It is a sad reality of running a business that some employees will not perform to the level that you expect. Making the decision to let these employees go can be emotionally challenging and, if not handled correctly, a legal minefield too. This practical guide gives an overview of how you can dismiss an employee fairly for poor performance.
The Employment Rights Act 1996 (ERA) is the cornerstone of UK employment law and places strict obligations on employers to ensure dismissals are fair, justified and procedurally sound. All employees who have been at their current workplace for two years or more are entitled to the protection of this legislation, and the Government intends that from 2027, employees will have this protection from day one of their employment.
To ‘fairly’ dismiss an employee for poor performance, Section 98(2)(a) of the ERA says that the employee must lack either the capability or qualifications to do the work they were hired to do.
Most obviously, employees might not have the minimum skills necessary for the job. For instance, if they are a bus driver, they should have a driving licence. If a pilot, they should be able to take off and land a plane and have the appropriate qualifications to do so.
However, what if they meet the basic requirements but are unproductive, inflexible, or have been unable to establish a good working relationship with colleagues or clients?
Whether you can dismiss an employee in such a situation depends first on whether they have the requisite qualifying service and then whether you are following the statutory framework, any internal rules and procedures and as a minimum the ACAS Code of Practice.
Make sure that you have evidence of poor performance. The most important evidence will usually be from appraisals carried out by the manager or supervisor of the employee, provided that they are conducted in an objective and honest way. Evidence of a drop in productivity, poor client feedback, or communication issues will also be important information to gather.
What a ‘realistic timescale’ is depends on the extent of the underperformance and the length of past service. As a general rule of thumb, the longer the employee has worked for your business, the longer they should be given to improve.
In all likelihood, only continuous poor performance will satisfy an Employment Tribunal that dismissal was a fair outcome.
Any unreasonable failure to follow the procedure set out in the ACAS Code of Practice, may lead to an increase in the unfair dismissal compensation by up to 25%.
It is also important to show that you have taken account of and documented other factors that might be affecting performance, such as:
If you do not ensure that you have taken account of such factors and taken appropriate steps to offer support and/or training, you could be at risk of not only a finding of unfair dismissal but potentially, discrimination if the poor performance is linked to an employee’s protected characteristics, such as disability, age, sex, race, religion, or sexual orientation.
Letting go of underperforming colleagues can be hard. However, it is also often necessary, with poor performers eating into revenue and reducing morale amongst high-performing staff. To protect yourself from claims, you need expert lawyers that can help you put fair procedures in place and support you during the process. Doing so will not just enable you to avoid liability for any claims but also contribute to a healthy working environment in which hardworking employees know that their positions are secure.
Our specialist employment solicitors are available to guide you through this complex area and advise you swiftly and decisively when problems arise.
For further information please feel free to contact Rachel Lester, Head of Employment, on +44 (0)7394 802375 and at Rachel.Lester@ilaw.co.uk.
