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How to dismiss an employee without ending up in a tribunal

How can you go about ditching a rubbish member of staff without ending up in a tribunal? EN investigates

Sometimes it’s not redundancy and it’s not regrettable – staff deserve the boot because either they are grossly underperforming or behaving badly. What can you legitimately sack someone for and how should you go about it? Given the current economic climate it is more important than ever to make sure your staff are working to the best of their abilities. However, we all know that expecting all of your employees to pull out all the stops is like waiting for Santa Claus to shimmy down your chimney. Quite simply, it isn’t going to happen.

An underperforming worker can affect your bottom line: why should you pay someone who is not doing their job properly? Their salary could be ploughed back into the business, or you could use it as a deposit on a new Range Rover.

Of course, it’s not just a case of wasting money.

Underperforming employees also affect workplace morale and can make other employees’ jobs a lot more difficult. So sometimes the best thing for a business to do is to dismiss the worker in question.

Tim Thomas, associate at Hill Dickinson, says that it is never an easy thing to move somebody on, unless you are a hardnosed employer.

“But you have to keep in mind the needs of the business and the fact that as a business you employ a number of other people whose livelihoods depend on a successful business,” he says.

Veronica Howley, a lawyer from Lees solicitors, says that you can sack anyone for anything and you don’t have to follow any procedures if you don’t want to.

But she warns that you will have to “get your chequebook out”, as you could end up in front of a tribunal.

Thomas says that a lot of employers are under the impression that they can’t fire underperforming staff but he says this is simply not the case.

It just takes time because you have to carry out a performance review process.

Technically you can fire an employee that has been with you for less than a year without going through such a process because they cannot make a claim for unfair dismissal without 12 months’ service under their belt. However, you still run the risk of ending up in a tribunal because a disgruntled employee could make a spurious claim for discrimination in order to try to force a settlement. Or it may not be spurious.

Nigel Crebbin, a partner in the employment department at law firm Berg, warns that if the performance issues arise because of a medical condition that can be classed as disability then dismissing someone on the grounds of poor performance could mean they bring a disability discrimination claim against you – with no minimum length of service.

“It is worth looking into the reasons for poor performance to see whether it is linked to an individual’s health. If it is then you have to tread carefully,” he adds.

The best course of action is to have a suitable performance review system in place from day
one of employment.

This means that you will have a paper trail to support any claims of underperformance. Katherine Falder, a solicitor at Shipley, says that employers should make it clear what is expected from their employees.

She recommends implementing capability procedures: so have regular meetings, set objectives, measure performance and take action if necessary.

It also means that employers have proof that they have treated all of their workers fairly.

If you want to sack someone for underperformance who has worked for you for longer than 12 months then you will need to make sure that you have gone through the correct processes.

First of all, you will need to have prove that someone is not capable of doing their job, whether because they are being lazy, not following orders or just aren’t up to it.

An employee’s capability to do the job is one of the five fair reasons (the other four are conduct, redundancy, breach of statutory duty and a “substantial reason”) for which you can dismiss them but Julie Watson, partner in the employment team at law firm Cobbetts, says that even when the employee is in the wrong and is not performing, the employer will have to show that they have carried out the dismissal in a fair manner.

An informal chat is the best place to start in order to let the worker know that you are not happy with their performance.

Adrian Wakeling, senior guidance manager at conciliation service ACAS, says this is because many employees are simply not aware of the fact that they may be doing something wrong, or that they may not be doing enough.

He says that for many employers it is not in their interest to “get rid of people” because of the cost and time spent hiring and firing.

However, if you have tried the informal approach and the worker has not improved, then you will have to tackle underperformance as a disciplinary issue.

Wakeling says that the next thing to do would be to start a formal disciplinary procedure: issue an improvement notice, if that does not work then give a warning, and so on (see Disciplinary issues below).

Employers should always give the worker a chance to improve and you also have to give them a right to appeal the decision.

“An employment tribunal will look at whether an employer and employee have followed the ACAS Code,” he adds.

If one party has not adhered to it, then the tribunal could reduce or increase damages claims by 25 per cent to the party that wins the case.

It isn’t quick. A performance review process can take anything between two and nine months. Louise Tobin, partner in the employment division at SAS Daniels, says it is a “piece of string job”. There is no
stipulated timeframe because it depends on the nature of the individual’s job.

If you don’t want to go down the performance management route because you know that deep down you no longer want that member of staff on your payroll, then you could always offer a compromise agreement.

A compromise agreement does exactly what it says on the tin. It’s an agreement between the employer and the employee (they are usually offered to staff members with senior positions) in which the worker waives any claims they may have against the employer in return for a pay-off. This, Falder says includes the right to sue for unfair dismissal, wrongful dismissal or discrimination.

“The employer knows that once payment is made no further action can be taken against them in relation to any claims that the employee has waived,” she adds.

However, Mark Higgins, partner and head of employment law at Ralli Solicitors, says compromise agreements have pros and cons.

