Fair reasons for dismissal – Making the grade?

One of the potentially fair reasons for dismissal under s98 Employment Rights Act 1996 is capability which is more commonly referred to, and dealt with under the guise of, performance.  Capability can refer to capability in the sense of ability to do the job i.e. poor performance, or capability in the sense of being fit and well enough to do the job i.e. health related capability. 

If an employee is unable or ‘incapable’ of fulfilling their contractual role, then it is possible to terminate their employment on the grounds of capability and acts as one of the fair reasons for dismissal. This sounds straightforward but remember that any employee with over two years’ service has the right to claim unfair dismissal and if there are health reasons impacting an employee’s performance then you must consider whether they may be a disabled person for the purposes of the Equality Act 2010.  If they are disabled, then employers must also consider whether any reasonable adjustments may be required to enable the employee to carry out their role adequately. 

Putting ill-health to one side, any performance issue and/or management needs to be executed carefully.  More often than not employers go from 0-100 in highlighting performance issues and implementing an unobtainable performance management process. 

Your starting point is always an informal performance process.  Engage with your employee if you think there are performance issues.  Question whether there is an underlying reason for the decline, do they need additional support, resources and/or is this just a ‘blip.’  Often informal management can bring about positive improvement and allows for the maintenance of the employment relationship.  If things do not improve following attempts at informal management, then you can move to a formalised performance management process.  This should be staged, clear and have clearly delineated objectives which are transparent and attainable.  This, coupled with regular feedback and updates, shows the employer genuinely wants the employee to improve. 

A performance management process can be time intensive but committing to fairness and transparency at this stage is more likely to avoid a meritorious claim for unfair dismissal later down the line.  If dismissing an employee on the grounds of capability they are entitled to their contractual notice on termination. 

This blog was written by Elizabeth McGlone, Legal Director at didlaw.