How to fire for poor performance

By Robert Dixon, Employment Partner, Turbervilles

Solicitors
November 2 2012 - Much has been said recently by the
Government about how its current package of intended
employment law reforms will help create a climate in which it
will be easier for employers to dismiss under-performing staff.
The Government argues that this will give businesses especially small businesses - the confidence to take on more
staff, thereby aiding growth and economic recovery. But how
difficult is it, in fact, to fire under-performing staff and will any
of the intended reforms actually make a difference?
Dismissing new employees
One crucial point to remember is that employees are only
protected against unfair dismissal once they have been
employed for at least two years (one year if their employment
began before 6 April 2012). There are certain types of
dismissal which are forbidden from day one of employment
(for example, dismissing someone because she is pregnant
or for whistleblowing or for exercising a statutory right) but
dismissing an employee in the first two years because his
performance is not up to scratch will not be an unfair
dismissal.
Businesses therefore already have a lengthy opportunity in
which to assess their new employees and, without fear of
comeback, to weed out poor performers before they become
established.
How best to go about this? Taking on a new employee
usually involves a significant investment in both time and
money. It obviously makes sense to give that employee every
possible chance to succeed. Equally, his work must be
subjected to rigorous scrutiny.
Whatever its size, the employer should provide a new starter
with a proper induction into the business and his role within it.
This induction should include setting and communicating the
standards of performance expected of the employee with,
where appropriate, specific targets and timescales. That way,
everybody knows what is expected. Any training needs

Robert Dixon,
Employment Partner,
Turbervilles Solicitors

Robert Dixon specialises in

employment law and human
resources and has been a
partner at Turbervilles since
1989. He currently jointly heads
the firm's HR & Employment
Law department.
[email protected]
Turbervilles are a leading, fullservice, South East law firm
specialising in employment law
and human resources.
Telephone: 01895 201 700
Website:
www.turbervilles.co.uk

should be identified and, if necessary, a training plan for the

employee put in place.
New appointments should always be made subject to
completion of a satisfactory probationary period. The reality is
that every new employee is on probation for two years but
psychologically a probationary period of more than 6 months
probably would not work. A typical period is 3 months normally long enough for the employer to complete a proper
assessment of the employee's skills and his aptitude for the
role. If it soon becomes clear that the employee simply
cannot do the job then his employment should be ended
straightaway. There is no need to wait until the end of the
probationary period. If by the end of the probationary period
there are still doubts about the employee's capability then the
employer should explain the position carefully to him and
extend the period of probation.
If the decision is taken to dismiss an employee for poor
performance during or at the end of his probationary period
or at some later time before the employee has acquired
protection against unfair dismissal then the process need not
be complicated. The employee can simply be told of the
decision to dismiss him and then either given notice and
required to work it or terminated there and then and given a
suitable payment in lieu of notice. Either way, the decision
should be confirmed in writing and it should be made clear to
the employee that his incapability or poor performance was
the reason for his dismissal. One word of caution: extra care
must be taken if the employer has a contractual disciplinary
procedure or if the employee is within a month of gaining
protection against unfair dismissal.
Of course, there is nothing preventing an employer from
putting an unprotected employee through a warning
procedure if he is under-performing and his work standards
need to be raised. Indeed, it is good practice to do so.
However, if an employee is to be dismissed for poor
performance whilst he is still unprotected against unfair
dismissal, it is not necessary that any prior warnings should
have been given to him. Nor is it obligatory to give him the
opportunity to appeal unless there is a contractual
disciplinary procedure conferring a right of appeal.
Careful management of new employees ought to flush out

the bad appointment decisions - the minority of people who

for one reason or another should never have been appointed
in the first place. However, most instances of poor
performance involve employees who are perfectly capable of
doing their job but who fail to maintain the necessary
standard of work, whether due to lack of effort, loss of
confidence or whatever. Often these issues do not arise until
long after the point when the employee has gained statutory
protection against unfair dismissal and with a protected
employee the business does have to take much more care.
Dismissing protected employees
Under the present law, a protected employee who
consistently under-performs can be fairly dismissed on the
ground of "capability". However, in order to dismiss such a
person fairly, his employer must follow a fair and reasonable
procedure. As a minimum, the employer must observe the
guidance set out in the ACAS Code of Practice on
Disciplinary and Grievance Procedures. Many employers
find the prospect of having to confront their employee and
then take him through what seems likely to be a timeconsuming, stressful and risky disciplinary process
impossibly daunting. Often employers will simply back off and
put the problem into the "too hard" tray where it can fester
and create other difficulties. Sometimes employers will dive in
feet first and find themselves facing a constructive unfair
dismissal claim as a result. Other employers look for a less
confrontational way out - offering their employee a
compromise agreement settlement which can prove
expensive or, if the tactic backfires, very expensive.
In reality, tackling a poorly performing employee, if it is
handled properly, need not be as problematic as people think
it is going to be. The key is to be firm, organised and
methodical and to ensure that a disciplinary process is set up
and followed through fairly either to the point where the
employee is back on the "straight and narrow" or until he is
dismissed (assuming he does not first wake up to the reality
of what is happening and resign). Achieving this is always
going to be easier in a larger organisation because of its
greater resources. The owner of a smaller business does,
though, have the consolation of knowing that when an
Employment Tribunal is scrutinising the fairness of a
dismissal, it will take into account the size and resources of

the organisation in question.

