Underperforming employees can be an expensive issue to ignore and something which is often left to ‘fester’ within a business. Unless an employee has been seriously negligent it is generally not possible to dismiss an employee for a first incidence of poor performance, for example, continually missing targets or deadlines without a valid reason, poor communication with other members of staff/customers or poor attitude to work. It is then important to ensure that an appropriate procedure is followed from an early stage so you are positioned to deal with any further issues that may arise, or even avoid them before they come to a head.

Poor performance (capability) is a potentially fair reason for dismissal but it is necessary to ensure that before dismissing you have a reasonable belief in the employee’s incapability and have followed a fair procedure. A Tribunal will expect there to have been clear communication to the employee of the requirements and expectations and that appropriate support and training has been provided before considering dismissal.

The ACAS Code of Practice on Disciplinary
Take steps to manage performance – before problems arise
At an early stage it may be that the employee’s performance can be managed and improved through discussion and applying some of the following steps:

  • Use probationary periods for new employees (or newly promoted) – the announcement regarding the extension of the qualifying period to claim unfair dismissal to 2 years (from April 2012) will also be good news in this regard.
  • Set out the required standards and ensure the employee is clear on their role and responsibilities (job description).
  • Appraise the employee.
  • Provide supervision and day-to-day management.
  • Provide training.
  • Keep records of performance discussions.

Dealing with the issue early may avoid potential bad-feeling which could arise from going through a formal procedure with the employee. If it does not bring about the improvement you need then it will also help you to show that the employee was supported and aware of the expectations.

Formal procedure
If informal steps are insufficient it may be necessary to follow a more formal procedure. Before deciding to do so you should investigate the employee’s performance and assess whether you consider such action is necessary. This could involve reviewing their file – performance and appraisal records etc.

Other steps which will be expected as part of a fair procedure include:

  • Invitation to meeting – Write to the employee and invite them to a capability meeting. The letter should set out the alleged issues or concerns with the performance, the potential consequences of the meeting if the performance is found to be unsatisfactory, the employee’s right to be accompanied at the meeting and enclose any evidence which will be relied on or discussed. The employee should be given sufficient notice of the meeting to enable them to prepare for it.
  • Capability meeting – The capability meeting should be used to review the employee’s performance, go through the required standards and evidence that these are not being met, allow the employee to respond, consider the reasons for the poor performance (employers should be particularly alive to the possibility that the performance issues could be an indicator of another issue, for example, disability, issues outside of work or workplace stress), consider ways of assisting to improve the employee’s performance (for example, training and supervision), set down and agree targets for improvement and the timing for review.
  • Capability decision – Communicate your decision arising from the meeting in writing and notify the employee about their right of appeal. If you consider that the performance is unsatisfactory, you may issue a written warning. The warning should address the areas in which the performance is unsatisfactory, targets for performance improvement and the relevant time scale for this. If it is proposed that additional measures will be taken to help the employee these should also be set out (for example training courses or additional supervision).
  • Appeal – if the employee appeals the decision you should go through the appeal process with them.
  • Review – monitor the employee’s performance during the review period. If at the end of the period performance is still not satisfactory it may be necessary to invite the employee in to a further capability meeting – going back through the steps set out above. A review period should be long enough to allow reasonable time for improvement but will ultimately need to be balanced against your business needs.

The ACAS Code recommends that an employee should be given at least 2 warnings before they are dismissed for poor performance. If the employee is given a final written warning and their performance still does not improve, further action against the employee (following the procedure) may lead to dismissal. Another point that may be considered prior to dismissal is whether there are any alternative roles available to the employee (or demotion).

Often, an informal discussion with an employee will improve their performance and bring to light any issues that may be the reason for their under performance at work (particularly if they have previously been a good employee and performed well). Where this doesn’t ‘do the trick’, it will be important to bear in mind the above considerations and follow a fair procedure to protect your business from successful claims and to resolve any problems with individual employees (and problems that may be created within the workforce) as quickly and as easily as possible.





Allison Grant is a Partner and leads the Employment team at Lester Aldridge.

Allison has extensive experience as an employment lawyer and as head of a team of employment specialists providing a supporting and advisory arm to employers.

Her expertise covers all aspects of employment and industrial relations law, where she has over the years worked closely with her clients to keep abreast of changes in our laws and to promote best practice.

Allison has a reputation for providing sound, clear and effective advice, which takes account of client needs and client expectation.