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The primary purpose of any performance management procedure should be to encourage improvement rather than to punish.
By having a clear procedure to deal with poor performance allows employers to have a framework within which managers can work with employees to maintain satisfactory performance standards and to encourage improvement where necessary.
Employers should note that concerns over performance are dealt with fairly and that steps are taken to establish the facts and to give employees the opportunity to respond at a hearing before any formal action is taken.
INFORMAL DISCUSSIONS
The ACAS code suggests that, in the first instance, minor performance issues are usually best dealt with informally.
In the first instance, performance issues should normally be dealt with informally between the employee and their manager as part of day-to-day management. Informal discussions may be held with a view to (for example):
(a) clarifying the required standards;
(b) identifying areas of concern;
(c) establishing the likely causes of poor performance and identifying any training needs;
(d) setting targets for improvement; and/or
(e) agreeing a time-scale for review.
In some cases an informal verbal warning may be given if the manager deems it appropriate. This will not form part of the employee’s personnel record and there is no right of appeal.
The formal procedure which is detailed below should be used for more serious cases, or in any case where informal discussions have not resulted in a satisfactory improvement.
CAPABILITY HEARINGS
A capability hearing should be held at each stage of the procedure.
Unless it is impractical to do so, you must give the employee written notice (with a minimum of 48 hours notice) of the date, time and place of the capability hearing.
The written invite must detail the concerns and issues of poor performance that you have with the employee and the basis for those concerns. You must also attach any documentary evidence substantiating the alleged poor performance with the written invite. This is to ensure that the employee has a reasonable opportunity to consider this information before the hearing.
The hearing should be held by a manager [or a more senior manager]. The employee must be informed in the written invite that they have the right to bring a companion with them to the hearing.
The employee must take all reasonable steps to attend the hearing. Failure to attend a hearing without good reason may be treated as misconduct. If the employee or his companion cannot attend at the time specified then the employee should inform you immediately and you should seek to agree an alternative time.
A hearing may be adjourned if you need to gather any further information or give consideration to matters discussed at the hearing. The employee should be given a reasonable opportunity to consider any new information obtained before the hearing is reconvened.
After the hearing you should give written confirmation of the decision, the reasons for it, and give the employee the right of appeal, after the capability hearing.
STAGE 1: FIRST CAPABILITY HEARING
Where performance is unsatisfactory, and informal steps have either failed to resolve the situation or are not appropriate, a first capability hearing will be held. An employer must ensure that they send an invite detailing everything stated above. The purposes of the first capability hearing include:
(a) setting out the required standards that are considered not to have been met;
(b) establishing the likely causes of poor performance;
(c) allowing the employee the opportunity to explain the poor performance and ask any relevant questions;
(d) discussing measures, such as additional training or supervision, which may improve performance;
(e) setting targets for improvement; and
(f) setting a time-scale for review.
Following the hearing, if an employer decides that it is appropriate to do so, they can give the employee a formal written warning setting out:
(a) the areas in which the employee has not met the required performance standards;
(b) targets for improvement;
(c) any measures, such as additional training or supervision, which will be taken with a view to improving performance;
(d) a time-scale for review;
(e) the consequences of failing to improve within the review period, or of further unsatisfactory performance.
The warning will normally remain active for six months, after which time it will normally be disregarded for the purposes of the capability procedure. A record of the warning will form a permanent part of the employee’s personnel record.
The employee’s performance should be monitored and at the end of the review period the company should write to the employee and inform the employee of the next step, as follows:
(a) if the manager is satisfied with their performance, then no further action will be taken;
(b) if the manager is not satisfied, the matter may be progressed to Stage 2; or
(c) if the manager feels that there has been a substantial but insufficient improvement, the review period may be extended.
STAGE 2: SECOND CAPABILITY HEARING
If the employee’s performance does not improve within the review period, or if there are further instances of poor performance while the formal written warning is still active, then the employer should hold a second capability hearing. Again an employer must ensure that they send an invite detailing everything stated above.
The purposes of the second capability hearing include:
(a) setting out the required standards that are considered not to have been met;
(b) establishing the likely causes of poor performance including any reasons why the measures taken so far have not led to the required improvement;
(c) allowing the employee the opportunity to explain the poor performance and ask any relevant questions;
(d) identifying further measures, such as additional training or supervision, which may improve performance;
(e) setting targets for improvement; and
(f) setting a time-scale for review.
Following the hearing, if the employer decides that it is appropriate to do so, they can give the employee a final written warning, setting out:
(a) the areas in which the employee has not met the required performance standards;
(b) targets for improvement;
(c) any measures, such as additional training or supervision, which will be taken with a view to improving performance;
(d) a further time-scale for review;
(e) the consequences of failing to improve within the time-scale, or of further unsatisfactory performance.
A first written warning will normally remain active for six months, after which time it will be disregarded for the purposes of the capability procedure.
The employee’s performance will be monitored and at the end of the review period the employer should write to the employee and inform the employee of the next step, as follows:
(a) if their manager is satisfied with the employee’s performance, that no further action will be taken;
(b) if their manager is not satisfied, the matter may be progressed to a stage 3 capability hearing; or
(c) if the manager feels that there has been a substantial but insufficient improvement, the review period may be extended.
STAGE 3: DISMISSAL OR REDEPLOYMENT
If the employee’s performance does not improve within the further review period set out in the final written warning, or if there are further serious instances of poor performance whilst their final written warning is still active, you should hold a further capability hearing.
The purposes of the stage 3 hearing include:
(a) setting out the required standards that are considered not to have been met;
(b) identifying areas in which performance is still unsatisfactory;
(c) allowing the employee the opportunity to explain the poor performance and ask any relevant questions;
(d) establishing whether there are any further steps that could reasonably be taken to rectify the poor performance;
(e) establishing whether there is any reasonable likelihood of the required standard of performance being met within a reasonable time; and
(f) discussing whether there is any practical alternative to dismissal, such as redeployment to any suitable job that is available at the same or lower grade.
In exceptional cases where the employer believes that there is a reasonable likelihood of the necessary improvement being made within a reasonable time, a further review period will be set and the final written warning extended.
If performance remains unsatisfactory and there is to be no further review period, the employer may:
(a) redeploy an employee into another suitable job at the same or [(if the contract permits)] a lower grade; or
(b) dismiss the employee
Dismissal will normally be with full notice or payment in lieu of notice, unless the employee is guilty of gross misconduct within the meaning of the company’s disciplinary policy, in which case you may dismiss the employee without notice or any pay in lieu.
APPEALS
The employee may appeal against the outcome of any stage of the formal capability procedure.
Where practicable, the appeal hearing will be held by a manager who is senior to the person who conducted the capability hearing.
Depending on the grounds of the employee’s appeal, the appeal hearing may be a complete rehearing of the matter or a review of the original decision.
Following the appeal the company may:
(a) confirm the original decision;
(b) revoke the original decision; or
(c) substitute a different outcome.
The final decision should be confirmed to the employee in writing, if possible within one week of the appeal hearing. There will be no further right of appeal.
The date that any dismissal takes effect will not be delayed pending the outcome of an appeal. However, if the appeal is successful, the decision to dismiss the employee will be revoked with no loss of continuity or pay.
If you would like any further information or advice on performance management, please contact us.
