Employment Law Poor Performance Dismissal

Employment law poor performance dismissal guide for employers

Employment law poor performance dismissal is one of those topics that many employers, managers and business owners find difficult.  Yet getting this right is critical to protect your business from legal claims and to treat your team fairly and transparently.

As a solicitor specialising in employment law, I often speak to clients who feel stuck when an employee’s performance isn’t where it needs to be. They wonder whether they can simply dismiss the person or what steps they must follow first. The short answer is that there’s a process you should follow, and getting this process right is just as important as identifying the performance issue in the first place.

What constitutes poor performance in UK workplaces?

When we talk about poor performance in employment law, what we really mean is that an employee is not meeting the standards reasonably expected of their role. This may be because they lack the necessary skills, have not responded to training, or are unable to deliver what the job requires. In legal terms, this is often referred to as “capability”. If an employee genuinely cannot perform their job after appropriate support, dismissal may be lawful. However, failing to follow a fair procedure is likely to leave an employer open to claims such as unfair dismissal.

It’s important to distinguish poor performance from misconduct. Misconduct usually involves behaviour issues such as breaches of policy or rules. Capability concerns are about ability or capacity to do the job. The correct categorisation matters because the legal process you follow will differ.

Employment Law Poor Performance Dismissal Fair Process

You will see in many tribunal decisions that even if an employer believes there is a valid issue with performance, the Employment Tribunal will look just as closely at the process you followed. If you decide to dismiss someone for poor performance without giving them a fair opportunity to improve, the dismissal is likely to be judged unfair under employment law.

At its core, a fair process means:

• Identifying the performance issue clearly and objectively with evidence.
• Setting out measurable standards and expectations.
• Giving the employee a reasonable opportunity to improve.
• Providing necessary support such as training or coaching.
• Holding formal review meetings and keeping clear records.

The ACAS Code of Practice on disciplinary and grievance matters is regularly referenced in tribunal decisions. It suggests that, in most cases, at least two warnings should be given before dismissal unless the circumstances are exceptionally serious. Please note this guidance will inform tribunals’ view of reasonableness but does not replace your own capability procedure if you have one.

For practical steps on the dismissal process generally, see our article on how to dismiss an employee.

Step by step: managing poor performance before dismissal

In my experience, employers who take a structured and documented approach to poor performance issues are much more likely to reach a lawful outcome. Start early and be clear about expectations. This doesn’t mean waiting until the performance issue becomes acute. Address concerns promptly and fairly, and make sure you can show what you have done.

1. Clarify expectations

Most performance issues start with ambiguity. Often, an employee simply does not understand what is required or how their performance is being measured. Review the employee’s job description, objectives and any relevant performance metrics. Have an honest discussion about where their performance falls short.

This discussion should not come as a surprise to the employee. If possible, it’s usually better to raise issues informally in the first instance so that the person understands the concern and has an opportunity to respond or explain any factors you may not be aware of. Only after genuine efforts at clarification should formal steps begin.

2. Offer support and set improvement targets

Once the issue is identified, support is critical. This might include additional training, mentoring, or adjustments to workloads. Set out clear, measurable performance targets and realistic deadlines. Ensure the employee understands these targets and agrees they are achievable.

Make a note of the support offered and the outcomes expected. It’s not enough to say training was offered; you need to be able to demonstrate that the training was relevant and effectively delivered.

3. Monitor progress and review regularly

During the agreed improvement period, maintain regular contact. Provide constructive feedback. If things are improving, acknowledge progress. If not, explore reasons why and adjust support where it makes sense to do so. In some cases, poor performance may be linked to health issues or personal circumstances, so take care to explore these sensitively and consider adjustments where reasonable.

If there is no clear improvement after the agreed timeframe, a formal meeting should be held where you outline the continued concerns. This meeting should be conducted in line with your internal policy and the requirements set by employment law, and the employee should be given the opportunity to bring a colleague or trade union representative with them if the issue may lead to sanctions.

4. Final warnings and dismissal

If, after following these steps, performance still falls short, you may issue a final written warning that clearly states dismissal could follow. The final warning should mirror the earlier stages in terms of clarity, evidence and opportunity for improvement. If there is still no satisfactory progress, you can then consider dismissal. Always allow the employee the right to appeal the decision internally.

If you ultimately decide to dismiss an employee on the grounds of poor performance, you must ensure you have explained the reasons in writing, given the correct notice or payment in lieu of notice, and complied with any contractual or statutory obligations.

Common legal pitfalls and tribunal risk

The most frequent claims arising from employment law poor performance dismissal situations are unfair dismissal, discrimination and breach of contract. Under UK law, an employee with more than two years’ continuous service is generally eligible to bring a claim for unfair dismissal. You will be in a much stronger position if you can show you genuinely believed performance was lacking, you followed a fair capability process and you considered alternatives to dismissal.

Don’t underestimate the tribunal’s view of your process. Failing to follow the ACAS Code does not automatically make a dismissal unfair, but tribunals can increase any compensation award if your process deviates unreasonably from the guidance.

Another common pitfall is inconsistency. If two employees with the same performance issue are treated differently without a good reason, this may give rise to claims of discrimination or unfair treatment. Keeping detailed records and treating similar cases consistently helps mitigate that risk.

Practical examples from tribunal cases

Over the years, tribunal decisions have shown that employers who proactively document appraisal discussions, performance targets and training interventions generally fare better when defending claims. For example, where an employer provided clear records of performance reviews, the tribunal was more likely to conclude the dismissal was reasonably justified. In contrast, employers who could not show evidence of meaningful support or who relied on subjective opinions alone tended to lose claims. These cases remind us that employment law poor performance dismissal is not just about good intentions; it’s about what you can demonstrate.

It’s also worth remembering that capability is only one of several potentially fair reasons for dismissal. Others include misconduct, redundancy or some other substantial reason. Knowing which category applies and following the correct steps for that category is key.

For related guidance on managing performance in the workplace see our article on managing poor performance at work. Below are other useful resources from EBS Law:

• How to Dismiss an Employee for Poor Performance
• What Are the Legal Grounds for Dismissing an Employee
• Disciplinary Matters at Work

In addition, if you are looking for broader employment law advice for employers or practical free employment law advice for employers, our team is here to help.