Before an employer can lawfully dismiss an employee for poor performance, they must first show they have followed a process to allow the employee the opportunity to improve and meet the standards required in their role.
The Acas Code of Practice provides guidance to help employers ensure their obligations towards their employees are met during instances of poor performance.
When dismissing an employee for poor performance, employers are required by law to do so fairly. This means giving the employee reasonable opportunity to improve their performance prior to taking disciplinary action such as dismissal.
‘Reasonable opportunity’ to improve means:
- Making the employee aware of their poor performance
- Making sure the employee knows exactly what is expected of them
- Giving the employee additional training and support if necessary
- Giving the employee enough time to improve before disciplinary procedures and dismissal are considered
Knowing how to dismiss for poor performance is essential, as failing to give an employee reasonable opportunity to improve their poor performance prior to terminating their contract may constitute unfair or wrongful dismissal. There is a subtle difference between the two terms:
- Unfair dismissal: the reason you gave for the dismissal was false; the reason was genuine but unfair; or you acted unfairly by not giving them warning about the dismissal and opportunity to avoid it.
- Wrongful dismissal: You have breached the conditions of your contract with the employee in dismissing them (E.g. by not utilising the specified number of warnings, or for dismissing without warning beyond the agreed probation period).
If an employee believes you have dismissed them wrongfully or unfairly, they may make a claim against you to an employment tribunal.
Knowing when to dismiss for poor performance
Before considering how to dismiss for poor performance, it is important to ascertain the issues behind the poor performance. The Employment Rights Act 1996 lists five fair reasons for dismissal:
- Statutory ban
- Some other substantial reason
Poor performance would usually be considered a conduct or capability issue, depending on the nature of the poor performance. For instance, if the employee is displaying poor performance despite their ability to perform well, this may be considered a conduct problem. An example of this would be an employee who previously hit performance targets but is now failing to do so. It would be for the employer to understand the reasons for the decline as this will influence how the issue is addressed, for example, is the change in performance due to illness, apathy, personal circumstances or conflict with a colleague.
‘Capability’ applies when the employee is displaying poor performance and failing to meet the required standards despite their obvious best efforts.
When poor performance is associated with misconduct, you should consider whether dismissing for poor performance is the most suitable option. Depending on the severity of the conduct problem, the employee’s behaviour may qualify as gross misconduct. Offences such as rudeness, aggression and repetitive lateness often come under the ‘gross misconduct’ umbrella. The employee’s contract may specify further job-specific behaviours that would be considered gross misconduct (e.g. abuse of flexitime or disclosure of sensitive information).
In situations where poor performance and gross misconduct exist side-by-side, it is often more appropriate – and faster – to dismiss the employee for gross misconduct. Employers are required by law to give notice when ending an employee’s contract on the basis of poor performance; however, gross misconduct allows for instant dismissal. Of course, the employer would have to be certain that dismissal for gross misconduct is truly warranted, otherwise the employee may claim unfair, or wrongful dismissal.
How to dismiss for poor performance without discrimination
When dismissing for poor performance, it is essential to consider the employee’s wider situation to ensure that discrimination is not an issue. This will involve making sure that the employee’s poor performance is not in some way linked to a protected characteristic (e.g. age, sex, disability) which you have failed to make reasonable adjustments for. This could be an issue if the employee has a mental or physical impairment associated with a recognised disability, which is negatively impacting their ability to perform at work.
Ultimately, following the proper procedures when dismissing for poor performance should enable you to avoid any discrimination claims. Raising the performance issue with the employee in an appropriate manner will give them the opportunity to state if they feel disadvantaged due to a protected characteristic.
ACAS poor performance dismissal guidelines
The ACAS Code of Practice for discipline and grievance sets out guidelines that employers must follow when disciplining or dismissing for poor performance. The guidelines are not laws; however, employment tribunals are legally required to refer to the code of practice when deciding if an employer acted fairly in a dismissal case. Following the Acas guidelines should protect you from unfair or wrongful dismissal judgements, should an employee make a claim against you.
