Requirements of the Acas Code of Practice
The Acas Code of Practice on disciplinary and grievance procedures (the Acas Code) also applies when you decide to take formal action to deal with issues of poor performance. It highlights that the key requirements of a fair performance process are:
- Employers and employees should raise and deal with issues promptly and should not unreasonably delay meetings, decisions or confirmation of those decisions
- Employers and employees should act consistently
- Employers should carry out any necessary investigations, to establish the facts of the case
- Employers should inform employees of the basis of the problem and give them an opportunity to put their case in response before any decisions are made
- Employers should allow employees to be accompanied at any formal meeting
- Employers should allow an employee to appeal against any formal decision made.’
We consider these requirements in more detail below. Our advice is aimed at providing guidance to somebody at line manager level taking formal steps in relation to the management of an employee’s poor performance. However, the recommendations are generally applicable and should be followed at whichever stage of your performance review procedure is being implemented, although the primary aim is to ensure that any dismissal which occurs as a result of the operation of a performance review process is fair.
Key stages in a performance review process
The key stages are:
- Establish the facts.
- Write to the employee inviting them to a performance review meeting.
- Hold the meeting.
- Where appropriate (see below), issue a first written caution spelling out the consequences if their performance does not improve within a specified duration. The caution should set out a ‘performance improvement plan’ explaining precisely what the employee has to do to achieve the required standard.
- Offer a right of appeal against the caution.
- If the employee fails to improve or to sustain the improvement, move to a second or final written caution (offering a right of appeal).
- If performance is still unsatisfactory, consider alternatives to dismissal such as redeployment or demotion but, if not available,
- Dismiss with notice.
We elaborate on these stages below.
Establish the facts
When poor performance first comes to your attention, consider whether the employee is aware of the standard that is expected, and check, before you meet with the employee, that the standard has been set at a realistic and achievable level.
If the employee is disabled, consider whether there are any reasonable adjustments that could be made to the physical work environment or the way that their work is organised to enable the employee to meet the target.
Convene a meeting with the employee
A key stage in managing poor performance is for you to meet with the employee (in what we call a performance review meeting) to identify why there is a performance problem.
However, before you convene any formal performance review meeting, at any stage of your procedure, there are a number of safeguards that you are required to observe, namely:
- write to the employee inviting them to attend the meeting. Your letter should give the employee the right to be accompanied;
- give them in advance of the meeting copies of relevant documents and provide sufficient information (and time) to enable the employee to prepare their response;
- warn the employee that a possible outcome might be a formal sanction under the relevant stage of the company’s performance review procedure (including, where appropriate, dismissal). For example, if you have already given the employee a final written caution, your letter should explain that the next step is possibly dismissal or redeployment (see below). See Letter - inviting an employee to a performance review meeting.
These safeguards, which are derived from the Acas Code, are essential to the fair operation of your procedure. Following them will, if you dismiss the employee, stand you in good stead if the employee makes a claim of unfair dismissal to an employment tribunal. Also, much of the practical advice set out in Steps before a disciplinary hearing is equally relevant to a meeting to consider poor performance.
Conducting a performance review meeting
The tone of the meeting should be consensual – you are trying to understand the situation and come up with a solution together.
Explain that the meeting is being held under the company’s performance review procedure.
If the employee is not accompanied, check that they understand they have the right to be. If they decline to be accompanied, make a note of that.
Explain what the performance problem is and the impact it is having.
Ask the employee probing questions to try and understand why the problem exists and what (if any) the trigger was for the fall off in performance. If relevant, why, despite previous action under the procedure, has there not been satisfactory improvement?
Take time to consider what the appropriate next step is; might it be a reference to action under another company procedure (see below)?
Sometimes, you may need to adjourn the meeting to get more information about, for example, what support and training might be appropriate to help the employee meet the standard required.
