How do you manage an employee who is not performing?

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Employees are unlikely to want to hear that they are not performing to standard.

If an employee is not performing up to the required standards, you can put them into a performance management procedure. This is a process in which you can set out where they are falling short and what they need to do to reach the required standards, give them time to improve, monitor their performance, and take action if they fail to do so. Capability (as in poor performance) is a potentially fair reason for dismissal.

How do you tell staff they need to improve?

It can be really difficult to give someone the bad news that their performance isn’t up to scratch.  It follows that it’s important to take care how the feedback is presented, to ensure that the message gets through, but in a way that doesn’t immediately lead to a grievance or complaint about how they’ve been treated. In short, HR professionals are usually best placed to conduct difficult conversations or to coach managers to do it themselves.

You could start off informally by meeting with the employee and asking how they feel they’re doing. Discuss where they’re doing well, and where they’re doing less well, setting out any particular areas of concern where their performance is below requirements. Explain that if they don’t improve you may need to go into a formal performance management/performance improvement process – these titles mean the same thing, but different employers use different terminology.

If you have an established appraisal system with regular catch ups and reviews, performance issues being raised in isolation shouldn’t come as a shock to the employee. If there’s no appraisal system in place, it can be harder to raise performance issues in the first place, and it may take longer to work through a fair process.

What is the difference between formal and informal performance management?

Informal performance management is a softer approach, without the potential for formal warnings being issued. Often, a gentle push in the right direction can solve minor issues of performance, such as where an employee has been “coasting”.

However, where performance issues are serious or an informal approach hasn’t worked, then you may want to move on to a formal performance management process, which will usually carry the threat of warnings, and ultimately dismissal if the employee doesn’t improve as required.

What is formal performance management?

Many employers have a performance management policy in addition to their disciplinary policy, though some treat performance as a disciplinary issue and include performance in their disciplinary procedures.  Best practice is to have separate policies though, because the procedures and outcomes can be very different, and “conduct” and “capability” are two distinct potentially fair reasons to dismiss in the employment legislation.

If it has become necessary to put an employee into a formal performance management process, it should look something like this:

  • Invite the employee to a formal meeting at which their performance issues will be discussed. Consider whether to let them bring a companion – sometimes employer’s processes will permit a companion (colleague or trade union representative) at all meetings.
  • Set out the issues, give the employee the opportunity to put forward their version of events and make counterpoints to flush out any obvious issues such as a failure to provide adequate training.
  • Explain that the employee has a given period to improve and set out the targets or achievements they have to meet in that time. Notify the employee of any warning being issued at this stage (this will depend on what is provided for in the employer’s process).
  • Write to confirm what was discussed and to reiterate the targets or achievements the employee has to meet. Confirm any warning issued and explain what will happen if the targets or achievements aren’t met.
  • Call the employee to further meetings at the end of each review period, issue (further) warnings as appropriate and in line with the employer’s procedures if targets or achievements haven’t been met, and set updated or new targets and achievements for the next review period. At some point it may be appropriate to inform the employee that the upcoming review period is the final period before they could be dismissed for poor performance if they don’t reach the required standards.
  • Write to confirm all the above and confirm any warning issued, and notify the employee that (assuming the employer’s process allows for this) if the required improvement is not made during the final review period, then the employee’s employment may be terminated.
  • Call the employee to a final meeting at the end of the final review period, after which a decision regarding their continued employment will be taken. The employee will be entitled to be accompanied by a work colleague or trade union representative at this meeting, even if they haven’t been allowed a companion at earlier meetings.
  • Make the final decision – if that is to dismiss the employee, you’ll need to write a termination letter setting out the reasons for their dismissal. Usually a fair performance dismissal will be with notice, so you’ll need to ensure that the employee is paid up to the termination date, plus pay in lieu of their notice period, and accrued holiday pay.

Note that this is a generalised procedure, just to give you an idea of the extent and likely duration of a fair performance management procedure.  In short, it takes several months to conduct a fair performance management process before you can fairly dismiss an employee for poor performance.

Poor performance can result in termination of employment.

Can I sack someone for poor performance?

Yes. Capability (i.e. poor performance) is a potentially fair reason to dismiss an employee.  You have to be able to show that it was reasonable to dismiss an employee for poor performance, which means you need to show that you had a reasonable belief that their performance was inadequate.  This is why you need to give the employee a fair chance to improve their performance, and why it’s important to establish whether there’s an obvious weak point, such as a failure to provide adequate training. It’s also essential to follow a fair procedure before deciding to dismiss, so that’s another reason to go through a fair procedure and give the employee opportunities to improve to the required standard before dismissing them.

It’s less risky to sack someone for poor performance where they have less than two years’ employment, and arguably even easier when they are still in their probation period. However, it’s still important to ensure that there are no other risk factors that don’t need two years’ service to result in a claim such as discrimination or whistleblowing.

Can I avoid a lengthy performance management process?

Not if you want to manage the risk of a successful claim by ensuring that the process and any action taken, including a dismissal, is fair and not discriminatory.

However, there are ways to achieve a swifter conclusion to a situation where you have decided that the business needs to remove a troublesome employee.  An underperforming employee can be highly disruptive to the wider team or business. If unchecked, the situation can create bad feeling, create stress, damage morale, and damage other employees’ performance if the team thinks that someone is “getting away with it”.  Good employees may leave if action is not taken.

It is not unknown therefore for employers to look for a “commercial” solution that minimises further disruption and enables the team to move forward to bigger and better things.

It is possible to approach an underperforming employee with a “protected conversation”, in which they are offered a termination deal and a settlement agreement with a compensation payment, as an alternative to being put through a performance management process. Employees aren’t allowed to disclose that protected conversation in relation to an unfair dismissal claim, though no protection is given in relation to other types of claims such as discrimination, so care still needs to be taken in how you present the offer.  It’s best to get legal advice on your options before taking any action.

Employment Law Solicitor

If you need more help with the subjects covered here then do reach out to our expert solicitors.  You can leave a comment below, email or call us on 03300 020 863.

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