Employers are often faced with the problem of an employee who may be underperforming in their role. There is often a temptation to dismiss them or terminating their employment by entering into a settlement agreement. Understanding how to manage employee performance is key to avoid any claims being brought against your company.
This guidance note draws on some common scenarios that employers may face. It is aimed at employers who want to deal with performance management issues within a legal framework.
Identifying Performance Management Issues
As a starting point, employers should be clear on whether or not they are dealing with a performance management issue. Overlaps can sometimes exist between performance and misconduct issues.
An example could be if a factory employee fails to carry out a health and safety check, resulting in another employee suffering a serious workplace accident. This situation could lean towards misconduct, especially if the employer can prove there was wilful neglect on the part of the employee.
A performance issue, however, is more likely to surface where an employee is making an effort but simply falls short of the required standard. For instance if an employee is carrying out reasonable management instructions, but still struggles to meet regular targets or deadlines.
Engaging With Employees
Many organisations will have an appraisal process in place to assess employee performance on a regular basis, but some employers may want to conduct their appraisals on a more informal basis. Either way, the employer should be engaging with the employee on a fairly regular basis.
Other employers may want to operate a more formal grading system, perhaps even tying this into employee pay reviews. It is generally seen as best practice to put some form of appraisal or review system in place which allows employers to identify any issues at an early stage before any formal process is required.
Does The Employer Need A Performance Management Policy?
It always helps the employer if they have a coherent set of policies and procedures in place. This acts as a blueprint for managers or business owners when carrying out a performance management process. It also assists the employee as they will know where they stand during the whole process.
It is also something that an employment tribunal may take into account when deciding whether any decision to dismiss the employee was fair. Before performance management proceedings, employers should inform the employee that they intend to undergo a review of their performance and explain the process. This helps to avoid confusion and challenges on the part of the employee, and reduces the likelihood of a claim being brought against the employer, which could lead to costly litigation.
What Steps Should Be Followed?
A lawful performance management process should usually consist of at least two formal review meetings before a final performance capability meeting takes place. After the final meeting, an employer may take a decision to dismiss the employee.
Any formal review meetings should typically be spaced out between 6 to 8 weeks of each other. This way the employee is given ample time to improve their performance after each stage of the review process. It is imperative that employers keep a clear paper trail of meetings or relevant documents, as these could prove useful if a claim is brought forward by the employee.
During each review meeting the employer should fully explore the reasons behind the alleged poor performance. The employee should also consider potential measures to implement that could help the struggling employee, like offering training or amending their duties.
Generally however, an employer is not under a strict obligation to place the employee in an alternative role, assuming they do not have a disability. This is something that the employer may want to look at as a practical resolution to the problem as opposed to dismissal.
If you are unsure what steps you should be following as part of a lawful performance management process, you should contact an employment lawyer or HR adviser.
What Are The Risks If A Formal Process Is Not Followed?
Tribunals will expect that before any dismissal the employee was given a reasonable opportunity to improve their performance, otherwise there could be grounds for an unfair dismissal claim by the employee.
If issues like underlying medical conditions or disabilities are not addressed when reviewing an employee's performance, then an employer could also be faced with a disability discrimination claim.
During the performance management process, it is not uncommon for an employer to discover that an employee has a condition which could amount to a disability. If this happens, an employer should make reasonable enquires, like obtain medical evidence or a professional opinion, to ascertain whether there is a link between the employee’s condition and their performance levels.
If this causal link is identified then an employer should look to put reasonable adjustments in place. Typically, this could involve amending the employee’s duties or placing them in an alternative role.
Any capability performance dismissal will be assessed by the courts on a case-by-case basis. Therefore, in determining whether the dismissal was fair, the courts are likely to look at factors such as
The nature of the individual’s role – If the role is particularly senior in nature and poor performance has a heavy detrimental impact on customers or service users then a shorter process may be seen as more acceptable. Examples of such roles may include senior management teaching positions of sales based roles.
The impact of the individual’s performance on the organisation – Larger organisations with greater resources may be better placed to absorb a period of poor performance than smaller companies.
Whether the employer has treated all employees equally – On this basis, employees conducting similar roles should be given similar targets and timeframes to improve their performance.
On a more general level, employers must be seen to be acting reasonably. This includes not setting excessive and unreasonable performance targets. Employers who ignore alternatives to dismissal, such as training or periods of supervision, also run the risk of being found liable at tribunal stage.
Are There Any Alternatives To A Formal Performance Process?
Employers can sometimes be reluctant to engage in a lengthy performance management process with employees. This may be due to the fact that they find the process awkward or the nature of the role requires the employer to terminate the employee’s contract quickly.
As an alternative to a performance dismissal, employers may want to explore a potential settlement agreement option. This comes with the obvious attraction of ensuring that the employee’s contract terminates quickly. It also reduces the risk of any future claims being brought against the employer.
In other circumstances, employers may feel that a formal performance management process could have the desired effect of improving the employee’s performance. The employer's approach may well depend on the nature of the employee and their overall character.
What If an Unfair Dismissal Claim Has Been Taken Against My Company?
Contacting a solicitor should be your first choice of action. At Simpson Millar, we have a specialist team of employment lawyers who are experts in dealing with unfair dismissal claims taken against your company.
To discuss your options in a situation like this contact a member of our employment team today, either on our Freephone number or by our online enquiry form