What employers need to know about performance management and grievances

2nd May 2024

The effective management of employee performance is a cornerstone of organisational success.

Thomas Eastment, Legal Adviser at DAS, looks at the best practices that employers must adopt to balance performance management with fair and legally compliant grievance resolution. 

What are the legal guidelines for setting up and conducting performance appraisals in the UK?

Employers are not legally required to conduct appraisals. However, this is a good idea as an appraisal policy can highlight performance concerns through monitoring or serve as a reminder of the attainable targets which must be fulfilled before a pay rise or promotion can be considered. This two-way process allows both employers and employees to share feedback. Instilling a progressive and transparent workplace culture can boost staff morale and result in greater productivity.

How should employers legally address performance issues that may lead to disciplinary actions or dismissals?

Where performance-related concerns have been identified, an employer should first consider whether these can be addressed on an informal basis. This approach would be appropriate in circumstances where minor problems are apparent or to draw a line in the sand where longstanding issues have not previously been addressed. An employer can take formal action against repeat offenders who fail to take on board constructive feedback.

If an employer intends to pursue formal disciplinary action, a thorough investigation must be conducted to establish the root cause. Where an employee cites health concerns as the primary reason for their underperformance, employers should consider obtaining a medical report from the employee’s GP or pay privately for an occupational health assessment. If appropriate, an employer should make reasonable adjustments in accordance with the Equality Act 2010 to avoid a discrimination claim.

Once any mitigating factors have been addressed, an employer can progress to a formal capability hearing. In the absence of a contractual policy, the ACAS Code of Practice establishes a minimum standard of fairness that should be followed. It is advisable to list an employee’s shortcomings before setting measurable and objective targets to be assessed over a reasonable timeframe. Assuming the employee has passed probation and not committed gross misconduct, the Code stipulates a minimum of two warnings be issued before the employee is dismissed for poor performance.

An employee, regardless of length of service, must receive adequate notice of the hearing. They should also be afforded the opportunity to attend with either a work colleague or a trade union representative as per Section 10 of the Employment Relations Act 1999. Employees can also request an appeal hearing, which should be chaired by someone more senior so that impartiality is not compromised.

Adopting this approach can reduce the likelihood of costly and time-consuming litigation. Mishandling a capability process can give rise to a constructive or unfair dismissal claim for members of staff over two years’ length of service, or possibly an automatic or wrongful dismissal claim for those with a shorter length of service.

What steps must UK employers take to ensure that performance management processes are fair and non-discriminatory?

During a performance management process, an employer should be mindful of their obligations under the Equality Act 2010. Discrimination can arise where an employee, who possesses a ‘protected characteristic’, has been subject to less favourable treatment.

A common example is where an employee is classed as disabled. An individual is disabled if they have a physical or mental impairment which causes a substantial, adverse and long-term effect on their ability to carry out normal day-to-day activities. In these circumstances, an employer is expected to make reasonable adjustments to ensure that the employee does not suffer a substantial disadvantage. This might involve providing additional support and/or training to the employee in question.

Performance Improvement Plans (PIPs) which contain unrealistic objectives and/or timeframes for improvement could be deemed inherently unfair by an Employment Tribunal if the evidence suggests that the employee has been set up to fail. Similarly, an employer who selectively imposes a PIP on an individual whose team produces a similar calibre of work, runs the risk of unfavourable treatment.

How does UK employment law define a grievance, and what procedures must employers follow when handling them?

A grievance is a complaint or concern that an employee wishes to raise with their employer. Employers will often have their own policy or procedure when handling these internal matters, but they must follow the ACAS Code of Practice as a minimum and give the employee the opportunity to attend a formal hearing with a trade union representative or work colleague.

It is likely that the employee will want to give evidence in support of their grievance, so the employer should carry out an investigation to determine whether the grievance should be upheld. Employers must deal with grievances without unreasonable delay and give the employee an opportunity to appeal the outcome.

In what ways can an employee legally challenge the outcome of a performance management process?

Many companies have an internal appeals process where employees can challenge performance evaluations or disciplinary sanctions. Further, this could also involve submitting a formal grievance which should be handled by a higher authority within the company.

