If the performance management process is handled badly it can create resentment and little chance of a successful outcome.

It can be a challenge to make the experience a positive one but there are ways to reduce a negative impact.

Under two years employment

If your employee has under two years employment it’s relatively easy for you, the employer, to dismiss them. As long as there’s no glaring discrimination or whistleblowing risks, you should be able to exit an employee without the fear of facing an employment tribunal.

Over two years employment

Once an employee reaches the Holy Grail of two years’ employment service, they’re protected from unfair dismissal. This means there’s only a few reasons why you can dismiss them, of which, performance is one.

When dismissing for performance related reasons, you need to be able to show that it was actually the reason for dismissal, and that you had a reasonable belief that the employee was underperforming.

ACAS Code

The ACAS Code applies to performance management and although you won’t be liable simply for not following the code, if you do fail to follow the code and face an unfair dismissal claim, it will count against you with the potential to increase compensation by up to 25%.

Key points to managing performance

• You must carry out a reasonable investigation, gather evidence, meet the employee and provide them with the evidence of their underperformance.
• You must give your employee the chance to improve, providing clear objectives for improvement, as well as reasonable timescales to achieve them. ACAS says you should give at least two warnings about their performance before contemplating dismissal.
• Consider providing additional support and training to help your employee improve.
• Monitor and assess performance throughout the set period for improvement through regular meetings.
• If after all of the above your employee has shown no signs of improvement, you can move to a final hearing to consider dismissal on the grounds of poor performance.

Employment tribunal claims because of unfair dismissal due to poor performance

If an Employment Tribunal finds that an employee wasn’t in fact dismissed because of poor performance, but for some other reason, that would be unfair dismissal and an employee can bring a claim.

Under two years’ employment

If the employee has less than two years’ service, most likely their only claim would be for breach of contract which most likely means their notice pay. If they were dismissed with notice, which is common practice in performance management cases then the claim is unlikely to get very far.

Over two years’ employment

If your employee has two years’ service or more, they can bring an unfair dismissal claim.

The employee can bring a claim for loss of earnings, limited to the statutory cap which usually increases each April. They can also claim a basic award based on their age and length of service (an amount similar to statutory redundancy pay).

Time limits to bring a claim

Employees can only bring a claim once their employment has ended, although the ACAS Early Conciliation process can be started whilst they are still employed.

The time limit for bringing an unfair dismissal claim is three months less a day from the date dismissal takes effect (i.e. after notice has expired, or the date of immediate termination if notice is paid in lieu).