Do you have an employee who is highly productive but also highly disruptive?
In any business, leadership requires managing complex human dynamics. It can be overwhelming when a key staff member—often referred to as a toxic high-performer—begins to actively undermine your decisions, disrespect management, or create a divisive atmosphere among the team.
This is a critical threat to your culture and your bottom line. This staff member believes they are better than the business, and they use their competence as leverage, often holding the business owner “hostage” by threatening to quit. The challenge is magnified when this person is in a key role, such as a General Manager, Project Manager, or 2IC.
So, how do you deal with an undermining employee without risking the loss of their output?
As a business owner, you have two strategic paths forward.
1. The Critical Choice: Rehabilitation or Termination
Before you act, you must decide how to proceed. Many business owners, in a situation known as the “hostage crush,” procrastinate on making this choice, using excuses like: “I’ll be stuffed without them,” or “It’s too hard to train someone else.”
Chances are, you’ve recognized this disruptive behavior for a while. To resolve this issue and protect your business culture, you need decisive action.
| Path 1: Rehabilitation | Path 2: Strategic Termination |
| Requires the employee to be genuinely willing to change. | Protects the team culture and prevents further damage. |
| Goal: Re-wire their habits and re-connect them to the company’s cause. | Goal: Mitigate risk and ensure a smooth, compliant exit process. |
2. The Path to Rehabilitation: The Three Cs
If you choose to rehabilitate, the goal is to re-establish a professional connection and correct the disruptive patterns.
a) Confront (With Documentation)
As the employer, you must address the behavior directly. Bring the disrespectful employee into a private meeting and make them explicitly aware of the behavior you have observed and the effects it is having on you and the company culture.
Crucially: Ensure this meeting is formalized and documented, recording the specific dates, instances of misconduct, and the intended outcomes. This documentation is vital regardless of whether you end up rehabilitating or terminating.
b) Control (Find the Root Cause)
You need to control the situation by finding the real reason behind the negative behavior. There is always a source to the problem. Often, it is a simple misalignment:
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Unclear expectations regarding their role.
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Feeling undervalued or overlooked.
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A loss of connection to the company’s mission.
Understanding the root cause allows you to apply a targeted solution instead of a temporary fix.
c) Command (Re-establish Authority)
Once you understand the reason, it is time to regain control of the ship. Undermining employees are often testing the boundaries of your authority. You must clarify:
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Their exact job role and responsibilities.
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Their professional conduct requirements.
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Most importantly, the specific, measurable expectations for future performance and behavior.
This clarity ensures everyone understands the new, required standard.
3. Strategic Termination: A Risk-Averse Exit Plan
If the behavior is non-negotiable or the employee is unwilling to comply with the new standards, termination is the right choice for the health of your business.
a) Seek Professional HR & Legal Advice
This step is non-negotiable, especially when dealing with a high-stakes employee. Before you issue a termination notice, you must:
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Seek advice from an HR professional or legal expert to ensure you are compliant with all Australian employment laws (e.g., Fair Work regulations).
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Review your employment contract and follow the proper procedure for documenting misconduct and issuing formal written warnings.
b) Prepare for the Transition (Succession Planning)
A common mistake is being ill-prepared for the gap this departure will leave. Falling back into the “I’ll just do it myself” mindset is a recipe for burnout.
A smart move: Begin the search for the next employee to fill that position before it becomes officially vacant. Succession planning mitigates risk and ensures the business does not lose momentum.
c) Effective Immediately
If you have exhausted all options, it is time to act swiftly. We strongly advise against terminating a toxic employee and then asking them to stay on until you find a replacement. If they were undermining staff before, imagine the damage they could cause on their way out.
Manage the situation professionally by terminating their employment effective immediately and working out the necessary handover, payment in lieu of notice, and final entitlements with your HR advisor.
Summary: Prioritize Culture
As an employer, managing toxic staff is one of the toughest responsibilities. You will inevitably come across employees who challenge your authority, but you must prioritize the health and productivity of your entire team.
It’s also important to reflect: are there cases where the employer’s lack of clarity or inconsistent management has contributed to the behavior? Extreme ownership over your leadership style is the first step in prevention.
Ready to Master Your Team Dynamics and Stop Workplace Toxicity?
Managing high-risk employee situations requires experience and a clear, customized strategy. Stop losing sleep over disrespectful or difficult employees.
Book a Discovery Call with the UpCoach business experts today to get a customized performance management strategy for restoring your culture and accelerating your business growth.
Call us on 1300 459 302 or Book your consultation now.