What are the legal protections for employees in the UK who raise grievances related to workplace discrimination or harassment?

An employee who exercises a statutory right and faces a detriment or dismissal as a direct consequence can pursue potential claims in the Employment Tribunal.

Where the employee has faced workplace discrimination or harassment, it is likely that they are asserting their right to equal treatment pursuant to the Equality Act 2010. If they are dismissed, no qualifying service is required to bring a claim for automatic unfair dismissal and alternatively, claims for detriment can be actioned whilst the individual is still employed.

Assuming the grievance process has been exhausted, generally, an employee normally has three months from the date of the incident to lodge a claim with the Tribunal.

The employee must first inform ACAS that they intend to pursue legal action. ACAS will offer early conciliation, lasting for up to six weeks, with the intention of reaching an amicable resolution. If unsuccessful, the ACAS certificate number must be included in the ET1 claim form.

Need more help?

DAS UK customers have access to templates and guides on dasbusinesslaw.co.uk, including employment contract template and a number of other employment-related guides and templates.

You can access DAS Businesslaw by using the voucher code in your policy provider’s documentation.

Visit DAS Businesslaw

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.

Managing absence – an employer’s perspective

Employers must navigate the delicate balance between supporting staff welfare and ensuring operational efficiency.

April 2024 Learn more
Employee, self-employed or worker? – The Bitesized Edition

Employment status can be complex if an organisation does not define the relationship with an individual clearly and reflective of the actual relationship in practice.

April 2024 Learn more
Workplace stress: your responsibilities as an employer

Commenting on Stress Awareness Week, Sarah Garner, Solicitor at DAS Law, takes a look at what the law says employers needs to do about stress.

April 2024 Learn more

Read more from the DAS Law blog

Employment disputes 10 top TUPE tips for employers – Transferees

TUPE kicks in when there is a transfer of a business from one organisation to another or there is a service provision change from one provider to another.

June 2024
Employment disputes Faulty products face recalls – these are your rights when things go wrong

Gurkaran Singh Gill looks at what you can do if you have bought a faulty product.

May 2024
Employment disputes 10 top TUPE tips for employers – Transferors

Here are our top 10 TUPE tips for the Transferor – this is usually the seller of the business to another or a client seeking to outsource a service.

May 2024
Employment disputes What employers need to know about performance management and grievances

Thomas Eastment, Legal Adviser at DAS, looks at how employers can balance performance management while ensuring fair and legally compliant grievance resolution.

May 2024
Employment disputes Managing absence – an employer’s perspective

Employers must navigate the delicate balance between supporting staff welfare and ensuring operational efficiency.

April 2024
Employment disputes Employee, self-employed or worker? – The Bitesized Edition

Employment status can be complex if an organisation does not define the relationship with an individual clearly and reflective of the actual relationship in practice.

April 2024
Employment disputes Workplace stress: your responsibilities as an employer

Commenting on Stress Awareness Week, Sarah Garner, Solicitor at DAS Law, takes a look at what the law says employers needs to do about stress.

April 2024
Employment disputes International Stress Awareness Month: your workplace rights

To mark International Stress Awareness Month, Sarah Garner takes a look at what the law says your employer needs to do about workplace stress.

April 2024
Employment disputes Don’t get in trouble with the law on April Fool’s Day

When does the line between hilarious and harsh get crossed and can a prank turn into legal proceedings?

March 2024
Employment disputes Top 10 Settlement Agreement tips for employers

The purpose of a Settlement Agreement is to bring an employment relationship to an end by mutual agreement. Here are our top 10 tips for moving people on with settlement agreements.

March 2024
Employment disputes Do employees get extra pay on a leap year day?

Every four years, many workers find themselves cramming an extra day of work into an already packed year. But are workers in the UK entitled to extra pay for this extra work?

February 2024
Employment disputes How Maternity, Adoption and Shared Parental Leave regulations are changing this year

In this Bitesized Edition, we look at the new Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations, set to come into force on 6 April 2024.

February 2024
Employment disputes 9 things employers need to know about apprenticeships

With National Apprenticeship Week here, we explain what employers need to consider regarding apprenticeship schemes and their legal obligations.

February 2024