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Performance management can be both challenging and time-consuming. The first challenge is to determine whether it is a capability issue that needs to be addressed under a performance management procedure, or a conduct issue to be dealt with under the disciplinary process. Generally, capability relates to the employee’s abilities and competence, whereas conduct involves carelessness or laziness.

It is crucial to get this distinction right to ensure the correct procedure is followed and minimise the risk of unfair dismissal. This guide outlines the performance management process, examines common problems, and highlights some alternative options

Key steps

The purpose of a performance management policy and procedure is to give the employee the opportunity to improve within a given time frame, with any suitable training and support. Different organisations have different time periods for improvement and a different number of ‘chances’ under their policies, but the principle is usually the same.

Performance is assessed during the time period, typically of a month or two, and at the end of the period the manager meets with the employee to discuss progress. If there has been sufficient improvement, the process is concluded. If not, a further time period is set with clear objectives, monitoring and support. Warnings can also be given for a longer duration of say 12 months. If the employee’s poor performance reoccurs in this time, the procedure can be started again, but the employee will have fewer chances to improve before moving to dismissal.

It is usually only after the employee has exhausted their chances, without sufficient improvement, that it will be fair to consider dismissal. The employee should be invited to a meeting to discuss this. As with most dismissals, employers should consider any alternatives to dismissal, consider the employee’s side of the story and offer the employee the right to appeal against the dismissal.

Employers should look out for any disability issues that may be relevant to the employee’s poor performance or the way the process is applied. At all stages of the process, the legal obligation to make reasonable adjustments may arise. We can advise you further on the employee’s individual circumstances.

Common problems which can occur along the way include:

• Employee goes off sick

We see a lot of cases where an employee goes off sick because they struggle to cope with the scrutiny and pressure of performance management, particularly if the poor performance has gone unchallenged for a long time. If the employee is absent for a significant time, the time periods for monitoring performance may need to be extended to take account of the time off. Again, be alert to any potential disabilities that may be relevant to the sickness absence.

• Employee raises a grievance

Even when the process is handled as sensitively as possible, the employee may feel that their treatment is unfair and raise a grievance. Managers may regard this as a tactic to deflect or delay the performance management procedure or as showing that the employee is unable to take responsibility for weaknesses in their performance. Despite these concerns, the grievance still needs to be addressed, particularly if the employee alleges that the manager ‘has it in for them’ or the process is discriminatory. This may mean delaying the procedure or, if possible, bringing in a different manager to carry out the performance monitoring.

• Employee improves, but not for long

After the hard work of performance managing an employee, managers can be frustrated to find that the employee did enough to get through the process but once the monitoring stops, slips back into old habits. If the employee still has a live warning, the procedure can be restarted at a later stage, and it will be quicker to progress to dismissal. Otherwise, a lot of managerial time can get used up in keeping the employee on track and getting caught in a performance management cycle. Employers may consider whether, on balance, it makes sense to make an exit payment to the employee to end their employment under a settlement agreement.

Alternatives to performance management

Prevention is better than cure. Robust recruitment processes may help ensure you have the right person for the job, but some employees give a great interview only to fail to deliver in the job. Make sure your contracts include a probationary period and use that time to properly scrutinise the employee’s performance.

If concerns arise about an individual’s performance and you think the situation is not rectifiable, remember that the employee cannot bring a claim for unfair dismissal unless you have employed them for at least two years. Until then, you can dismiss without the risk of an ‘ordinary’ unfair dismissal claim. However, employees can still bring an unfair dismissal claim from day one if they can show that they were sacked for a prohibited reason, for example that they ‘blew the whistle’ or they raised concerns about health and safety. Employees can also bring a discrimination claim from day one, for example if an employee with Asian heritage is dismissed and alleges that their white peer was kept on while performing at a similar level.

Finally, if you wish to avoid the challenges of performance management, you can agree an exit package with the employee, who signs up to a settlement agreement.

How we can help

Managers can be wary of pursuing performance management, but with our support, you can follow a tight process that leads to a fair dismissal. We can also help you with the specific challenges each case brings up.  For further information, please contact one of our Employment experts.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.