Performance management

Aims of the Policy

The overriding aim of a performance management policy is to help the employee for the benefit of both the individual and the company. It should be used to identify problem areas and attempt to agree steps to redress the problem.

Who is it for?

The performance management policy lays down the procedure to be followed when an employee consistently fails to meet the standards required by the company. It is important that the company does not use the disciplinary procedure as this may result in the dismissal being considered unfair by an employment tribunal. However, if employees are fully capable, but unwilling to carry out their job properly this should be dealt with as misconduct and dealt with under the disciplinary procedure.

New minimum statutory disciplinary procedures are set out in Schedule 2 of the Employment Act 2002 and must now be followed by all employers where they contemplate dismissing or taking "relevant" disciplinary action against an employee, including dismissal as a result of this procedure.

Failure to follow the procedure may result in the dismissal being classed by a Tribunal as automatically unfair. Following the procedure, however, does not guarantee the dismissal will be fair, dismissal still being subject to Employment Law principles of equality and fairness.

Essential elements

The aim of a performance management policy is not to manoeuvre an under-performing employee out, but to help them to achieve the standard required by the company. At all stages of the procedure the employer should consider how additional training would benefit the employee and also the possibility that alternative employment within the company might be in the interests of both parties.

Training

The employer must ascertain what further training is available, what the employee requires and how much the further training would cost. This should include a review of the processes currently in place, the equipment available and possible improvements to working practices that may help the employee.

Alternative employment

When considering possible alternative employment employers should be aware that:

• Failure to consider alternative employment may make the dismissal unfair
• There is no obligation to create a job where none exists
• Alternative vacancies up to date of termination should be considered
• It is essential to consider making reasonable adjustments in cases of disability.

Best practice: Handling performance problems –  informal proceedings

If an employee's performance is not of the required standard at work the employer should have an informal discussion with the employee to highlight the concerns and to discuss ways to improve. Make a note of the meeting for future reference.

Handling performance problems –  formal proceedings

If the problems with the employee's performance cannot be resolved informally you should consider invoking the company's formal procedure which must comply with the new statutory minimum dismissal procedures under its disciplinary policy.

Carry out investigation

A full investigation should be carried out and a report prepared, providing an appraisal of the employee's performance.

Consultation meeting

The employee should then be invited, in wiriting, to a consultation meeting. The letter should set out all the issues to be discussed. Consider allowing employee representation.

At the consultation meeting the employer should:

• Stress that the meeting is not a disciplinary matter
• Discuss the problem, seek agreement on the shortfall in performance and the reasons behind the shortfall
• Establish what further training, assistance or additional help the employee needs
• Clearly explain the standards required and expected by the company
• Decide and agree a review period and set targets for improved performance from the employee.

Training

Write to the employee, confirming the improvement expected, the period over which their performance will be monitored and the date of the next meeting. Specify the help to be provided by the company and any additional training that the employee will be expected to undertake.

Review meeting

At the review meeting the employer should consider performance against targets set and consider the need for a further review period. The employee should be expressly warned that failure to improve in requisite time frame may result in termination of employment. This should be confirmed in writing.

Further review meeting

If insufficient improvement has been made, the employer should consider the possibility of alternative employment.

Decision to terminate employment – the standard procedure

Where no alternative employment is available the employer should consider termination of employment. The employer should write to the employee, detailing the alleged failure in performance which has led the company to contemplate dismissal. The employee should be invited to a meeting where the decision to terminate or seek a further review will be taken, and advised of their right to be accompanied.

Where the employee is dismissed the employer should inform the individual of their right of appeal and detail when and to whom any appeal should be made.

Grey areas

Points that are worth highlighting as potential danger areas include:

• When does a performance meeting become a disciplinary hearing?
• Issues or complaints raised at the performance meeting should still be dealt with formally under the grievance procedures.

Gross incompetence and unsuitability

There may be circumstances where the failure of work performance is so serious that it leads to instant dismissal. Such serious instances are rare and the company should always look to follow the full performance management procedure where possible. A performance management procedure  will also apply where potentially disastrous consequences will result from just one mistake (eg if the employee is an airline pilot).

Even then a full investigation must be carried out and the findings confirmed in writing with the opportunity to appeal offered.

Possible disability

Before invoking the performance management procedure all employers should be aware that the definition of disability will incorporate many common problems such as stress-related illness or bad backs, both of which may have a significant effect on an individualÕs ability to properly perform their job.

The Disability Discrimination Act 1995 defines disability for the purposes of discrimination legislation: "Any physical or mental impairment which has a substantial and long-term adverse affect on ability to carry out day-to-day activities."

Before taking any action employers should ask themselves the following:

• Does the employee have a physical or mental impairment?
• Does the impairment affect their ability to carry out day-to-day activities?
• Does it have an adverse effect?
• Is the adverse effect substantial?
• Is the adverse effect long-term?

If the answer to these five questions is yes, it is likely that the employee will have a disability as defined under the Disability Discrimination Act. The next step is to determine whether the disability is responsible for the poor performance and accordingly, whether invoking the performance management procedure would constitute discrimination.

Disability discrimination is a sensitive and complicated area. It is clear that a failure on the part of the employer to consider reasonable adjustments will result in dismissal of a disabled employee being treated as unjustified discrimination. The series of review meetings set out by a properly drafted performance management procedure should allow the employer ample opportunity to sit down with the employee and consider adjustments that will help to alleviate the effect of their disability.

Employer protection

• Follow the correct performance management procedure
• Make the most of the probation period before matters get too serious
• Always keep accurate records of performance records (including details of all meetings / conversations) as they may be needed at tribunal
• Ensure line managers or those who will deal with problems on the front line are aware of the procedure and, where appropriate, have received adequate training to properly implement it
• Be aware of the possibility that a disability is causing the employee's poor performance and be prepared to make reasonable adjustments and consider alternative employment as part of the review process.

Key legislation

Employment Act 2002

Employment Act 2002 (Dispute Resolution) Regulations 2004

Employment Rights Act 1996

Disability Discrimination Act 1995

Links

ACAS www.acas.ork.uk

Department of Trade & Industry www.dti.gov.uk

Disability Rights Commission www.drc-gb.org

This note is for general guidance only and should not be relied upon without advice about your specific circumstances.