“The advantage is that if both parties agree it gets the job done quickly. It gets the employee out of the business and there should be no comeback in terms of claims because, of course, they have compromised their right to claim.

“The disadvantage is the fact you have to pay out a substantial amount of money for the privilege of getting rid.”

Tobin says that employers should look at how long it would take them to terminate the individual’s employment fairly, which basically means the amount of time it will take to complete a performance review process. If they anticipate that it will take six months and they have a notice period of three months, they will have to pay the employee for nine months.

So they will have to stump up nine months’ worth of pay and invest significant management time. And there is also the chance that you could lose business because the staff member might not be doing their job properly.

Compromise agreements can reduce costs because although you will pay a lump sum, you will not be paying them right up until a performance review process is completed. And you will also be able to sleep easy in the knowledge you won’t end up fighting an unfair dismissal or discrimination claim.

Raising the possibility of a compromise agreement can, in itself, be quite risky though. You have to introduce such an agreement cleverly and carefully so you don’t shoot yourself in the foot, says Crebbin.

He tells EN that you should arrange a meeting to discuss the deal and inform the worker that you are speaking to them on a “without prejudice basis” as this means that whatever is discussed cannot be repeated to a court or tribunal.

You should not tell the employee that if they go through the performance review process it will result in them being fired. Instead, according to Crebbin, you should tell the worker that you have “concerns in relationship to their performance”.

He explains that you would then say that the issues can be addressed by means of a formal process,
which may or may not ultimately result in their dismissal and that “hopefully it won’t, but it could do”.

He says that you can then bring up the compromise deal by telling the employee that you understand that they may not want to go along that route and would prefer to deal with it now.

Although compromise agreements are not guaranteed to be 100 per cent watertight, it is rare for a properly drafted agreement to be challenged.

So what do you do if you have followed all of the necessary procedures and you have had to fire an employee but a few weeks later you get a request for a reference?

It is entirely up to you as to whether you want to provide a reference.

You do not have to supply one if you do not want to and this may be the best solution if you have fired someone who left on bad terms.

You often hear people say that employers are not allowed to give a bad reference but this is simply not true, says Browning.

He explains that you cannot give a misleading reference: if you pretend the worker was fantastic when in fact they barely lifted a finger, the new employer could potentially launch a claim against you.

The best thing to do is to give a very basic reference which doesn’t compromise you. Just confirm dates and job roles, something which larger businesses tend to do nowadays regardless of whether the employee was good or bad.

However, Howley says that although references with basic factual information are more common, you will have to be cautious and operate such a policy across the board. You don’t want it to be seen as a “little nod and wink” toward the new employer, she states.

If a compromise agreement was signed, then you may have already told the employee that you will provide a reference, but you will have to make sure that you don’t provide any false information. Less is more.

Fault Lines
The distinction between conduct and capability is often blurred. Capability is performance-related but with conduct you have to establish intent.

Higgins compares it to murder and manslaughter. He says that if you kill someone it doesn’t automatically mean you have murdered them. You have to have intended to kill or cause grievous bodily harm for it to be classed as murder.

If you kill someone through reckless behaviour then it is manslaughter, as you didn’t intend to kill them.

“In conduct cases there has to be an element of deliberate fault. So someone who says that they have done something but haven’t and has tried to cover it up could be accused of bad behaviour or poor conduct,” he notes.

In terms of capability, there may be no intention to perform badly - they simply might not be up to the job.

Bullying, harassment, consuming alcohol or drugs in the workplace are all common examples of bad behaviour.

Russell Brown, partner in employment law at Glaisyers, says that refusing to follow lawful or reasonable instructions can also be classed as poor conduct.

A high-profile case of potential poor conduct is Carlos Tevez’s alleged refusal to come on as substitute during Manchester City’s Champions League match against Bayern Munich in September.

Brown says that if we are to accept what the press has reported, then Tevez reportedly flatly refused to do something that he was asked to do by his boss.

This, Brown says, is on the face of it insubordination: a conduct issue. Undermining authority is something that is usually taken very seriously, because if one staff member gets away with it then the whole management structure could fall apart.

Disciplinary issues

• Employers and employees should raise any issues that they have as soon as possible.
• Any necessary investigations should be conducted and employers should then discuss their findings with the worker and give them an opportunity to put their case forward.
• Employees are allowed to be accompanied at any formal disciplinary or grievance meeting and staff should always be given the right to appeal any decision made.
• If disciplinary or other action is justified, the employer must inform the employee accordingly in writing. In cases of misconduct or poor performance, a written warning or an improvement notice is usually given.
• If another act of misconduct is carried out, or the worker’s performance does not improve within a set period, a final written warning is usually issued.
• A first or final written warning should always set out the nature of the misconduct or poor performance and the change in behaviour or improvement in performance required with a timescale.
• The employee should be informed of the consequences of further misconduct, or failure to improve performance, within a set period following a final warning, which could ultimately result in their dismissal or demotion.

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