These Guidelines will provide you with practical guidance when managing employees who are not performing to a satisfactory standard.  The aim is to ensure that standards are clearly communicated and that employees understand the potential consequences if they fail to meet them going forward, so that poor performance can be fairly managed.

This document is designed to provide general guidance and it should not be seen as a substitute for you taking advice on any specific case from your own HR team or Legal Advisor.

Why do I need to performance manage my employees?

• If those employees who do not reach the performance standards required by the business are not “managed” this is likely to have a wider detrimental effect on the business. For example, other employees who are performing well may feel resentful and lower their own level of commitment.
• Effective performance management is designed to stop minor issues becoming real problems.  If a robust performance management process is not used to tackle issues quickly and effectively, it may well lead to the business facing bigger issues in the future.
• It is important to realise that any employee who has more than 6 months’ continuous employment can only be dismissed “fairly”.  A fair dismissal will require the business to dismiss both for a “good” reason and to act “fairly and reasonably” in dismissing for that reason.
• Poor performance can be a good reason for dismissal, but an unfair dismissal claim may be brought if a fair and reasonable process is not followed by the employer before dismissal takes place.
• Poor performance is not gross misconduct unless the employee commits an act which is grossly negligent.  Therefore, you cannot simply dismiss an employee who is not performing well without first having given that employee formal warnings and a fair opportunity to improve.
• Poor performance is generally an “ordinary” misconduct issue and it should be managed as such. This means either issuing formal warnings under a performance management procedure (if you have one) or, alternatively, under your disciplinary procedure.
• The aim of effective performance management is to “turn around” poor performing employees and to resolve any issues quickly and effectively.  If, however, this does not prove possible then following a fair performance management process such as the one set out in this document, should protect the business from a successful unfair dismissal claim being brought.

What are the key steps of effective performance management?

1. The groundwork

• Know what your performance management / disciplinary policy and procedure say.  Familiarise yourself with this document so that you are aware of how to handle a performance management situation.
• Make sure that your employees also know what this document says.  If they don’t know what the business’ standards and rules are and what the consequences are likely to be if they fall short of them, that will be unfair.
• If any payments, ie a bonus payment or commission, are linked to performance make sure that the employee clearly understands what they must do to become entitled to the payment.  Make sure that this is documented in writing and given to the employee.

2. Timing

• If there is any issue with performance, the key to resolving it amicably and effectively is to deal with it quickly.  Do not wait until the end of the financial year or until the employee’s appraisal.  Nip the issue in the bud as soon as it arises.
• If there is an issue with poor performance, make sure that you are not giving inconsistent messages. The poor performance should be logged and discussed during the appraisal process.  It is no good giving an employee a glowing appraisal and then telling them at the time when payment of a bonus is due that they are not entitled to receive any payment as they have not performed well.
• Don’t bring the subject up for the first time at the end of the working week, this will only lead to the employee festering over the weekend.  Raise the issue at the beginning of the week so that the employee has a chance to think about what has been said and to respond to you during working time.

