Bettina Bender, Partner, CM Murray LLP CM Murray LLP: Specialists in Employment, Partnership and...

Bettina Bender, Partner, CM Murray LLP

CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Dealing with Poor Performance –Legal and Practical Tools for HR Professionals

and In-house Counsel

Poor Performance : How To Prevent Problems

• Recruitment Process – Take up references; Check qualifications; Proper interview selection

• Contract of Employment – Detailed Job Description; Clear Reporting lines; Clear Targets

• Probationary Period – End of Probationary Period Review; Extension if necessary; Training

• Regular Appraisals – Address performance issues and objectives for the future, formalise any shortcomings; Training

• Regular One to One Meetings with Line Manager

• Document performance concerns

• Offer training, mentoring

• All good work is in vain if there is no PAPERTRAIL

NB: Always bear in mind the risk of a subject access request or general disclosure obligations during litigation: Do not write down anything you are not happy to be asked about when giving evidence at Tribunal; use neutral language.


How do you deal with Performance Issues – The Formal

and Informal ApproachGeneral Principles• Performance issues should be addressed promptly; poor performance does not tend to just get

better by itself or go away

• Common problem: managers do not raise their concerns, employee training is not given until it is too late and the perception then is the employee has to go

Informal approach– you have a conversation with the employee in which you suggest there are performance

issues which the employee needs to address; informal monitoring and follow up

Formal approach– you raise issues at the end of probation meeting, in one to one meetings, at the appraisal

and document these steps and offer training, if this fails you commence a performance management or disciplinary process.

Performance management: • takes time, management commitment and effort. • The aim is either:-

- to have an effective employee performing at the appropriate standard; or - to part company, ideally without being exposed to a claim


• In cases of misconduct or poor performance, the employer should comply with the ACAS Code of Conduct, as a matter of best practice and the law on unfair dismissal.

• The Code was introduced after the complicated statutory dismissal and disciplinary procedures (which were widely viewed as unworkable) were repealed in April 2009.

• The Code sets out the basic requirements of fairness and is intended to provide practical guidance to employees and employers carrying out disciplinary procedures for misconduct or poor performance.

• This Code is supplemented by non-statutory guidance. Employment tribunals are not required to take this guidance into account but it does give further assistance on best practice that employers should find helpful.

• NB: No real clarifying case law as yet


The ACAS Code of Conduct

The ACAS Code

• In essence, the Code retains the principles of the statutory procedures but without their rigidity and formality.

• The concepts of fairness and reasonableness are emphasised, as is the need to take steps promptly and without unreasonable delay.

• Both employees and employers are encouraged to behave in a manner consistent with the Code

• The parties are encouraged to seek an informal resolution, if possible, before starting a formal process.


In order to terminate lawfully

• the employer needs a fair reason (there are six categories including conduct and capability); and

• the employer must also follow a fair procedure before deciding whether to issue a disciplinary sanction e.g. a warning or whether to dismiss.

• The law of unfair dismissal is primarily concerned with

whether the individual employer acted reasonably in all of the circumstances in dismissing or disciplining the employee.

Unfair Dismissal

CM Murray LLP: Specialists in Employment and Partnership LawCM Murray LLP: Specialists in Employment and Partnership Law

• Capability refers to skill, aptitude, health, or any other physical or mental quality (this could cover dismissals relating to sickness and injury, in which case particular care is necessary);

• Conduct refers to the employee’s behaviour (or misconduct). In order to warrant dismissal, misconduct must be extremely serious, or if not extremely serious repeated on more than one occasion.

• Most cases of poor employee performance will be covered by capability

CM Murray LLP: Specialists in Employment and Partnership Law

Unfair Dismissal: Conduct or Capability?

Unfair Dismissal: Capability

• In capability cases, it is essential for the employer to show what was required of the employee, that the employee was informed of, or must have been aware of, those requirements, and the he or she fell short of them.

• Apart from the ACAS Code an employer should comply with any relevant company procedure (whether it is said to be contractual or not).

