Performance management is the process used by employers to develop and improve their employees. It can also be used to manage capability issues where they arise. This should not be confused with a disciplinary process which would be more appropriately used to manage conduct issues.

Performance management is a focus on helping an employee to improve whilst enabling an employer to take appropriate action should an employee fail to do so. Performance management arrangements can include:

• setting performance measurements / targets;
• regular meetings or 1:1s;
• maintaining a record of performance;
• redeployment;
• dismissal.

This list highlights that whilst performance management is a supportive process, it also has potentially serious results.

1                 The procedure

1.1             If it becomes clear that an employee cannot do their job to the required standard or ability, an employer can follow its capability or performance management procedure (where there is one in place). The process may start with an informal discussion between an employee and line manager. This may be enough to prompt and support the employee to improve where needed.

1.2             If the employee continues to fall below the required standard or the capability issue is sufficiently serious, a formal procedure can be started and would typically be carried out as follows:

1.2.1         If necessary, the line manager (or nominated investigation manager) can investigate concerns with performance issues.

1.2.2         The employee will be invited to attend a capability hearing. The invitation should include:

(a)              the date, time and place of the hearing (with reasonable notice);

(b)              the reasons for concern;

(c)              likely outcome if, following the hearing, it is found that performance has been unsatisfactory; and

(d)              relevant information gathered as part of the investigation and copies of any relevant documents.

1.2.3         Stage 1 capability hearing will be held. The aims of the hearing include:

(a)              setting out the required standards and highlighting where the employee has fallen below this standard;

(b)              allowing the employee to ask questions, present evidence, call witness and respond to the concerns raised;

(c)              establishing the causes of poor performance;

(d)              identifying what measures can be taken to improve performance; and

(e)              discussing targets and time-scales for improvement and review.

1.2.4         Outcome of hearing to be provided in writing. The outcome may include providing the employee with an improvement notice which would outline:

(a)              areas in which the employee is required to improve;

(b)              targets for improvement;

(c)              measures to be taken (such as training or mentoring) to improve performance;

(d)              a period for review (usually 6 months); and

(e)              the consequences of failing to improve within that time.

1.2.5         If there is a failure to improve during that time, the employer may choose:

(a)              to extend the review period; or

(b)              hold a stage 2 hearing.

1.2.6         Following a stage 2 hearing, an employee may be issued with a further improvement notice as above but for a period of 12 months.

1.2.7         If there is a failure to improve during that time, the employer may choose:

(a)              to extend the review period; or

(b)              hold a stage 3 hearing.

1.2.8         Following the stage 3 hearing, the outcomes may include:

(a)              extending the stage 2 review period;

(b)              redeployment; or

(c)              dismissal.

1.3             An employee will be entitled to appeal any warnings or decisions to dismiss made throughout the performance process. Appeals should be held promptly and managed by a more senior manager where possible.

1.4             If an appeal to dismiss is upheld, the employee should be reinstated without loss of continuity and/or pay.

2                 Right to be accompanied

2.1             The statutory right to be accompanied applies to disciplinary hearings. Disciplinary hearings are hearings that could result in:

2.1.1         a formal warning being issued to a worker;

2.1.2         other disciplinary action such as demotion or dismissal; or

2.1.3         confirmation of a warning or other disciplinary action (e.g. outcome of an appeal).

2.2             The right to be accompanied therefore applies to capability hearings as well as disciplinary hearings for misconduct. Investigation meetings are not disciplinary hearings as they will not result in disciplinary action, as such no right to be accompanied will arise.

3                 Redeployment

3.1             If necessary, the decision may be made to redeploy an employee into a more appropriate role. This could be a lateral move into a role which is perhaps less physically or mentally demanding or it could be a demotion into a junior role.

3.2             Employers should check that they are able to make the contractual changes needed. If the policy is contractual and alternative sanctions such as redeployment are included in the policy, then the employer will have the power to make the necessary changes.

3.3             Where there is no express contractual term either in the policy or the contract and the change is imposed unilaterally by the employer, this can amount to a repudiatory breach of contract. Demotion, as well as a potential breach of express contractual terms, could also constitute a breach of mutual trust and confidence. Such breaches could lead to wrongful dismissal or potential constructive dismissal claims.

3.4             If the contract does not expressly permit the employer to redeploy or demote the employee, then the employer could instead offer redeployment as an alternative to dismissal and secure the employee’s agreement.

4                 Dismissal

4.1             Employers should be aware of section 98 of the Employment Rights Act 1996 before deciding to dismiss. Capability is potentially a fair reason for dismissal but, in the event an unfair dismissal claim is made to the tribunal, an employer will still be required to show that a dismissal was fair in the circumstances.

4.2             Employers are also required to follow an appropriate fair procedure before deciding to dismiss and in cases of poor performance, the employer should comply with the Acas Code of Practice on Disciplinary and Grievance Procedures. Failure to do so may lead to a finding of unfair dismissal and a tribunal could choose to uplift any compensation awarded by up to 25%.

5                 Risk of disability discrimination

5.1             Consideration should be given to whether poor performance may be related to a disability and whether reasonable adjustments can be made. This may come about for various reasons including (but certainly not limited to) repeated absence / lateness, failure to meet deadlines, struggling to deal with certain situations. Failure to consider reasonable adjustments could give rise to a disability discrimination claim.

5.2             Some employers will have a separate procedure to deal with disability / poor-health capability. This may be linked to an absence management procedure and could include additional steps such as referrals to occupational health and trial periods for reasonable adjustments.