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Effective Employee Management: Navigating the Fine Line of Discipline and Compliance

Monitoring and disciplining employees is a crucial aspect of managing a successful business. However, it can be difficult to navigate the legal and ethical considerations that come with this task. In this article series, we will examine the concept of "the carrot and the stick" and provide five steps on how to effectively monitor and discipline employees. From conducting regular performance reviews to implementing monetary sanctions and disciplinary action, we will explore the strategies that can help to maintain a high level of performance and compliance with employment laws.

This is part one of the three-part series on Mastering Employee Management: Strategies for Motivating, Disciplining and Advocating for Employees.

Talk to them

The first step in managing and disciplining employees is to talk to them. This can be done through regular one-on-one meetings or through group meetings. During these meetings, employers should discuss the employee’s performance, address any concerns, and provide feedback on how the employee can improve. To avoid making the employee feel like the meeting is out of the ordinary (the employee could become defensive during out of the ordinary meetings), it is important to present it as a regular process and give feedback frequently. In fact, frequent, specific, accurate, and timely feedback is critical for sustained high-level performance. This will help to identify issues early on, and clarify responsibilities and expectations for the employee.

By maintaining an open line of communication, employers can foster an environment where employees feel valued and motivated to improve their performance. Additionally, it’s important to remember that feedback is a two-way street and that employees should also be encouraged to provide feedback to the employer, address ideas and concerns.

Conduct regular performance reviews

Conducting regular performance reviews is an essential aspect of managing and disciplining workers. These reviews can help employers to assess the employee’s performance, identify areas of improvement, and set goals for future performance.

The frequency of performance reviews in private sector is not regulated by employment law. Employers are free to establish their own policies for conducting performance evaluations. These evaluations are often conducted at least once a year. However, more frequent performance reviews appear to increase employee engagement. During the reviews, employers should not only take into account key performance indicators but also consider the employee’s development. Ideally, focus should be on future goals rather than past mistakes. Employers should also ensure that the evaluation process is fair and objective, and that the employee is given the opportunity to provide feedback and address any concerns. This helps to create a transparent and effective performance management system that benefits both the employer and the employee.

Disciplinary Action, Monetary Sanctions, Lump-Sum Compensation, Contractual Penalty

Some of the issues employees can present with include sexual harassment, workplace bullying, inappropriate use of social media, and using office assets for personal business.

If you face an employee with persistent issues despite taking all necessary steps, the best thing to do is to act promptly and firmly with a set protocol. In such case, disciplinary action, monetary sanctions, lump-sum compensation, and contractual penalties are important tools for addressing employee misconduct and ensuring compliance with company policies. They are used to hold employees accountable for their actions and discourage behaviour that is detrimental to the organization.

Disciplinary action

The severity of the penalty usually depends on the employee’s violation and the number of times he or she has committed it.

The Slovenian Employment Relationships Act provides that if an employee is found to be liable to disciplinary action, he or she may be given a warning or other disciplinary sanctions, if these are laid down in the branch collective agreement. For this reason, it is important to review available disciplinary sanctions before issuing any. Additionally, in order to impose a disciplinary sanction, it is necessary to carry out a procedure in which the employee is given the option to address the matter and is warned of the possibility of disciplinary sanctions in line with the policy adopted by the company.

Monetary sanctions

Within the scope of disciplinary action, monetary sanctions can only be imposed if the branch collective bargaining agreement foresees such sanctions. This means that a provision in an employment contract alone is not enough to allow for monetary sanctions to be imposed and if the branch collective bargaining agreement does not foresee monetary sanctions, such provision in the employment contract is not enforceable.

It should be stressed that even if monetary sanctions could be imposed, there are still drawbacks to consider. Punishment through disciplinary action tends to provide only short-term compliance.

Lump-sum compensation

Lump-sum compensation is a form of compensation that is used in certain situations when determining the exact amount of damages incurred is too costly or difficult. Lump-sum compensation can only be assessed if actual damages have occurred, but determining the exact amount of those damages would be too expensive or impractical. For example, in disputes with low value, it would be necessary to hire an expert to determine the amount of damages. This would turn out to be disproportionate to the value of the claim and thus a lump-sum compensation would be in order.

As with monetary sanctions, option for lump-sum compensation also has to be laid down in the applicable branch collective bargaining agreement in order for it to be exercised in the employment relationship.

Contractual penalties

Contractual penalty is a penalty that is imposed on a party in case of a breach of contract, even if no damages have occurred. Contractual penalties are limited in employment relationships. They are generally used for breaches of non-competition clauses. However, as the Supreme court noted in several decisions, they are not usable in cases of other breaches of employee’s work obligations during the employment relationship.


A warning is another form of punishment that can be used to discipline workers. This can be a verbal or written warning, and it serves as a formal notice to the employee that their behaviour or performance is not in compliance with company policies or expectations. The Slovenian Employment Relationships Act allows employers to issue warnings to employees. The procedure for a warning before the termination of the employment relationship ordinarily follows these three steps: Firstly, the employer discusses with the employee about the breach of employee’s work obligations and gives them a reasonable time to remedy the situation. Secondly, if the breach continues, the employer may issue a written warning. Thirdly, if breach happens again within the next year or a different time as specified by the applicable branch collective bargaining agreement, the employer may terminate the employment relationship. Of course, the escalation of the steps depends on the severity of the breach of employee’s work obligations.

Moreover, if the employer has no interest in dismissing the employee or the misconduct is of such nature as to warrant only disciplinary action but not dismissal, the employer can proceed with other disciplinary actions.


Dismissal is the most severe form of punishment that can be used to discipline workers. This can be done for serious misconduct, such as theft or embezzlement, or for repeated violations of company policies or performance expectations. Continuous violation of obligations from the employment relationship can also result in dismissal. The Slovenian Employment Relationships Act sets specific deadlines for the process of dismissal, which must be respected.

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