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30 June 2017

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Avoiding an employment tribunal

Solicitor Jayne Harrison discusses how to avoid an employment tribunal when dismissing an employee for performance reasons

Compensation awards for unfair dismissal can easily cost a practice dear. Here’s how to deal with difficult issues now and minimise the chance of a claim.

The most recent employment tribunal statistics for 2015/16 showed that the median award for unfair dismissal was £7,332. The average award was £13,851 with the highest award being £470,865, although this last figure was not for an ordinary unfair dismissal.

The compensatory award is currently capped at 52 weeks’ gross pay or £80,541, whichever is less. It is calculated in the same way as a statutory redundancy payment (years of service multiplied by age and maximum weekly pay of £489). This means the maximum basic award available to an employee with 20 years’ service over 42 years old with a weekly wage of £479 is £14,670. 

So how can you avoid claims of unfair dismissal for performance-related matters?

Look at your policies

The best way to avoid claims is to ensure you have all policies and procedures up to date. This also means ensuring that all employees are given written particulars of employment – or, even better, a contract.  

Every employer must give every employee written particulars within the first two months of employment, otherwise the practice could be fined £978 to £1,956 in addition to any unfair dismissal awards made to the employee.

Ensure that your disciplinary and grievance procedures are up to date and at the very least comply with the Advisory, Conciliation and Arbitration Service (ACAS) code of practice. Do you have a policy to tackle poor performance? If not, do you need to implement one? Ensure that employees sign a document to say they have received and understood the policies, in case there is an issue with an employee not following procedure later. These documents should be kept on each employee’s personnel file. Revise these if you change policies or implement new ones. 

Look at your recruitment process

Careful recruitment of suitable people who have the skills for the job or the potential to acquire them will minimise the risk of substandard work.

Effective use of probationary period

There is no legal rule that states probationary periods must be used, but they can be a useful tool for dealing with issues early on. 

The normal rule is that in order to qualify to bring an ordinary unfair dismissal claim, an employee must have been continuously employed for not less than two years, ending with the effective date of termination. A lot of people view this as the golden gateway to employment protection. Therefore, employers tend to have probationary periods that are less than two years – typically three or six months – to assess the new recruit (although it is up to you to decide what the period should be). However, if an employee has fewer than two years’ continuous employment, that does not mean an employer is safe to dismiss them without fear of tribunal claims. 

There are 26 automatic unfair dismissal reasons that do not require two years’ service – such as dismissal relating to pregnancy or health and safety reasons. Some of the reasons, such as whistleblowing, carry uncapped compensation.

So in dealing with employees with fewer than two years’ service it is still advisable to use the probationary period review. If you do not, there is a risk that the employee could claim an automatic unfair dismissal reason or dismissal for a discriminatory reason.  

Furthermore, it is normal for employees to have a shorter notice period during their probation. Typically, this can be no notice for the first month and one week thereafter. After the employee has completed their probationary period, the longer notice period normally kicks in.

If an employee does not perform to the required standard during the probationary period, they may be dismissed before the period expires. There is no requirement that they be allowed to complete the full period unless this is a term of the contract.  

It is important that employers ensure the end of the probationary period is noted and that a decision on satisfactory completion (or otherwise) is communicated to the employee before that date passes. If the employer fails to deal with the probationary review in time, or exercise any power it may have to extend the probationary period, the period will lapse and any longer notice period applicable in the contract will then apply. 

Induction period

At the start of the induction period for both newly recruited employees and existing employees moving to a different job, the accountabilities and measures of performance in the job description should be explained fully. This ensures that employees are aware of what is expected from them and how their performance will be measured. 

Appropriate and adequate training is an important factor. Unless an employer can prove that an employee has been properly trained, there can be no firm basis for criticising substandard work. The employee can rightly argue that without the necessary knowledge and skills, it is impossible to do the job to the required standard.