• You have to follow a fair process and go through a series of warnings, allowing time for improvement and offer training before you can move to termination.


Investigation

An important principle established in the case law of unfair dismissal is that an employer should carry out a reasonable investigation, and this is reflected in the ACAS Code.

• The extent of the investigation will depend on the circumstances. • The investigation may involve investigatory meetings with the

employee under investigation or it may simply involve the collation of other evidence.

• In any event, an investigation should take place prior to any disciplinary action.

• An investigatory meeting should not result in disciplinary action without a disciplinary hearing.

• If paid suspension is necessary during the investigation, this should be as brief as possible and kept under review.

• The employer should make clear that this is not in itself a form of disciplinary action.


• Detailed investigations are more likely to be required in circumstances of misconduct or suspected wrongdoing rather than capability issues, which may simply require a review of the employee’s appraisals and discussions with the line manager and the employee.

• In the event of a claim a tribunal will consider whether the employer’s actions in terms of what constitutes a reasonable investigation are within the “band of reasonable responses”.


Investigation (cont’d)

Invitation to Performance Meeting

• Following the results of the investigation, if a decision is made to start the performance management process, the Company needs to write to the employee, inviting them to a meeting to discuss the allegations/capability issues.

• Employees have the right to make a reasonable request to be accompanied by a colleague or trade union official at the disciplinary meeting. What is reasonable will depend on the circumstances of the case.

• The letter should set out the reason for the meeting being called and provide copies of any relevant evidence on which the employer intends to rely (including witness evidence).

• It should also set out the possible consequences (including where appropriate the risk of dismissal or warnings).

• The notification should set out the time and place of the disciplinary hearing

• The meeting should be held without unreasonable delay whilst ensuring that the employee had reasonable time to prepare for their case.

• It is a basic principle of fairness that a decision whether to dismiss or take other disciplinary action should not be taken without a disciplinary hearing or meeting.


At the meeting, the employer should:

• Explain the allegations and go through the evidence (many are of the view that this is not strictly necessary from an unfair dismissal perspective, but best practice suggests that this should be done);

• Allow the employee to set out their case and answer the allegations;

• Allow the employee a reasonable opportunity to ask questions, present evidence, call relevant witnesses and raise points about any information provided by the witnesses.


Performance meeting

• Following the hearing, the employer’s decision should be communicated to the employee without unreasonable delay.

• If misconduct or poor performance the employer needs to determine the appropriate sanction and any necessary training requirements and monitoring, including necessary follow up action.

• Written warnings should set out the nature of the misconduct or poor performance, the improvement required, and the timescale for improvement. They should also specify how long they will remain current and the consequences of further misconduct (or failure to improve) within that period.

• Dismissal would usually only be appropriate if there has been a prior written warning and a final written warning.

• Gross misconduct can justify dismissal for a first offence, but not without following a disciplinary procedure and only in extreme cases (e.g. where safety is an issue).


Possible Sanctions/Warnings

Right of Appeal

• After the meeting, the employer should write to the employee setting out their decision and providing the employee with a right of appeal.

• Any appeal from the employee should specify the grounds on which they are appealing. If they bring a tribunal claim without appealing, any compensation awarded may be reduced.

• The appeal should be heard without delay, ideally at an agreed time and place and should be conducted impartially by a manager who (where possible) has not previously been involved and who is more senior than the person who made the original decision.

• The employer should hold the appeal meeting within a reasonable time.


• The ACAS Code does not set out guidance on the length of warnings, it just require employers to state the period for which a warning will remain active.

• The non-statutory Acas guide gives guidance on the appropriate period. It states that warnings would normally be live only for a set period but does not rule out the possibility or an unlimited warning in appropriate cases, particularly where an employee had a history of allowing their conduct to lapse just after the expiry of warnings.

• Employers may breach the implied terms of mutual trust and confidence if warnings, especially final warnings, are used oppressively for relatively minor misconduct.


General Considerations

Potential Risks• Unfair or wrongful dismissal and potentially discrimination.