Employers also need to bear in mind that the consequence of
failing to address performance issues goes beyond avoiding
unfair dismissals - it is an important part of maintaining
positive performance and morale, with productive members
seeing that under-performing colleagues are dealt with.
Following a far and reason procedure will involve taking
some or all of the stages described below, all of which
should, for the benefit of both employer and employee, be set
out in more detail in a published disciplinary procedure. From
the employer's perspective, it is preferable if this procedure is
described as being non-contractual.
Informal stage
While managers often do not want to confront employees
over perceived inadequacies in their performance,
sometimes all that is needed is an informal meeting to make
an employee improve - to be clearly reminded what
standards are expected of him and where he is falling short.
In many cases the employee will react positively and sharpen
up his work performance rather than have to go through a
formal procedure. However, where an employee's poor
performance is evidently due to a more deep-seated attitude
problem, it may be more appropriate for the employer to go
straight to the formal stage of the disciplinary procedure.
This differentiation highlights the point that the possible
causes of an employee's poor performance should always be
investigated right at the outset, one additional purpose being
to identify any possible health-related issues which may
amount to a disability under the Equality Act 2010 and require
the making of reasonable adjustments to be considered.
It is also essential in every case of poor performance for the
employer to consider at the outset whether any information,
training, resources or other forms of support might be needed
by the employee to assist him to achieve the required
standards. This is something which should be discussed with
the employee and, if necessary, followed up.
If the employee is approached informally about his poor
performance, he can, if it is thought appropriate, be given an

informal verbal warning. He must be told exactly what

aspects of his work need to improve and how. The employer
must set a review period and make the employee aware that
his performance, or aspects of it, will be monitored during, or
at the end of, that period. The employee must be told that if
there is insufficient improvement then the formal procedure
will be invoked. The employer should keep notes of what was
discussed and details of the informal warning, although
verbal, should be confirmed in writing to the employee. A
copy of the notes and of the written confirmation should be
placed on the employee's personal file.
If after an informal warning has been given a review shows
that the employee is still not performing satisfactorily, then
the formal procedure should be implemented against him.
That said, there are a limited number of situations when it
might be fair to dismiss an employee for poor performance
without actually going through a formal disciplinary process.
For example, there may be no need to give formal
performance warnings where the employee is so patently
unqualified or otherwise unsuitable for the role that it would
be a complete waste of everyone's time to put him through a
series of graduated warnings; or where the employee is
highly unlikely to improve and his retention during a formal
disciplinary process would be highly damaging to the
employer's business interests; or where the employee has
already demonstrated that he is incapable of changing, or
unwilling to change (perhaps refusing to admit he is
performing badly); or where the employee is performing very
badly in a senior position and already knows, or ought
reasonably to know, his job is in jeopardy. It goes without
saying that an employer who proposes to dismiss someone
on the ground of incapability without first going through a
warnings process must tread extremely carefully.
Formal warning stages
A formal disciplinary procedure, when applied to performance
shortcomings, will conventionally consist of three warning
stages with each stage resulting in a progressively serious
level of warning. A typical model will be: stage 1 - verbal
warning; stage 2 - first written warning; stage 3 - final written
warning. An alternative model could be: stage 1 - first written
warning; stage 2 - second written warning; stage 3: final
written warning. A three-stage procedure can, of course, be

very protracted and therefore a two-stage procedure, with

just first and final written warnings, can in some instances be
justified. This will particularly be the case where, because of
the nature of the employee's job, a relatively long
performance review period has to be used. For example, the
natural review period for a sales person, if there is a time lag
between the person making the sales pitch and the receipt of
customer orders, might be three months whereas for a
different type of employee the natural review period may be
only a month. So with some employees a two-stage
procedure might be justified though with the majority of
employees it would probably (but not necessarily) be more
appropriate to use a three-stage procedure. The disciplinary
procedure should be flexible enough to allow the business to
adopt either model.
At each stage of the procedure, the following points will arise:

The employer will write to the employee to

advise him that his performance (or aspects of
it) is considered to be unsatisfactory and why,
inviting him to a meeting to discuss it. The letter
or email should make it clear which stage of the
employer's published disciplinary procedure
applies and alert the employee to the possible
sanction(s) that might arise. The employee
should be advised of his right to be
accompanied at the meeting by a work
colleague or trade union official.

