September 23, 2013

You’re fired: dismissing underperforming staff

As an employment solicitor I am often asked by my clients and business associates “Is it really too hard to dismiss underperforming staff?”

This question often ignites a debate about whether the UK employment laws are too stringent on dismissing staff.  It often creates a divide in opinion on how easy it actually is to terminate employment without significant risk of facing a claim in the employment tribunal.

There is generally always a 2 stage test when dealing with dismissals – is there a potentially fair reason for terminating an employee’s employment and have you followed a fair process.

There are 5 potentially fair reasons for terminating employment – capability, conduct, redundancy, statutory ban and some other substantial reason.  Underperforming staff will fall under the capability category.  The good news for employers is that employees employed from 6 April 2012 or after now have to be employed continually for 2 years before they can bring a claim for unfair dismissal.  This is subject to some limited exceptions if the employee feels that they have been dismissed for an automatically unfair reason, such as race or sex discrimination, or if they have blown the whistle or asserted a statutory right.  Employers should therefore keep a close eye on employees with service under 2 years, and if necessary ensure that underperforming employee’s employment is terminated well in advance of the 2 year anniversary.

But what happens when employees have a number of years service and then their performance starts to deteriorate?  In these circumstances, employers need to give the employee an opportunity to improve before they can take steps to terminate.  This will normally involve a lengthy process of performance management, including a series of disciplinary warnings before termination.  The key thing here is simply treating the employee reasonably, and giving them the opportunity and support to improve on their performance.

So is this all a bit much?  My view is that we have actually achieved a relatively good balance of giving employers control over their businesses, but at the same time providing employees with a reasonable amount of job security.

I do, however, have sympathy with employers who may not have the time or resources to follow through with a lengthy process.  I’m therefore pleased to be able to say that from 29 July 2013 new statutory provisions were introduced which give businesses the power in certain circumstances to offer a compensation package and say “Its time to call it a day, and all the best for the future.”  This is now known as a protected conversation.  The new provisions significantly improve what is often referred to as “without prejudice” discussions, which previously could only be used safely when a legal dispute had arisen.  As always, employers must look out for the exceptions before having the conversation, particularly when issues of discrimination or whistle blowing have been raised.

So in summary I would always say, think twice before pressing ahead with a dismissal.  Take advice and consider the risks involved before making that decision.  Employers can take strength from the fact that the UK is significantly less regulated than some of our European counterparts, and recent changes such as the increase in the qualification period from 1 to 2 years to claim unfair dismissal, the introduction of employment tribunal fees and the introduction of “protected conversations” are certainly easing the burden on employers.

For specific advice please contact our Employment team.

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