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Performance management | How to address historic underperformance
Written by Alex Holmes (Updated on 3rd October 2025)
Every manager knows how easily performance conversations can get postponed or pushed aside, sometimes due to timing and other priorities, and sometimes because of the discomfort they bring. But what happens when this leads to months, or even years, of unaddressed employee underperformance? The commercial impact can be considerable.
Our experienced Employment Law and HR specialists can help. Book a no-obligation consultation today for support, or read our expert guide to understand your next steps in addressing performance management.
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Neglecting proper performance management
As an employer, it’s vital you consider the penalties if performance management isn’t completed correctly.
At present, when an employee has over two years’ service, they have unfair dismissal rights which must be considered. In practice, this means that if you want to exit them due to poor performance, you can’t complete this with just one meeting, unlike with a short service employee where this may be possible.
It’s important to follow the Acas guidance on performance management, which will enable you to mitigate an unfair dismissal claim as much as possible, should the worst happen. A failure to do so can be a costly error for an employer, as the employee’s length of service is linked to the Tribunal award. In other words, the longer the service, the higher a Tribunal award could be.
How to manage underperforming employees
Consider this an action plan for underperforming employees. You need to get to the bottom about why they’re not delivering, which may be down to personal issues or maybe the employee is quiet cracking.
Your first consideration is your performance management process. If you do have a policy in place, it’s good business practice to follow it. That way, if you’re unlucky enough to encounter a claim following a dismissal in this manner, you’ll be able to show a full process has been utilised. And one in line with your internal procedures and processes. That’s a robust policy in keeping with the Acas guidance and it’s a strong starting point.
Once you have sourced your policy, consider the employee in question. If you were to start a formal performance management process now:
- Would they have any knowledge of the underperformance, or is this likely to be a shock to them?
- Have they, for example, had regular performance reviews, and/or received regular and meaningful feedback on the concerns in a constructive manner that can be evidenced?
If the answer is no to the two questions, it’s recommended you complete an investigatory meeting with the employee in the first instance, addressing the performance concerns and giving them an opportunity to improve without a formal sanction being applied.
Once you’ve completed this process, which includes giving the employee a reasonable amount of time to make improvements, if the poor performance continues you can look at a more formal process.
Navigating a formal performance management process
The Acas guidance states a three-stage sanction process must be followed, even if the performance has been poor for some years. In practice, this means performance management sanctions (First Written Warning, Final Written Warning, Dismissal with Notice Pay) can’t all be completed all at once
You need to hold a performance management hearing with the employee. Make sure they’re formally invited and detail their statutory rights. At this meeting:
- Discuss and address the concerns to see if there are any mitigating factors to take into account; and
- Work together on a formal Performance Improvement Plan (PIP), setting out agreed targets for the employee, linked to their specific role. We recommend using an HR model such as ‘SMART’ targets to ensure all of the necessary details are included in the PIP and give the employee the best chance of being successful
After this meeting, not only would the employee be issued with a finalised copy of the PIP, but they would ordinarily also be issued with the first formal sanction. This is a first written warning.
Potential pitfalls of managing an underperforming employee
As with any employment law process, there are some common considerations to keep in mind during the performance management process to ensure you are managing employees fairly and reducing risk as much as possible:
- Medical conditions: Is the poor performance linked to an underlying medical condition, or another protected characteristic? If so, you may need to take extra steps before formally managing the employee, as you could leave yourself open to a discrimination claim if you don’t.
- Are the targets reasonable? When creating a target, and considering if management is justifiable, employers need to consider whether it is fair to the employee. For example, if two employees completing the same role for the same hours each week are given different targets, or an employee is given a bigger target because ‘they are more experienced’, this is likely to be seen as unfair. Notably, targets shouldn’t be based on length of service (excluding trainees), as this in itself could be potentially age discriminatory.
Is firing an underperforming employee an option?
No. An employee redundancy scenario will only arise where there’s a diminished need for the kind of work that the employee is undertaking or a site closure. If they’re performing poorly, but the role is still required in some capacity, this won’t be a genuine redundancy situation. Proceeding with an ‘engineered redundancy’ runs the risk of an unfair dismissal claim being brought by the employee.
Need professional performance management support?
Managing poor performance can be a lengthy process, as you cannot dismiss somebody straightaway. If you’re pressed for time or lack the necessary expertise, WorkNest’s Employment Law and HR specialists can help.
From providing management training to producing key documents like PIPs and outcome letters and advising on how to navigate the process efficiently and compliantly, we’ve got you covered. For support specific to your situation, request your free consultation today.
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