Formal appraisals are a useful means of measuring performance, picking up problems at an early stage, agreeing solutions and identifying training needs. Any method of appraisal should be systematic, analytical, objective, non-discriminatory and relevant to the requirements of the job.

In order to be effective, appraisals should be conducted honestly. If you provide positive or flattering feedback that does not reflect the employee’s true performance, you may find this is later used against you. If you have provided the employee with a good appraisal but then want to take formal action against them for poor performance, you may not have the evidence to do this. Also, the employee may be under the impression that there is no problem because it has not been highlighted in their appraisal. And if you fail to tackle performance issues through your appraisal system, this may also hamper future business decisions in other respects. For example, in redundancy situations, if you want to give someone a low score for performance, that must be corroborated by past appraisals.

Early resolution

Managers are usually comfortable dealing with issues of misconduct, but sometimes shy away from dealing with performance issues. It is very hard to tell an employee that they are not succeeding when it may be clear that they are trying as hard as possible. Performance management can also be time consuming. However, the issue must not be avoided. An employee is more likely to turn their performance around if concerns are highlighted at an early stage than if matters are left to fester.

If offering training and support results in a positive outcome, this is less time consuming and costly than going through a poor performance dismissal procedure and recruiting a replacement. And being able to demonstrate that an employee has been given support and the opportunity to improve will greatly improve the employer’s chances of effecting a fair dismissal if this becomes necessary.

Another reason to tackle poor performance is that it may be seen by other staff as accepted, particularly when those staff are subordinate to the employee whose performance is deteriorating. This will affect the whole of the practice, and can be de-motivating for productive staff if the underperformance of colleagues is ignored. Furthermore, incompetence in hazardous working environments can place the employee and colleagues at risk of injury and breach of health and safety regulations. 

But remember that all contracts of employment have an implied term of trust and confidence. 

So take care not to unduly criticise or humiliate a poorly performing employee in front of colleagues. If you do, there is a risk that the employee could resign and claim constructive unfair dismissal for breach of trust and confidence. However, it is unlikely that an employer who follows a reasonable procedure will break this.

Handling a poor performer

  • Make an objective assessment of the performance against the standards required for the job and take into account factors outside the influence of the employee. 
  • Does the employer know the standards expected of them? If not, the first step may be to discuss this informally. Identify the cause and degree of the substandard work. 
  • Has the employee been made aware of the key accountabilities of the job? Has training been given? A view of past performance should be established by reviewing appraisal notes. If it is apparent that the employee has not been made aware of these points, hold an informal meeting to bring these to their attention.
  • Read your own procedure on dealing with poor performance. This should always include a full investigation.
  • A preliminary interview with the employee should seek to present the facts and establish the employee’s point of view and any mitigating circumstances. 
  • Is performance really the issue? Employers sometimes find there are other issues that need to be addressed instead of, or in addition to, the performance. The following may emerge as relevant:
  1. Ill-health or disability – any future action should involve liaison with medical advisers.
  2. Problems with childcare or caring responsibilities – is there a solution?
  3. Poor management within the team – you will need to investigate this.
  4. Harassment or bullying by a manager – you will need to deal with this.
  5. Excessive workload, leading to inability to deliver and stress for the employee. You have a duty to provide a safe working environment for staff and not to cause psychiatric damage by requiring an employee to undertake too much work with insufficient backup.

Each of these issues may create legal liabilities for the employer if they are not addressed. 

  • If the employee’s explanation of the poor performance is unsatisfactory, either an informal warning or a formal hearing will be appropriate.
  • At formal hearings, employees should be given the right to be accompanied by a colleague or union representative and should be given every opportunity to answer the case against them. It might be that a formal warning is appropriate. You must set out the standards to be achieved and a reasonable deadline. The consequences of failing to meet the standards should be pointed out, together with the right of appeal.
  • Ensure your own procedures are fit for purpose, and follow the ACAS code of practice on disciplinary and grievance procedures. 

And when performance issues arise, deal with them early so that the problem doesn’t get as far as an employment tribunal.