Good communication, transparency and ample opportunity for improvement are the three most important factors when handling poor performance issues in the workplace. The employee must be given the chance to improve their performance before any formal disciplinary action is taken. When disciplinary action becomes necessary, the employer must provide clear and achievable targets at each stage of the disciplinary process, while making sure that the employee understands the consequences should they fail to meet those targets.
The Acas guidelines recommend that dismissal for poor performance includes:
- At least one verbal warning
- At least one formal written warning
- A final warning
Each stage of warning should be assigned a specific duration (e.g. three, six or 12 months), with the entire process taking up to around 18 months. Performance reviews should be conducted before each warning expires. If no improvement has been made, the next stage of warning must be initiated before the current stage runs out.
Poor performance and probation periods
Probation periods are used to give the employer a set amount of time to assess the new employee within their new role and the employee a set period of time to assess. During this period, employers will often look to give the employee one week’s notice to terminate the contract, taking advantage of the rule that employees can only bring a claim for unfair dismissal where they have at least 2 continuous years’ service.
However, employers are reminded that employees on probation are protected by the same employment rights as other employees, for example, the right to not be discriminated against. This means that while there is little risk of an unfair dismissal claim from an employee dismissed while on probation, other claims could still be possible, such as a claim for discrimination.
To reduce the risk of such claims, employers are still advised to follow a fair process, where possible, to dismiss during a probation period for poor performance. This would typically involve informal chats followed by a formal meeting.
The terms of the probation period should be included either in the employment contract, a company policy or the employee handbook. This should also include details on the process and guidelines to follow in response to poor performance, such as effective record keeping, to ensure a consistent and effective approach is taken across the organisation. If an employee fails to follow the process prescribed, they may face a claim for breach of contract.
Probation periods are typically between 3 and 6 months, but this varies by organisation and by role, since some jobs will require a longer period for the employer to make a sufficient assessment. The employer may also be able to extend the probation period under the contractual terms.
As with any dismissal, employers should assess the wider circumstances to identify any potential areas of complaint from the employee. Have they raised a grievance or could there be any other reason attributed to the dismissal rather than poor performance, such as discrimination?
Employers must remember that a fair dismissal process aims to prevent dismissal, by enabling the employee to improve their performance. Your goal should not be to reach the point of dismissal as fast as possible. The steps you should follow when dismissing for poor performance are outlined below; it is important to ensure your obligations towards the employee are met at each stage, before progressing the disciplinary process.
1. Issue a verbal warning
Before any formal action is taken, the employee’s manager should make them aware of the poor performance with an informal chat. This should involve explaining to the employee precisely how their performance has fallen short of expectations. The employee should be given the opportunity to express concerns and ask for additional support. The employer must make it clear that formal disciplinary action will be pursued if performance is not improved.
2. Invite to a disciplinary meeting
If the employee’s performance does not improve, the employer should send an official letter or email inviting them to a disciplinary meeting. The letter must state:
- The precise nature of the poor performance
- The purpose of the meeting (to discuss disciplinary action)
- The fact that the employee may bring a union representative with them
- The possible outcomes of the meeting
- The time and date of the meeting (which must allow time for the employee to prepare responses, without unreasonable delay)
3. Hold the disciplinary meeting
The employer must once again fully explain the nature of the poor performance. The employee should again be given the chance to explain themselves and/or request additional support. When the meeting is concluded, the employer should decide whether to grant the employee additional time to turn their performance around, or to further the disciplinary process with an initial written warning.
4. Issue the written warning
Notify the employee in writing that they are being placed on a written warning due to poor performance. State the duration of the written warning and the targets which the employee is expected to meet during that time (must be specific and realistic). Inform the employee that a performance review will take place towards the end of the warning’s lifespan.
If the employee’s performance has not improved in line with agreed targets by the next performance review, the employer may initiate a second or final written warning, following the guidelines outlined above. Should the final written warning expire with no improvement, the employer can issue notice of the employee’s dismissal.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.