In the context of unfair dismissal legislation, “capability” is assessed by reference to an employee’s “skill, aptitude, health or any other physical or mental quality”. This definition covers performance on the one hand and ill health (both long term and intermittent) on the other. Whilst there may be (a very important) crossover, here we are concerned with pure performance dismissals only.
Many employers have capability procedures in their employee handbook. Provided such procedures are non-contractual and not unnecessarily onerous, they can be useful and provide direction. However, many are unsuitable and cause more problems than they solve. in such cases, the introduction of new procedures should be considered.
If performance figures and/or data on key performance indicators are available, a capability procedure can more easily be followed. A capability dismissal is more difficult when there is no continuous process of performance appraisals and no objective data to hand.
In the first instance, performance issues should be dealt with informally between the employee and their manager. This is part of day-to-day management and will hopefully help guide an employee, ensure they are aware of what is expected of them, and prevent problems arising. If there are problems that need to be addressed, targets should be set and a timescale for review agreed. In some cases an informal verbal warning may be given.
If an informal approach is insufficient or inappropriate, a formal procedure is required. This will involve a capability hearing where the employee has the right to be accompanied. The purpose of a capability hearing includes:
1. setting out why/how the employer considers the required standards have not been met;
2. providing an opportunity for the employee to explain the poor performance and ask any relevant questions;
3. discussing measures, such as additional training or supervision, which may improve performance; and
4. setting targets and a time scale for improvement and review.
Following the hearing, a first written warning may be given, setting out the areas discussed and the consequences of failing to improve within the review period, or of further unsatisfactory performance.
If performance remains unsatisfactory, the matter may be progressed to Stage 2. At a second capability hearing, the process and discussion points are similar to Stage 1, but the emphasis is on why the targets have not been met. A timescale for review will be set and if appropriate a final written warning will be given. This would set out the matters discussed (1-4 above) and the consequences of failing to improve within the time-scale, or of further unsatisfactory performance. A final written warning will normally remain active for 6 -12 months.
A failure to improve within the final review period or further poor performance within the life of the final warning will lead to a further hearing. This will again look at the failings and any reasons for them, whilst it should be established whether there is any reasonable likelihood of the required standard of performance being met within a reasonable time, and (if relevant) whether there is any practical alternative to dismissal, such as redeployment. If no options exist, dismissal will be appropriate. Dismissal will normally be with full notice or payment in lieu of notice. Appeals should be offered following all stages of the formal capability procedure. Whilst it remains in force, compliance with the statutory dismissal and disciplinary procedure is critical.
The level of performance expected of an employee will depend on salary, status and seniority. A capability dismissal, to be fair, will generally require a more blatant failure to meet standards for those employees lower down the employment ladder than those at the top. However, provided employers are able to show they have genuinely attempted to avoid dismissal, tribunals are often sympathetic.