3. Establishing what the problem is

• This is the first step in effective performance management, and it is one that you must not shy away from. You need to speak to the employee, informally and privately, to make the employee aware of your concerns and to try to establish what the root of the problem is.
• Don’t make assumptions. Consider whether the following could be factors when assessing an employee’s performance: lack of training or support; stress; bullying or harassment; illness; personal issues outside of work – ie a divorce.
• Depending on the answer to the above, you may need to make allowances for the employee over a period of time or to put in place additional training or support. You should seek HR advice particularly if illness or stress, bullying or harassment are mentioned as being issues.
• If the employee does not disclose any factor which might explain a blip in performance, you are entitled to assume that there is no “good” reason for it.  In this case, you should remind the employee of what the required standards are and make it clear that the next stage of the process is formal performance management (see below), if there is no improvement within a specified timescale.
• Agree and implement a strategy. You may wish to use some kind of performance improvement plan for the employee.
• Consider who should be present at the meeting – it will normally be appropriate for the employee’s line manager to undertake this first “informal” meeting as well as subsequent “formal” meetings. The exception will be where the employee says that their poor performance is in some way related to their line manager; in that case, another manager should conduct the meetings.
• Use objective data (ie, comparative sales figures for each member of the team) to clearly demonstrate why the employee’s performance is not up to the required standard.  This will also prevent you from being faced with allegations that you are “picking on” the employee.
• Don’t speak to the employee about your concerns in front of their work colleagues. Book a meeting room and allow plenty of time for the meeting.  Equally, don’t discuss your concerns with the employee’s colleagues; this could be unfair.
• Document everything. Keep a record and notes of all meetings, even informal ones.  These notes will be powerful evidence, showing that you have acted fairly and reasonably if the matter cannot be resolved and you have to move towards dismissing the employee.

4. The formal procedure

• If matters do not improve following an informal meeting which takes place in accordance with the guidance set out above, you will need to escalate the matter to the formal stage.  This will involve issuing “formal” warnings, as set out in the appended timetable.

• It is vital that the employee is given warnings and a fair opportunity to improve performance before dismissal. Failure to give the employee either of these things could result in a successful claim for unfair dismissal being brought by the employee.

• For a warning to be “formal” and so to count as part of the process: (i) the employee must be written to, inviting them to a formal meeting.  The letter should set out why the meeting is taking place and the possible outcome of it (i.e. issue of a warning). The employee should be given reasonable notice (i.e. at least 48 hours’) of the meeting. The employee should be given the right to be accompanied at the meeting by either a colleague or an accredited trade union person.

• The employee should be given a full and fair opportunity to explain their poor performance at the meeting.

• The employee can be informed of the outcome of the meeting verbally, but the outcome also needs to be confirmed in writing.

• The letter should set out what warning has been issued, how long it will last for, what the required standards are going forward and what will happen if those standards are not met (i.e. a further, more severe warning will be issued).

• You must ensure that the employee’s performance is closely and regularly monitored and reviewed following the issue of any formal warning. Make sure the employee knows that this is going to happen and that a failure to reach the required standard may result in a further formal meeting and a further formal warning being issued.

• There is nothing to stop you from having further informal review meetings at any stage during the process.

• Ensure that you are very clear as to what the required standards are and that the employee has acknowledged (as part of your meeting) that the employee understands what they are.

• When the matter gets to the stage where a final warning is being issued or where dismissal is a possible outcome of the meeting, someone should attend the formal meeting with you on behalf of the business to take a full note of all that is said.  These notes must be kept on the employee’s file in case they are needed as evidence if the employee subsequently brings an unfair dismissal claim against you.

• Remember that consistency is vital in determining whether any dismissal or disciplinary penalty is a fair one.  You cannot afford to have favourites.  The standards to be reached must be the same for all and everyone must be subject to the same sanctions if they fail to reach them; unless this is due to illness, difficult personal circumstances etc and any such exceptional circumstances must be clearly documented.

• Whenever you issue a formal warning or dismiss an employee, the employee must be given an opportunity to appeal that decision. The outcome letter must inform the employee of whom any appeal should be lodged with and what the timescale for lodging an appeal is.

• If an appeal is lodged, the employee must be invited to another formal meeting at which they will again have the right to be accompanied by either a colleague or an accredited trade union person.  Again, the employee must be given an opportunity to put forward their explanation, both as to the reasons for the poor performance and also as to why they believe the decision to issue with a warning / dismiss is unfair.

• A different manager (and normally a more senior one) who has not had any previous involvement in the performance management process should hear any appeal.

• Normally, one would expect warnings to be issued as follows:

  • first or verbal;
  • second or written;
  • third or final written.

• Generally, only after the above warnings have first been given, will it be fair to dismiss the employee.