22 Sep When Mental Health Meets Underperformance: A Hospitality Manager’s Dilemma

As a hospitality management consultant, I often get a call that sounds something like this:

“I’ve got a staff member who’s just not pulling their weight. They’re late, distracted, and customers are starting to notice. But when I sit them down, they tell me it’s because of mental health struggles. What am I supposed to do? I can’t run the business like this.”

If this sounds familiar, you’re not alone. Hospitality is a high-pressure industry, and unfortunately, sometimes managers feel stuck between protecting their business and respecting genuine personal struggles.

Here’s the truth: you can be both compassionate and firm. The key is knowing where to draw the line.

 

Start With Clear Standards

First things first: protect yourself by making sure your standards are on paper. Job descriptions, training checklists, and performance benchmarks should be written down and communicated. That way, if someone is underperforming, you’re talking about facts, not feelings.

I worked with a café owner in Melbourne who had a server constantly late to their shift. The owner felt guilty because the employee mentioned anxiety as the reason. But once we pulled out the roster records, it was clear: lateness wasn’t occasional, it was a pattern. Documenting it meant the conversation didn’t get lost in excuses — it was about what had actually happened.

 

The Private Conversation

When performance dips, never ignore it. Sit the employee down privately and explain what you’ve noticed. Stick to observable behaviour:

“You’ve been more than 15 minutes late to three shifts this week.”

“Two customers complained their orders were wrong in your section yesterday.”

If they raise mental health as the cause, acknowledge it respectfully. Something like:

“I appreciate you sharing that with me. Let’s talk about what support might help you, but also how you can get performance back where it needs to be.”

Notice the balance here: you’re recognising their situation but bringing the focus back to business requirements.

 

Support, Yes. Lowering Standards, No.

This is where many owners and managers go wrong. They either:

• Bend over backwards and end up with staff who take advantage, or
• Shut the conversation down and risk a discrimination claim.

The middle ground is simple: offer reasonable support, but don’t compromise standards. For example:

• Adjust shifts slightly if certain times are difficult for the employee (within reason).
• Provide extra training if confidence is the issue.
• Point them toward Employee Assistance Programs (if available).

But also be clear: product and service standards don’t change. Customers expect their meals on time, floors must be cleaned, tills must balance.

 

Put It in Writing

If issues continue, it’s time for a formal Performance Improvement Plan (PIP). This isn’t just HR jargon — it’s your safety net. A PIP makes everything clear:

• What the issues are (with examples).
• What needs to improve.
• How improvement will be measured.
• When you’ll review it.
• What support you’re offering.

I once saw a bar manager turn a flaky bartender around by setting a PIP with clear weekly goals. The employee either had to meet them or face formal consequences. To everyone’s surprise, the structure helped — the bartender lifted their game. But even if they hadn’t, the manager was protected because they’d followed fair process.

 

Know Where the Line Is

As an employer in Australia, you must comply with the Fair Work Act and anti-discrimination laws. That means you can’t dismiss someone simply because they disclose a mental health issue. But you can take action if, despite support and adjustments, the employee still fails to meet reasonable job standards.

The line is clear: your decision must be based on documented performance, not the fact they’ve mentioned mental health.

 

Protect Your Business, Protect Your Team

Here’s the bigger picture: when one person underperforms, the whole team feels it. Other staff get resentful, customers get let down, and your reputation suffers. Protecting the business also protects the rest of your employees — the ones who show up on time, work hard, and deliver.

So, don’t let guilt or fear stop you from acting. The fair approach is:

• Acknowledge mental health with empathy.
• Offer reasonable support.
• Keep standards firm.
• Document every step.

That way, whether the employee lifts their performance or you eventually part ways, you know you’ve done the right thing — both legally and ethically.

 

The Takeaway

Running a hospitality business is tough enough without carrying staff who can’t or won’t meet expectations. Yes, mental health is real and deserves respect. But so does the effort you and your team put in to keep doors open, producing great food and drinks, and customers smiling.

Be human but be fair. Compassion doesn’t mean compromise.