At the meeting, the employer will: review the

employee's performance against the required
standards, explaining his perceived
shortcomings from management's perspective;
give the employee the opportunity to respond; if
appropriate, discuss any personal
circumstances or other factors which could be
contributing to the poor performance and review
support measures already taken or which could
be taken to help the employee improve.

If, following review at the meeting, the employer

decides the employee is under-performing (or
still under-performing) and that some sanction
(or further sanction) is called for, the next stage
of the procedure should be implemented.

Realistic performance targets and time scales

should be discussed and, if possible, agreed.
These should be linked to an appropriately
worded warning and care should be taken to
ensure that the warning follows the format
described in the employer's published
disciplinary procedure.

The employer should take full notes of the

meeting and send them to the employee along
with the outcome. If a formal warning is given,
the letter or email must notify the employee of
his right to appeal against the decision.

Dismissal meeting
Where an employee is given a final written warning but fails
to achieve any, or a sufficient number, of his performance
targets in the following review period, the employer can set
up a further meeting with the employee which, barring
something unexpected, will lead to the employee's dismissal.
The employer should write to the employee to advise him that
his performance (or aspects of it) is still considered to be
unsatisfactory and why, inviting him to the meeting to discuss
it. The letter or email should make it clear that the final stage
of the employer's published disciplinary procedure applies
and alert the employee to the fact that the meeting might
result in his dismissal. The employee should, as before, be
advised of his right to be accompanied at the meeting by a
work colleague or trade union official.
If (as is often the case) all the previous meetings in the
process have been conducted by the employee's line
manager, consideration should be given to arranging for the
dismissal meeting to be chaired by a different manager.
Normally this will not be necessary bearing in mind that if the
employee is dismissed and exercises his right of appeal, a
different manager will review the decision at that stage.
However, sometimes - especially in larger organisations - it
can make sense to bring in a different manager to deal with
the dismissal meeting. It is no bad thing at the dismissal
meeting, if resources permit, for the line manager to present
the company's case against the employee and for a more
senior manager to chair the meeting.
At the meeting, whoever is chairing it, the employer should

review the employee's performance against the targets which

were set when he was given his final written warning,
pointing out how he has fallen short of those targets. The
employee must then be allowed to put forward his case. Any
points of substance raised by the employee must be
addressed. This may necessitate an adjournment of the
meeting to enable those points to be investigated. The length
of the adjournment will depend on what has to be
investigated and how long it will take for the investigation to
be properly carried out.
If the decision is then taken to dismiss the employee, he
should be informed verbally (preferably face-to-face) and
given the reasons. The decision must be confirmed in writing
and the employee notified of his right of appeal. The letter or
email must clarify whether the employee is being given notice
and required to work it or whether his employment is being
terminated with immediate effect with him being given a
payment in lieu of notice.
Coalition reforms
None of the proposed reforms will directly affect the steps an
employer should take, as described above, if it wishes to
dismiss an under-performing member of staff whilst avoiding
or minimising the risk of an unfair dismissal claim.
The Coalition is, however, planning to stimulate the use of
compromise agreements (or "settlement agreements" as they
are to be known). The proposal is to standardise the
agreement documentation as much as possible. That is a
welcome development but on its own it is not going to
encourage settlements or deals. More radical is the idea of
employers and employees being able to have "protected
conversations" with a view to agreeing severance terms. The
thinking is that anything said in such a conversation would be
inadmissible in evidence in any subsequent Employment
Tribunal case (i.e. if no deal was done and litigation ensued)
and that this would encourage employers and employees to
get their heads together to work out mutually agreeable
terms. At first sight this might seem like an excellent idea but
the likelihood is that so many safeguards and exceptions will
be embedded in the legislation that it will prove unworkable.
For more senior levels of employee, the Government has

recently unveiled plans for arrangements under which

employees will be able to have an equity stake in the
businesses they work for in return for giving up certain
employment rights including the right to claim unfair
dismissal. Initial reaction to this proposal has been mixed but,
even if it does come to fruition in due course, the initiative is
only likely to apply to a small number of employees.
Conclusion
Despite all the Government sound-bites and media hype, it is
unlikely that new employment laws are going to have any
positive practical effect on the challenges businesses up and
down the UK face when deciding what to do about poorlyperforming staff, especially those who are protected against
unfair dismissal. The truth is that, other than by throwing a lot
of money at the problem, there is no quick or easy fix.
Employers do, though, need to realise that dismissing poorlyperforming employees without winding up in the Employment
Tribunal can be done. It cannot be done overnight. But if
businesses are firm, organised and methodical, it can be
done.