When to performance manage employees – and the cost of leaving it too late

What’s the problem?

In order to dismiss an employee fairly, an employer must:
• have a fair reason for dismissing the employee, and
• show they have followed a fair process in dismissing the employee.

The employer needs to be sure that there isn’t an underlying reason for the employee’s poor performance – could the employee have an underlying health complaint or are they being treated badly by their manager?

How can an employer be sure that the employee’s performance isn’t good enough? Have they followed a fair process? Has the employer:
• followed a disciplinary or capability process and issued formal warnings?
• set the employee realistic targets and given them the chance to improve?
• given the employee the right of appeal against the disciplinary decisions?

What if the issues are not tackled properly?

One employee who is unfairly dismissed may have a claim in the tribunal for a maximum of:

Basic award £14,250
Compensatory award £78,962 (or one year’s gross pay, whichever is lower)
Breach of contract  (if notice of dismissal is not given) £25,000
Total: £118,212

If it’s not tackled at all, it’s hard to put a true cost on poor performance, lack of morale, motivation and respect for management, but it obviously has a detrimental effect to the business.

Effective performance management is therefore vital; not only to avoid a costly unfair dismissal claim, but to ensure there is no knock on effect of the poor performance to the employer’s business.

Learn more about how to deal with performance management effectively, our Swindon HR Training workshop 'Managing Performance' on 23 May will be an opportunity to discuss this, and other related issues.

This is the third in a series of 5 workshops which provide training on the lifecycle of the employment relationship.

See our Employment & HR courses here.