17 March 2016
Performance management in the workplace
Getting the best out of employees is one of the biggest challenges faced by managers. Paul Lawton, employment law specialist at B P Collins LLP in Gerrards Cross, looks at what employers can do to manage performance and, if necessary, how to dismiss an underperforming employee.
Poor performance can include lack of productivity or slowness, inflexibility, a breakdown in working relationships with colleagues or customers, a failure to reach targets, customer complaints, and negligence or mistakes. Ignoring these issues risks undermining a manager’s position and demotivating other staff, whereas dealing with them can increase both productivity and staff engagement.
Managing performance on a day-to-day basis
It is far better to deal with problems as they arise, rather than waiting for them to become a major issue. Performance should therefore be kept under review throughout the employment relationship.
A probation period can be utilised in the employment contract so that if the employee struggles to perform during the first few months of their employment, they can be dismissed with limited risk.
Regular informal meetings should be carried out on a one-to-one basis with all employees to check on their progress, and identify any potential problems, which you can then address at an early stage.
Annual appraisals are very important and can provide useful evidence where you decide to take formal action, but they need to be conducted honestly and appropriately. For example, it can understandably be problematic to dismiss someone for poor performance if the employee has recently received a glowing appraisal.
Formal interim reviews should be carried out between annual appraisals so that you can check on progress made against the goals that were agreed at the appraisal, and help the employee if these goals are not being met. Using all of these tools makes it less likely that you will have to have an uncomfortable conversation with an employee about their performance.
Dealing with a poor performer
You should consider whether performance is actually the issue before taking any formal action. There could be an underlying cause, such as ill health, lack of training or bullying that you need to tackle instead.
You should begin by having an informal discussion where you explain the problem and ask for the employee’s comments and suggestions for improvement. You should agree when you will review the situation. If the agreed improvement does not take place, you should move on to a formal procedure.
Fair dismissal reason and procedure
In order to have a fair dismissal, you need a potentially fair reason. Where the employee has failed to perform to the required standard, the fair reason will normally be capability. Your decision to dismiss must also be reasonable in all the circumstances. For example, it is important to give the employee support and any additional training they need, in order that they have an opportunity to improve during a performance management process.
You need to follow the correct procedure, which will involve having a capability hearing where both sides set out their position. Where you are holding formal meetings, the employee needs to be given a written invitation to attend, together with copies of any evidence, and has the right to be accompanied by a trade union representative or a colleague.
In the meeting you need to cover the purpose, the structure, what the problem is and the impact it is having on the business. Any evidence in regard to the performance failures should be put forward and discussed. The employee should be given the opportunity to make representations which can include their proposals to remedy the situation.
The outcome should be confirmed in writing and the employee should be given the right to appeal if a disciplinary sanction is imposed. Typically, a first written warning is issued and the employee is told what will happen next if the required standard is not met. Usually, a second written warning is then given and, if there is still no improvement, you can dismiss with notice.
A structured approach
Being prepared and structuring the formal performance management process is crucial. The commercial impact of the procedure should also be considered as often a performance management process can take up considerable time and resources.
It is not uncommon for an employee to improve during the warning period and then lapse soon afterwards. Where there is a clear pattern, you can take this into account when deciding how long a warning should be in place.
Employees can seek to postpone hearings for various reasons. If their chosen companion cannot attend, the employee can ask to delay the meeting for up to five working days. If the employee is ill and does not attend, you need to rearrange the meeting.
Another common problem is if the employee goes off sick with stress when invited to a formal meeting. In this situation, medical advice may be needed to determine whether they are fit to attend the hearing.
An employee can also raise a grievance during a capability process. You may need to suspend the performance management process while you deal with the grievance.
Due to the potential difficulties in managing the performance management process for all involved, a settlement agreement can be used in some circumstances as an alternative to the procedure. Under such an agreement, the employee is offered an exit package to leave the business in a structured manner.
An employee with two years’ service or more can bring a claim for unfair dismissal if they are dismissed as a result of poor performance. Any employee, including one with less than two years’ service, can also claim for automatic unfair dismissal in some circumstances - for example, if they consider that the performance management procedure is discriminatory or connected to a whistleblowing claim. There are risks associated with the process, and therefore significant benefits in ensuring that it is well structured and well managed.
If you have an underperforming employee and would like advice on how to best manage the procedure, or if you would like to better understand the option of putting forward a settlement agreement, please contact Paul in the employment team. Call 01753 279029 or email firstname.lastname@example.org.