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Performance Management: A Guide for Employers

The Importance of Managing Performance Properly

When managing capability and performance issues in the workplace employers should take account of the Acas Code of Practice on Disciplinary and Grievance Procedures and other best practice to minimize the risks of costly employment tribunal claims. The guidelines set out below are intended to provide employers with a means of monitoring performance and establishing performance criteria; a degree of consistency in how staff with widely differing responsibilities and duties are given opportunities to attain satisfactory levels of performance; and assistance in identifying the most appropriate form(s) of support and providing that support.

Capability is defined as:

"Where a member of staff is failing in a significant or persistent way to carry out their responsibilities or duties in a satisfactory manner, either due to a lack of ability, inadequate training or lack of experience. Such failings will be identified by use of the following procedures and steps taken to improve performance. Where such steps prove unsuccessful the member of staff may have their employment terminated on the grounds of capability".

If a member of staff fails to overcome their difficulties, any consequent action should be based on:

  1. Adequate evidence that the member of staff is incapable of performing their duties satisfactorily.
  2. A fair procedure. 
  3. The fact that the member of staff was given all reasonable assistance to overcome such failings.

Stage 1 - Informal Procedure

Where an employee of the Company exhibits an inability to perform their duties satisfactorily, the Company will attempt to resolve the matter informally via a meeting between the Line Manager and the member of staff. The nature and date of the meeting should be recorded and a letter sent to the member of staff indicating the nature of their unsatisfactory performance and how such performance can be improved to the satisfaction of the Line Manager. The member of staff should be informed that they may be accompanied at any meetings by a trade union representative or work colleague.

At this meeting, the line manager should agree performance standards with the member of staff, and a reasonable time period over which improvement will be expected. They should also agree how the individual’s performance will be monitored.

If the individual’s performance improves adequately over the timescale, then the process will terminate at this stage. If performance remains unsatisfactory, then the formal procedure should be invoked by the Line Manager as set out in stage 2.

Stage 2 - Formal Procedure - Information Collection

The Senior Manager / Director of the Line Manager concerned may call on the support of an external advisor or another member of the Management Team to undertake collecting the necessary information. They would be expected to interview the member of staff concerned and the Line Manager, as well as any other appropriate individuals. The member of staff should be informed that they may be accompanied at any meetings by a trade union representative or work colleague.

A written report based on evidence gained e.g. by interviews and observation of performance should be prepared by the advisor / Manager. The report should be precise and specific in the observations and comments it makes and shall contain clear information on: 

  1. Areas where the member of staff is failing to perform adequately;
  2. Actions already taken by management to address these failings and whether these actions were adequate - i.e. were clear performance standards set and monitored;
  3. Whether the member of staff acknowledges a problem and shows a willingness to improve;
  4. The impact of the individuals failings on colleagues and work output;
  5. Any other mitigating factors.

The report should be given to the member of staff concerned and to the Line Manager. Both may record in writing any comments on the observations contained within the report.

The Senior Manager / Director should consider the report, and may opt to take one of the following options:

  1. No further action
  2. Instruct the line manager to set reasonable performance standards for the individual and monitor these for a set period of time. (This option should be chosen if this has not previously been carried out adequately and at least three months given to improve)
  3. Convene a formal capability hearing to consider the matter further

Stage 3 - Capability Hearing

The Senior Manager / Director should write to the member of staff informing them of the date of the hearing, attaching any relevant documentation. The letter should contain:

  1. The performance deficits in sufficient detail to ensure that the member of staff fully comprehends their nature, extent and seriousness.
  2. The time, date and venue of the interview.
  3. The person who will conduct the interview, usually the Senior Manager / Director
  4. A statement that all employees have the right to be accompanied by a trade union representative or work colleague at any interview or hearing held under the provision of these procedures.
  5. At least 2 days’ notice of the hearing.

At the hearing, the member of staff should be given the opportunity to put forward a defense, to bring witnesses in support of their defense, to present mitigating circumstances and to make a full statement. A written copy of the procedure to be adhered to during the hearing should be made available to the member of staff before the hearing takes place.

If the allegation is found to be justified, then a decision on the action to be taken must be made. Depending on the nature, frequency and seriousness of the allegation(s) it is expected that at this stage a Warning will be given and this will be confirmed in writing.

A letter should be sent to the member of staff confirming the decision and the reason(s) why it was made. The letter should also indicate that the member of staff's progress will continue to be monitored and how this will be carried out. A time scale for performance to improve and a review date(s) will be specified.

If the failings are found to be not sufficiently serious to warrant a formal warning or where there are mitigating circumstances, then monitoring should be discontinued subject to a clear indication to the member of staff that it may be reintroduced if the problem(s) reappear.

Stage 4 - Second Capability Hearing

If poor performance continues, the process set out in stage 3 should be repeated. The time scale for improvement will depend on the nature of the duties and responsibilities of the employee concerned and the seriousness of the complaint(s).

If the conclusion of the second hearing is that performance has not sufficiently improved and that there is still evidence of incapability despite support and prior warnings, a final warning should be issued.

The letter confirming the decision as well as covering the points made at Stage 3, should clearly state that if an improvement is not forthcoming, the Company will convene a final meeting at which it will consider terminating the contract of the member of staff involved on the grounds of capability.

Stage 5 - Third Capability Hearing:

The appropriate Senior Manager / Director should conduct the third hearing at which if previous advice, training and warnings have not had the desired effect, he/she should terminate the contract of the employee concerned. The procedures outlined in Stage 3 should be followed.

Appeals

An appeal against any decision to terminate the employee’s contract of employment on the grounds of capability may be made in writing within 14 days of the decision. The employee’s appeal should be heard by the appropriate Senior Manager / Director and decisions made on appeal shall be final.

Performance Management Legal Advice

If you need advice or assistance in how best to manage poor perfoemance, or any other employment contract, employment law or HR matter, contact EmployEasily Legal Services today. We serve employers throughout the UK, from Inverness to London, and can help you make sure the employment relationships you form comply with the law, allowing you to focus on the running of your business. Contact us today on 0800 612 4772 for a free, no obligation consultation.




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