workload. But one area that doesn’t get as much attention is the harm that can arise from the way performance management processes are handled.

And this is where employers can unintentionally create risk.

Not just an employment law issue

This isn’t just about employment relations law.

There is also a health and safety aspect to this.

Under the Health and Safety at Work Act, employers have obligations to manage risks to employee health, including psychological harm.

So the way a process is run can have implications beyond whether it is procedurally fair.

We are already seeing cases overseas where employers are being held to account for psychosocial harm caused by workplace practices.

That is likely to become more relevant here over time.

The process still matters

In New Zealand, employers are required to follow a fair and reasonable process when managing employee performance.

That includes things like:

• clearly outlining concerns
•  giving the employee an opportunity to respond
•  acting in good faith
•  and making decisions based on proper consideration

Those obligations haven’t changed.

But what is becoming more visible is the impact that the process itself can have on the employee.

Where psychosocial harm can arise

A performance or disciplinary process, by its nature, is stressful.

That in itself isn’t necessarily a problem.

The issue arises when the way the process is carried out adds unnecessary pressure, confusion, or distress.

That can look like:

•  processes that drag on longer than they need to
•  lack of clarity about what the concerns actually are
•  employees not understanding what is expected of them
•  or feeling like the outcome has already been decided

In those situations, the process stops being just a legal requirement and starts becoming a source of harm.

What I’m seeing in practice

I think some of the processes we’re still using are outdated.

They’ve been built around compliance and risk management, rather than how people actually experience them.

One of the things I look for are the clues employees give when they talk about the process.

Often that shows up as increased levels of stress.

Not just because of the performance concerns themselves, but because of how the process is being run.

That’s usually a sign that something in the way the process is being handled isn’t working as well as it could.

Timeliness and how early conversations are handled

Timeliness is also a really important part of this.

Where I see things become more difficult is when concerns are left too long.

By the time the formal process starts, the employer or manager is already frustrated, and the relationship has shifted.

At that point, it can feel quite heavy for everyone involved.

Performance improvement plans and formal processes can also create a sense that the employee is under a spotlight.

Even where that’s not the intention, that is often how it is experienced.

A more effective approach is to start those conversations earlier.

Address concerns when they first arise, in a straightforward way, before they build into something more formal.

That tends to lead to better outcomes and reduces the pressure that can come with a formal process.

Legal risk for employers

From a legal perspective, employers still need to meet their obligations around a fair process.

That hasn’t shifted.

But if the way the process is handled contributes to stress or disadvantage for the employee, that can form part of a wider employment issue.

It may sit alongside:

•  personal grievance claims
•  unjustified disadvantage arguments
•  or broader workplace conflict

So even where an employer believes they are addressing a genuine performance issue, the way they go about it still matters.

This isn’t about avoiding the process

Managing performance is part of running a business.

Avoiding those conversations altogether isn’t the answer.

The focus is on how those processes are carried out.

Taking a structured, clear, and timely approach can make a significant difference to how the process is experienced by the employee.

A practical way to think about it

Rather than asking:
 “Are we allowed to run this process?”

A more useful question is:
 “Are we running this process in a way that is fair, clear, and proportionate?”

That shift in thinking is often where issues can be avoided before they escalate.

Frequently asked questions

What is psychosocial harm in the workplace?

Psychosocial harm refers to mental or emotional harm caused by workplace factors, including stress, pressure, or the way processes are managed.

Can a performance management process cause harm?

Yes. While performance processes are necessary, the way they are conducted can increase stress or confusion if not handled carefully.

What is a fair performance management process in NZ?

A fair process includes clear communication, an opportunity for the employee to respond, acting in good faith, and making decisions based on proper consideration.

Do employers have health and safety obligations for mental health?

Yes. Under the Health and Safety at Work Act, employers must manage risks to employee health, including psychological harm.

Kia ora. I’m Caroline Silk, Barrister and Mediator, and I specialise in NZ employment law and mediation.