Outcome of a performance review meeting
There can be many reasons why an employee is underperforming, leading to different outcomes. For example, in the course of the performance review meeting it may become apparent that:
- The employee has domestic difficulties. Where it is possible, you may agree a temporary change in, for example, working hours to help the employee overcome the short-term problem. In these cases, you should write to the employee saying that no further action will be taken under the performance review procedure and confirming what you have agreed with the employee, including a review date.
- The employee is suffering from a medical condition, in which case you might adjourn the performance review procedure to seek medical advice and consider adapting the process to take account of this. See Sickness and incapacity.
- The employee has not received training that other employees have had – the oversight can be remedied.
- The poor performance is due to lack of effort or carelessness on the employee's part. In such cases you should consider triggering the disciplinary procedure.
If you conclude that no further action should be taken, under this procedure or any other, write to the employee to confirm this.
In other cases, you might conclude that a formal written caution under the procedure, requiring improvement, is appropriate. Normally, you would issue a first written caution following an initial performance review meeting, unless the failings are very serious when you may, if your procedure allows it, miss a stage.
You should put the conclusion of the meeting in writing and include a performance improvement plan covering:
- the performance problem;
- the improvement that is required;
- a realistic timescale for achieving the improvement, including, where appropriate, staged targets;
- when interim progress will be assessed;
- how progress will be monitored;
- any support that will be offered or changes to the way work will be organised.
The plan will work best where the employee agrees to the targets. However, if you fail to get agreement, you can still issue the plan.
Your letter should also specify that they have the right of appeal and warn the employee of the possible ultimate consequences of failing to meet the target, which could include demotion, transfer or dismissal.
See Letter - first written caution for performance.
You should review the employee's progress as set out in the improvement plan and decide what further action, if any, is necessary. For many individuals, one formal warning is enough to trigger a sustained improvement in performance.
But in other cases the employee may be making a concerted effort to improve, has the potential to perform the job satisfactorily, but has not quite reached the standard required. In these circumstances it may be reasonable to extend the duration of the period set for the employee to reach the required standard and adjust targets and review dates accordingly.
However, if the employee’s performance is still falling substantially below the standard required and they appear unable to improve to any significant degree, even when given clear targets and appropriate support and training, you may wish to move to the next stage of the procedure, a final written caution. This should clearly tell the employee that they may be dismissed if they do not meet the required standard. See Letter - final written caution for poor performance.
Alternatives to dismissal
If, after a final written caution, the employee has failed to meet the targets after being given a reasonable opportunity to do so, consider transferring the employee to another job that is more suited to the employee’s capabilities. Employment tribunals require you to consider whether there is alternative employment before you dismiss an employee on poor performance or ‘capability’ grounds. Note, though, that you cannot impose redeployment on an employee unless the employee’s contract allows you to. In many cases, therefore, you will need an employee’s agreement to a transfer.
If you do not have the contractual right to transfer or demote the employee and the employee refuses to move job, then it would be advisable to explain to the employee that dismissal is the only other option, to give the employee the opportunity to reconsider their position.
As with any sanction under the performance review procedure, if a decision is made to offer redeployment (or to instruct an employee to transfer if your contract allows you to do so), you should give the employee a right of appeal.
If, having issued a final written caution, the circumstances are such that dismissal appears the only realistic option, write to the employee inviting them to a poor performance review meeting (see above) and explaining that the company is contemplating dismissing them because of their performance.
If the decision is made to dismiss, write to the employee notifying them of their right to appeal. You should normally dismiss an employee with notice. See Letter - dismissal with notice for poor performance.
If the company’s practice is to implement the decision to dismiss without waiting to see whether an appeal is lodged, terminate the employee’s contract by giving proper notice (or without notice but with a payment in lieu) and then deal with any appeal as and when it is made. If an appeal is made and upheld but the employee’s contract has already ended, the employee can be reinstated.
If the company’s practice is not to implement the decision to dismiss until any appeal has been heard, hear the appeal and then, if the appeal is unsuccessful, terminate the employee’s contract on notice or with a payment in lieu.