Can you dismiss your lowest performing employees?
Due to low staff turnover rates, Lloyds Banking Group is to advise the weakest performing 5% of its staff that they could face dismissal unless their performance improves. Is it legally acceptable to dismiss your worst performers?
Capability Dismissals
Dismissing an employee due to poor performance can be perfectly lawful, being one of the five potentially fair reasons set out in law. The term capability is used to refer to both performance and ill health, so those that cannot perform a role due to sickness or lack of ability can potentially be fairly dismissed.
However, in addition to have a fair reason to dismiss employers must also follow a fair process. This process is set out in the ACAS Code and general principles of fairness; these are decided on a case by case basis.
Blanket policies to dismiss “5%” of the worst performing staff therefore seems on the face of it potentially risky as each employee should be considered individually rather than as part of a global target number. Such schemes, referred to as “rank and yank,” are controversial because of the lack of individual focus and culture of fear and competition that they can invite. As the BTU union stated of the Lloyds scheme, “it…simply become[s] a numbers game and staff will be hounded out of the business.”
A fair process
A fair capability process will always commence with a reasonable set of targets or goals and allow employees a reasonable time to improve and achieve these. What this means will very depend on the job, some jobs can be evaluated within a few weeks, whilst others with a longer cycle of performance may take much longer. The performance plan will need to set out the expectations of the employer, provide training or support and allow the employee time to improve before disciplinary sanctions such as a warning or ultimately dismissal is invoked.
Before dismissing an employee, they must also know that that failure to improve will result in dismissal, the metaphorical “gun to the head” so that the employee knows the jeopardy of not improving.
The absence of these procedural steps from a capacity process is likely to result in it being unfair.
Having a target of “5%” may be perceived as an arbitrary target leading to challenges by those affected by such a scheme on the grounds that their dismissal was pre-determined, based on a matrix or criteria which have not taken account of their circumstances. A one size fits all approach is unlikely to be considered fair.
Tips
Each individual capability procedure should be undertaken with the particular employee in mind and tailored closely to both their characteristics and their role.
Particular attention should be given to employees who are or might be on family leave, such as maternity leave or shared parental leave for some or all of the capability process, ensuring that they are not treated less favourably due to their inability to participate in the process.
Likewise, those who have a disability or ill health condition are likely to need special attention to ensure that reasonable adjustments are made to the process to level this and ensure they are not prejudiced by any particular part of the process.
Employees with outstanding grievances must also be given particular attention, ensuring that these are not viewed as having a negative impact on the outcome of their capability process.
Our employment law solicitors can advise you on restructuring, conducting redundancy consultations and how to protect your business from Tribunal claims.
Please contact Zoe on 0203 858 9765 or email zoe@mulberryssolicitors.com.
Mulberry’s has offices in Brighton and London.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published
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