Performance management – a cautionary tale

01 December 2019

This article was featured in the December 2019 - January 2020 issue of the magazine. 

Jade Linton, senior associate at Thursfields Solicitors, explores the risk employers face when focusing solely on the performance issue without addressing the underlying reason(s) behind it

Instances of poor performance are unhelpful for business and employers are permitted to address poor performance provided they do so fairly. However, sanctioning the ‘what’ before addressing the ‘why’ is not good for business.

 

A recent case

In May 2019, a National Health Service (NHS) administrator was awarded £15,039 after her employer was found to have unfairly dismissed her for the repeated administrative errors she made after she developed cataracts (Denise Regan v Kent Community Health NHS Foundation Trust 2017). 

The employment tribunal found that the Trust had unfairly dismissed the employee after it had set “unrealistic targets” for performance improvements despite the employee’s health condition. The

tribunal said that once the employee’s visual impairment became known, it was unreasonable for the Trust to “persist in requiring improvement – at least not without medical confirmation she could achieve the improvement required”.

This ruling serves as a warning for employers that sanction employees for poor performance without exploring underlying reason(s) for it. 

 

The focus

The focus in any performance procedure – also known as ‘capability procedure’ – should be on improvement and not punishment. If, after following a capability procedure – which should include setting fair, realistic targets, supervision training and support – an employee’s performance has not improved, only under these circumstances might a sanction (a warning) be justified with dismissal being the ultimate outcome if a sustained improvement is not seen.

 

...only under these circumstances might a sanction (a warning) be justified with dismissal being the ultimate outcome...

 

Why?

There will almost always be a ‘why’ in every instance of poor performance – ‘why’ being the reason – if not the main reason – for the unsatisfactory performance. The extent to which an employer will be required to establish and deal with the reason behind the poor performance will vary from situation to situation. 

Where the ‘why’ is resolvable or is linked to a protected characteristic (e.g. disability making it difficult for an employee to complete certain tasks) an employer would be expected to consider this reason when deciding on an appropriate sanction and/or when setting targets aimed at improvement (such as adjusting targets). An employer may be expected to signpost employees to particular services that may assist them in overcoming the reason for their poor performance (e.g. counselling services for personal matters impacting performance).

 

Addressing the ‘what’ 

An employer that disciplines an employee for poor performance without considering underlying reasons effecting performance may risk a finding of unfair dismissal if that employee is eventually dismissed.

It is for the employer to establish the reason or principal reason for dismissal in any unfair dismissal claim. Lack of clear evidence showing the employer considered whether other factors could have led to the poor performance is likely to prevent the employer demonstrating capability as a reason for dismissal.

The law requires an employer to follow a fair procedure in managing poor performance. A ‘fair procedure’ will undoubtedly include consideration of external factors affecting performance and the provision of reasonable assistance in resolving such issues if it is in the employer’s power to do so.

 

...consider ways in which parties can work together to improve performance to an acceptable level

 

Example 

Rosemary has worked for Thyme Payroll Ltd for thirteen years as an administrator. For the past six months her performance has become more and more erratic, her letters are illegible and her interactions with colleagues and clients has become hostile. 

Focus on the ‘what’ – Thyme disciplines Rosemary for poor performance; she has worked for the company for long enough to know better. 

Rosemary is invited to a capability meeting where she is given a final written warning with the threat of dismissal if her performance does not improve.

Focus on the ‘why’ – On the basis Rosemary’s performance is out of character, an informal meeting is arranged between Rosemary and her manager, Basil. At this meeting Basil provides Rosemary with examples of errors in her work and asks for her to comment.

Basil asks if there are underlying issues Rosemary wishes to make him aware of. It transpires Rosemary is taking medication for a heart condition; the medication affects her moods and results in blurred vision hence the administrative errors.

Rosemary gives her consent for Basil to make a referral to Occupational Health. In his letter Basil provides the doctor with a copy of Rosemary’s job description, examples of the administrative errors in her work, a copy of the company’s capability policy and his suggested targets for improvement. Basil asks for the doctor’s expert medical opinion on Rosemary’s condition and the impact it has on her performance, including whether in his/her medical opinion Rosemary is capable of carrying out her substantive duties, suggestions for adjustments (if required) and comment on his suggested targets for improvement.

You will see from this example the contrast between a process focused only on poor performance and one which addresses poor performance by seeking to establish the underlying reason for it before deciding on an appropriate response. The former approach may be problematic for Thyme Payroll Ltd if Rosemary is dismissed, whereas the latter approach ensures the underlying reason is managed as part of a procedure aimed at giving the employee a reasonable opportunity to improve, with manageable targets before a sanction is given.

 

Conclusion 

A well-drafted capability procedure is useful to address the concerns regarding an employee’s performance and to consider ways in which parties can work together to improve performance to an acceptable level. A failure by an employer to consider underlying reasons for poor performance could result in sanctions being given unjustly and in the event of a dismissal a finding of unfair and/or a discriminatory dismissal in some cases.

A reasonable employer should always seek to establish the ‘why’ before sanctioning the ‘what’ in cases of poor performance.