Revisiting performance management | How to avoid legal risks when getting your team back on track
Written by Emma Chandler on 28 February 2023
Managing your team’s performance is crucial to the success of your business, and the beginning of the year is a natural time for employers to revisit and get a handle on these matters.
Not only is the first quarter an optimum time to establish priorities and benchmarks for success, it’s also a good time to identify any performance concerns so that you can address them early on. That way, you can prevent problems from snowballing and becoming more difficult to manage later in the year.
Unfortunately, regular performance management may have taken a back seat in the last few years, due to a focus on firefighting and immediate HR issues during the pandemic, plus the subsequent widespread shift to remote work. Because of this, managers may have become a little ‘rusty’ at this key HR process, or lack the confidence to address concerns, which could leave the door open to mismanagement mistakes and potential claims.
In this blog, we recap five things to keep in mind when performance managing employees, so that you can improve business performance in 2023 without inadvertently inviting legal issues.
1. Differentiate between employees who ‘can’t cook’ and those who ‘won’t cook’
Before going down the performance management route, first consider whether you’re dealing with an employee who can’t or won’t perform. This will ensure you follow the correct process.
‘Can’t do’ issues are those where an employee perhaps doesn’t have the skills, ability or knowledge to do the job. For example, they may be working too slowly because they are struggling to use the IT system, or missing deadlines because they are struggling to prioritise their time properly. These situations will fall under your performance management policy, and issues of this nature can often be resolved through training and support.
‘Won’t do’ issues, on the other hand, are those where the employee can do the role but for some reason isn’t meeting the required standard, perhaps because they are lazy or get distracted easily. These are conduct issues and should be dealt with under your disciplinary policy.
Often the lines are blurred, and the reason could be a mixture of the two. Where it is difficult to distinguish between conduct and performance, it’s often less risky to go down the performance management route initially, rather than the disciplinary route.
Start by holding a meeting with the employee to better understand the reason(s) for their poor performance; this will help you to work out what you need to do to support the employee and address the issue.
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2. Be wary of health issues and disability
If the employee suggests that a health condition may have contributed to their underperformance, you may need to put the performance management process on hold and explore this further.
This could be an issue, for example, in the case of an employee with a long-term back problem who is struggling with lifting duties, or an employee with serious mental health issues who is taking a lot of time to complete basic administration tasks.
In these circumstances, it is recommended to seek the employee’s consent to a medical report from their GP or an Occupational Health provider for advice on their condition, the impact it has on their work, and any measures that should be taken to assist them.
From an employment law perspective, it’s important to consider whether the employee’s health condition falls within the definition of a disability set out in the Equality Act 2010, i.e. whether they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. If it does, you must consider whether any reasonable adjustments could be put in place to help them perform.
The performance management procedure should be put on hold until you have reviewed the medical report. Depending on what the report says, it may be more appropriate to deal with the issues as a medical capability issue, rather than a performance issue.
Performance Management Flowchart
This handy flowchart outlines the correct process to follow in cases where performance issues might stem from a mental or physical health condition, including when to refer to Occupational Health.
3. Consider other risk factors (and arm yourself with evidence)
In addition to health issues, there are other risk factors to consider when addressing underperformance. If the employee can link their dismissal to one of the nine protected characteristics (such as age, pregnancy or race), or to the fact that they have raised whistleblowing concerns or health and safety issues in the past, there could be a risk of a claim.
This doesn’t mean you can’t performance manage or dismiss an employee with a protected characteristic. However, to minimise legal risk, it’s a good idea to have evidence to support the fact that they are genuinely underperforming, to prevent any suggestion that they are being treated differently to their colleagues because of this.
For example, if the employee you wish to dismiss is the only female in an all-male sales team, she may believe that her dismissal is motivated by the fact that she is a woman, leading to claims of sex discrimination. As such, you should:
- Gather evidence to show that her sales figures are significantly below others in the team, particularly in comparison to other employees who started around the same time or who have been given the same training and timeframe to prove themselves.
- Consider whether there are examples of you taking a similar approach with male colleagues who didn’t reach the required standard.
Unlike unfair dismissal, there is no qualifying period of service required to bring discrimination or automatically unfair dismissal (whistleblowing) claims, so if you recognise these as potential risks, always obtain evidence before you consider issuing a formal warning (or dismissal).
Discrimination issues aside, evidence may also be important during appraisals that are linked to an employee’s pay rise or bonus, as if you are planning to award a lower appraisal grading that impacts the employee’s pay, they may well challenge this. It’s much more difficult to argue with facts, evidence and examples, so coming armed with this information will help to justify the grade that they have been awarded.
4. Follow a fair process
For employees with over two years’ service, if their performance doesn’t improve and it becomes necessary to dismiss, there will be a risk of an unfair dismissal claim. Defending such claims will rely on you having followed a fair process.
The formal process requires you to hold several meetings with the employee in order to discuss their performance and ways to improve it, and to set and review targets. Before moving to the formal stage, you should have already sought to address the issues informally; however, if this has not been successful:
- Undertake a reasonable investigation to ensure you have all the facts relevant to the discussion and establish that it is actually necessary to move to the formal stage.
- If you decide to start the formal process, write to the employee setting out your concerns and inviting them to a formal meeting to discuss these issues.
- At the meeting, explain the areas of underperformance and run through the evidence. Give the employee the opportunity to ask questions, respond to the concerns, and provide any other evidence they would like you to consider.
- After the meeting, write to the employee confirming the outcome (usually a first written warning), explaining the consequences if the targets are not met (usually a final written warning), and informing them of their right of appeal.
- Issue a Performance Improvement Plan (PIP) to provide clear targets for improvement and the timescale in which they must be achieved.
- If the employee hasn’t improved to a sufficient standard, consider a potential final written warning, following the same process as before. If problems continue, dismissal may be warranted.
Always check the terms of your own policies to make sure that you are following all the steps required.
5. Know when it's safe to dismiss
Acas recommends that it is good practice to give an employee at least two warnings, and therefore two opportunities to improve, before any dismissal for poor performance.
Before moving to dismissal, double check that there are no further stages in your own policies or other discriminatory factors that you need to consider.
In order to successfully defend a claim for unfair dismissal for an employee with over two years’ service, you will also need to consider alternatives to dismissal, such as whether you should offer an extended final warning or offer the employee a demotion or transfer to another position which is within their capabilities.
It may then be safe to dismiss.
Specialist advice and support
Performance management can involve difficult conversations and the process to follow can be quite detailed. WorkNest’s Employment Law and HR experts can help you to address concerns early on, conduct a fair procedure, and deal with any curveballs raised during the process so that you can maintain high-performing teams and minimise the risk of claims. We can also offer performance management training to develop managers’ skills and help them deal with these issues more confidently.
For more information about our fixed-fee service, call 0345 226 8393 or request your free consultation using the button below.