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Dismissing employees for poor performance.

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Legal advice for employers considering dismissing an employee for unacceptable performance

The Employment Rights Act 1996 specifies five potentially fair reasons for dismissal. These are:

•    Conduct
•    Capability
•    Redundancy
•    Statutory ban
•    Some other substantial reason

Poor performance is likely to come under the heading of ‘conduct’ or ‘capability’.

It will be a conduct issue when the employee is able to perform adequately, but chooses not to and behaves in an obstructive manner.

It will be a capability issue if the employee is unable to perform adequately. This could be due to lack of training, lack of experience or lack of ability.

 Employee performance management 

If an employee is under-performing this should be dealt with initially through a performance management discussion. This should not be a disciplinary meeting, but should be an opportunity for the line manager to explain the problems with the performance, and to explain to the employee what standards should be achieved. At this meeting the employee should be given the opportunity to request additional training, and to explain any barriers that exist to achieving the level of performance that is required.

An Employment Tribunal will not look favourably on an employer that has rushed to take disciplinary action, and has not taken time to support the employee to reach the desired standards. A dismissal in such a situation is unlikely to be seen as being within the bands of reasonable responses.

 Probationary period for employee – the legal position 

It is usual for an employer to include a probationary period clause in the contract of a new employee. This clause should set out that the employee’s employment can be terminated during the probationary period if the required standards are not met. It should be made clear that the company disciplinary procedure is not applied during the probationary period.

It is usual for a probationary period to last for three months, although not uncommon for a more senior employee to have a probationary period of six months.

If an employee does not meet the required standards during the probationary period, but is showing promise, it could be suggested to the employee that the probationary period is extended. As this would be a variation of contract the employee would have to agree to this change being made. An extension to the probationary period should be confirmed in writing.

 Disciplinary warnings for poor performance 

It will be rare for it to be reasonable to dismiss an employee for poor performance without first going through the disciplinary warning process. Dismissal without giving warnings first would have to be for gross misconduct, and poor performance is unlikely to be defined as gross misconduct.

The number of warnings to be given prior to dismissal is not set out in law. As a result, guidance should be taken from the Acas Code of Practice: Disciplinary and Grievance Procedures. This Acas Code suggests that there should be at least one written warning, followed by one final written warning, prior to a dismissal.

A warning has a ‘life cycle’. Again, this is not set out in law, but it is recommended that a written warning has a life of six months, with a final written warning having a life of twelve months. If the employee does not reach the required level of performance during the life of the warning, the next level of warning can be given.

An employer does not have to wait until the end of the six or twelve month period before giving the next level of warning, but must give the employee sufficient time to address the concerns that have been raised and to make the necessary improvements.

It is recommended that the employer makes a diary note to review performance around six weeks before the warning is due to expire. This is because it is not possible to give the next level of warning once the first warning has expired.

 Disciplinary meetings 

The procedure which should be followed is the same, regardless of whether the outcome is dismissal or a disciplinary warning. The employer should follow any contractual procedure, and should ensure that the requirements of the Acas Code of Practice: Disciplinary and Grievance Procedures are met. If an employer is found to have unfairly dismissed an employee, and has not followed the Acas Code any compensatory award can be increased by up to 25%.

The employer should do the following:

1.    Write to the employee setting out the allegations and inviting the employee to a disciplinary meeting. There should be sufficient detail about the allegations (e.g. performance targets which have not been met, customer complaints) for the employee to prepare for the disciplinary meeting. The letter should inform the employee that s/he can be accompanied at the meeting by a trade union representative or a colleague.

2.    Hold the disciplinary meeting. The allegations should be put to the employee, and the employee should be given every opportunity to respond. After the disciplinary meeting it should be decided whether a disciplinary sanction is appropriate.

3.    If a disciplinary sanction is imposed the employer should write to the employee explaining the nature of the sanction (e.g. a disciplinary warning or dismissal). The employee should be allowed to appeal against the sanction, and should be told the deadline for making the appeal and who the appeal should be addressed to.

 Advice for employers on employee appeal againt dismissal 

Wherever possible the appeal should be heard by a manager more senior than the manager who made the decision to dismiss or give the disciplinary warning. The manager hearing the appeal should not have been involved in any discussions about the situation prior to the appeal.

This can be difficult to achieve in a small business, and the Employment Tribunal will be sympathetic to this should a claim of unfair dismissal be made. However, the Tribunal will expect to see that the issues raised on appeal were carefully considered and that the appeal was not just a ‘rubber stamping’ of the original decision to dismiss.

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