• Tribunals will take the Code into account and increase an award by up to 25% if an employer has unreasonably failed to comply with the Code (subject to the statutory cap in unfair dismissal claims) (and a decrease of up to 25% if the employee is at fault).

• It is for the Tribunal to decide what increase or decrease would be just and equitable.

• What is not clear is what will trigger a Tribunal awarding an uplift to a compensation award, e.g. will a technical breach suffice or does an employer need to flout the Code completely.

• This means that there remains considerable uncertainty for employers and employees until case law has developed, and may make it difficult to advise on appropriate figures for the settlement of claims.

• Consider Polkey reduction


Some Other Options• Follow the proper performance procedure – this will take months, risk is you may still not be

able to terminate

• Follow a limited procedure to have some paper trail in place to minimise your exposure to a claim

• Move straight to termination – high risk

• Offer a without prejudice compromise agreement with a financial settlement, consider stating that if agreement is not reached the performance process will commence

• Consider other alternatives: Redeployment, Redundancy, additional monitoring?

• Following the ACAS Code may not be appropriate in every misconduct or poor performance circumstance, e.g. key decision makers. However, it is best practice to follow some sort of procedure, as certain types of statutory claims do not have any length of service minimum requirement (e.g. discrimination claims) and the employer will be in a better position to defend such claims if they have followed an established process and have a papertrail on which to rely.

NB: The without prejudice label may not necessarily apply


Typical Practical Problems

The performance process is commenced; what are your options if:-• Employee raises a grievance

– General recommendation is to complete grievance first and then revert to disciplinary, but always depends

• Employee goes off on sick leave for stress– Request medical reports, consider home visits, if sickness continues

consider any permanent health insurance issues, proceed with disciplinary process if appropriate

• Employee asserts discrimination, harassment, victimisation or whistleblowing issues– Suspend disciplinary process, investigate allegations, consider whether

matter should be treated as a grievance, if no merit in allegations proceed with disciplinary process


Case Study 1

• Moaning Myrtle, who is 50 years’ old, has been a loyal and effective employee for some 10 years. A year ago, under direction of the parent company, new accounting and IT systems were introduced.

• Moaning Myrtle does not seem to be able to grasp the new IT systems. She has been sent on repeated training courses but is effectively unable to perform her role using these systems which are now mandatory. What do you do?


Some Considerations

A. Wait for her to retire (with the abolition of the default retirement age, could take a while, she's only 50)

B. Hope she leaves anyway

C. Ask the training company why they think she is not understanding the process; is there an underlying reason, medical or otherwise, if so, follow up

D. Put in place a performance management process with further training

E. Dismiss her under the terms of a compromise agreement

F. Start the performance management process and then try and do a deal

Risks: • MM goes on sick leave, she raises a grievance, disability discrimination, age

discrimination, constructive dismissal


Case Study 2

• Smooth Simon was recently recruited as FD and came with glowing references. In fact his performance is pretty disappointing and he shows no interest in any level of detail which for his role is crucial. He has recently queried how the CEO's mobile phone expenses are allocated to client files.

• His probationary period (and the shorter notice period) expired 3 months ago without any comment or follow up by the Company . The budget figures for the next financial quarter have been found to be hopelessly inaccurate; the CEO has hit the roof; what do you do?


Some Considerations

A. Follow up the references and academic qualifications to see if they all stand up (hoping they won't and you can terminate for gross misconduct)

B. Start a performance management process (shame that probationary period came and went)

C. Take Simon to one side and tell him it's not working out he's not very good and needs to leave under the terms of a compromise agreement

D. Commence a performance management process and look at discussing a severance deal with Simon

Risks: Whistleblowing claim, constructive dismissal (one year’s

service?)


Speaker Details

Bettina Bender, PartnerCM Murray LLP

37th FloorOne Canada Square

Canary WharfLondon E14 5AAUnited Kingdom

If you have any questions, please do not hesitate to contact:

Phone: 00 44 (0)207 718 0090 Email: [email protected]

Website: www.cm-murray.com


Bettina Bender, Partner, CM Murray LLP CM Murray LLP: Specialists in Employment, Partnership and...

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