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Performance Management

Dealing with underperforming employees can be a major headache for employers.

If you have an employee who is performing poorly, and you have tried everything to improve their performance to no avail, you may get to the point where you feel it is appropriate to take more “formal” measures against the employee. You may do this as a “warning” with every intention of continuing to work with the employee in the future, or you may do this as a prelude to dismissing the employee unless their performance improves.

Do you need an employment solicitor to help you with performance management?

  • If you are an employee and you think you need help, take a look at our workplace representation page.
  • If you are an employer who needs to manage an employee’s performance, please read on!

The reasons why are important

Examples of under-performing employees are:

  • The employee who is very bright and capable but is bored and cannot be bothered to do the job properly;
  • The employee who is trying very hard to do the job right but just keeps making mistakes;
  • The employee who does not hit targets; and
  • The employee who is suffering personal problems, poor relationships at home or at work which are affecting work.

Two years to assess an employee

As a general rule, employees with less than 24 months’ continuous employment (from April 2012) can be dismissed for poor performance without the need to go through any formal procedures prior to doing so (but take advice on the transitional rules!). This is because generally, employees with less than 24 months’ service will not be able to bring a claim for unfair dismissal in the employment tribunal and the employer will therefore not have the burden of showing that the dismissal was both substantively and procedurally fair.

The first 24 months therefore allows the employer an opportunity to assess whether a new employee is suitable and capable of doing the role they were employed to do. However, please note that there are some exceptions to the general rule, for example where an employee is pregnant or disabled and they might seek to argue that the real reason for dismissal was discriminatory. In such cases, employees will be able to bring a claim if they have less than 24 months’ service. Employers must therefore be very careful and take advice before dismissing an employee without following any procedure.

Where an employee has more than 24 months’ continuous service (or was employed before April 2012), employers must follow the basic procedures set out in the ACAS guidelines which are required by law when taking any formal disciplinary action against an employee. Basically, this means that the employer must investigate the matter, write to the employee inviting them to a disciplinary meeting informing them of their right to be accompanied, provide the employee with the evidence to be used to support the allegations and meet with the employee to discuss the matter prior to deciding whether the employee is underperforming and what sanction is appropriate. They must offer the employee the right of appeal against any decision and hold a meeting to discuss any appeal.

Where performance is in issue, it is generally accepted that in order for any dismissal to be fair, an employer must adopt a staged ‘warning’ process, allowing the employee an opportunity to improve prior to making a decision to dismiss them. The employer must be seen to be supportive and to fairly investigate the reason for the poor performance. Sometimes there may be a valid reason, for example, if the employee has not received the correct training, which can easily be rectified by completing the relevant training, or if the employee is unhappy with a working relationship, which could reflect in their performance. For this reason, it is recommended that employers speak informally to employees about performance concerns – especially where historically there has been no issue with performance – before embarking upon a formal procedure.

The performance management process in brief

Ideally, performance concerns should be dealt with as follows:

  • Hold an initial informal meeting with the employee to discuss concerns. Hopefully, this meeting will uncover any underlying reason for the poor performance and alert the employer to any special circumstances, for example, disability.
  • Take appropriate action to in response to any special circumstances. If there are no special circumstances, the employee should be given the chance to improve. Target-setting and review meetings are useful ways of monitoring ongoing performance.
  • If no improvement is seen, the employer should instigate the formal procedure (remembering to act in accordance with any contractual obligations and / or company policy or procedures) and a verbal warning should be given if justified. The employee should be given a further chance to improve, perhaps using target setting and reviews. The employee should be given the opportunity to appeal the sanction.
  • If no improvement is seen, the employer should repeat the process and a written warning should be given if justified. The employee should be given the opportunity to appeal the sanction.
  • If no improvement is seen, the employer should repeat the process giving a final written warning if justified. The employee should be given the opportunity to appeal the sanction.
  • If no improvement is seen, the employer should repeat the process. The employee may be dismissed if justified. The employee should be given the opportunity to appeal the sanction.

It is useful for new employees’ continuing employment is stated to be subject to completion of a probationary period, and for a probationary review system to be adopted by the employer. This should be stated in the contract of employment, for example, “your continuing employment with us is subject to successful completion of a probationary period of 6 months. At this time, we will hold a probationary review meeting, and will confirm whether your employment will continue”. Sticking to the review system should help employers sift out any unsuitable or under-performing employees as soon as possible and therefore at the lowest risk possible. This could help avoid a situation where a poor performer is not dealt with before their statutory rights and your obligations as employer kick in.

Finally, employers should always be sure that any action they take complies with any contractual obligations relating to disciplinary matters. Failure to do so could result in an employee bringing a claim for breach of contract against them.


Please ensure that in dealing with issues relating to performance, you do not either intentionally or unintentionally discriminate against your employees on any of the protected characteristics. It is particularly important to be aware of any potential disability discrimination issues when dealing with poor performance. If you have any concerns relating to these issues you should take advice.

For business law advice call 0845 225 2635


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