Dismissal for poor performance

Dismissing an employee for poor performance is lawful in principle, but whether it is fair and legally safe depends on how you go about it.

Legal position:

Poor performance, often referred to as "capability," is one of the five potentially fair reasons for dismissal under section 98 of the Employment Rights Act 1996. So the law does recognise it as a legitimate ground. However, having a fair reason is only the starting point. The dismissal must also be carried out fairly, which means following a reasonable procedure and acting within the range of reasonable responses open to a reasonable employer.

The key question is whether the employee has two years' continuous service (the qualifying period for ordinary unfair dismissal claims). If they do, the procedural expectations are significantly higher. If they do not, the risk of an ordinary unfair dismissal claim is removed, though you still need to be careful about other claims such as discrimination, whistleblowing detriment, or breach of contract.

What a fair process typically looks like:

1. Set clear expectations. The employee should know what standard of performance is expected and how they are falling short. This should be communicated clearly and documented.

2. Offer support. Consider whether training, mentoring, adjusted targets, additional supervision, or a change in duties might help. A tribunal will expect you to have explored reasonable steps to help the employee improve.

3. Follow a formal capability procedure. Most employers have one, and the ACAS Code of Practice on Disciplinary and Grievance Procedures is the benchmark a tribunal will measure you against. While the ACAS Code technically applies to disciplinary matters, tribunals routinely expect a similar structured approach for capability dismissals.

4. Give warnings. Typically you would issue a first written warning, set a review period with measurable targets, and then if improvement is not sufficient, move to a final written warning with a further review period.

5. Hold a fair hearing before any decision to dismiss. The employee should be told in advance what the meeting is about, given the right to be accompanied by a colleague or trade union representative, and given a genuine opportunity to respond.

6. Allow an appeal. If you decide to dismiss, the employee must be offered the right to appeal the decision.

Practical considerations:

Evidence is everything. Keep written records of meetings, targets set, feedback given, support offered, and the employee's responses. A tribunal will scrutinise whether the process was genuinely aimed at improvement or simply a paper trail leading to a foregone conclusion.

The length of the review period should be reasonable and proportionate to the role and the nature of the shortfall. For a complex professional role, several months may be appropriate. For a straightforward task, a shorter period may suffice.

Be alert to the possibility that the performance issue has an underlying cause. If the employee is disabled within the meaning of the Equality Act 2010, you have a duty to consider reasonable adjustments, and a failure to do so could turn a capability dismissal into a discrimination claim. Similarly, if stress, health issues, or workplace factors are contributing, those should be explored.

If the employee has less than two years' service, you have more flexibility, but it is still good practice to follow a fair process. You remain exposed to discrimination claims regardless of length of service, and a well-documented process protects you.

Risks to be aware of:

A tribunal can increase compensation by up to 25 per cent if you unreasonably fail to follow the ACAS Code. Conversely, if the employee unreasonably refuses to engage with the process, their compensation can be reduced.

If you dismiss without following a fair procedure, even where the performance is genuinely poor, a tribunal may well find the dismissal unfair on procedural grounds alone.

Constructive dismissal claims can arise if you handle the process in a way that is oppressive, humiliating, or clearly designed to force the employee out rather than give them a genuine chance.

Summary of sensible steps:

1. Identify the performance shortfall clearly and document it.
2. Meet with the employee informally first to discuss concerns and offer support.
3. If improvement does not follow, move to a formal capability process with written warnings and review periods.
4. Keep thorough records at every stage.
5. Only proceed to dismissal after a fair hearing, with a right of appeal.

If you can tell me more about the specific situation, such as the employee's length of service, whether there is a capability or disciplinary policy in place, the nature of the performance issues, and any health or other relevant factors, I can give you more tailored guidance.