Hi,
If the employee's performance has always been excellent and the child is thankfully being shipped off to school next year, then I think you should do what you can to keep them, as the issues look like they will improve.
It is a good idea to have flexible work arrangements so that people with families can continue working without being penalised for looking after the kids. Maybe this person could be offered flexible start/finish times, work from home options, or perhaps taking a little annual leave.
You can also gently inform the worker that they can access the company's Employee Assistance Program if you have one. If you don't, I strongly recommend implementing one, as these services can help workers manage their personal issues so there is less impact on work performance.
Finally, try implementing a Purchased Leave scheme. This scheme offers employees extra annual leave per year when they sacrifice a bit of their salary. For example, if they want 4 week's extra leave, then you pay them for 48 instead of 52 weeks a year. Of course, you average the lesser amount over the 52 weeks so they don't go 4 weeks without pay.
Hope this helps and good luck.
Cheers
Michaela
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