Competent, high-performing staff are key to the success of any business.
Where staff are not performing, it is crucial that employers seek advice early before taking steps to remedy the performance concerns.
First things first – informal or formal?
Where a performance issue has arisen, employers first need to consider whether an informal process should be utilised before commencing a formal process.
The key point about an informal process is that it will not result in warnings or dismissal. Rather, it is a process whereby a manager raises concerns with an employee and works with them to find ways to lift their performance. This might include identifying tools to assist the employee, or changes in methods, and it is often accompanied by additional training and regular check-ins.
This is a good first step before going down a formal route, particularly as it is an opportunity to find out if there are wider factors at play that may be impacting the employee’s ability to perform to a high level.
Formal performance processes must still include a focus on training and support, however also carry the possibility of warnings, leading to dismissal.
A formal process requires (in very summary form):
- A formal meeting to discuss concerns and to discuss a proposed performance improvement plan (PIP).
- Implementation of a PIP, with clear objectives.
- Regular review periods, with the possibility of a warning at the end of each review period if the objectives are not achieved, ultimately potentially leading to dismissal.
- Careful review before dismissal, including consideration of alternatives to dismissal.
Common pitfalls
Our expert Employment Law team regularly assists employees who are subject to performance processes, and employers running such processes.
Here are some of the most common pitfalls we see – and tips on how to avoid them.
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Ignoring the documents
Employers need to check:
- Are there performance-management clauses in the employee’s employment agreement?
- Is there a clear, up-to-date position description?
- Is there a performance management policy?
If there are performance management clauses, or a policy that sets out the process employers will follow in performance management processes, this process must be followed. If it is not, and – as a result of the process the employee is ultimately dismissed – there is a risk the Employment Relations Authority will find the dismissal is procedurally unfair, meaning it is unjustified.
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Ambiguous standards
The standards the employee needs to be meeting must be clear and as objective as feasible. When acting for employees, we regularly see PIPs including a high degree of subjectivity, for example where the PIP includes requirements in respect of the employee’s attitude, without any specifics.
The standard to reach should actually be set out in the PIP and not simply rely on a manager deciding – based on unspecified criteria – that the employee has, or has not, met the required standard.
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Delay
Where performance issues arise, it is understandable and sensible to work informally with the employee first, but employers should not wait too long before commencing a formal process.
Where evidence of underperformance becomes stale, this undermines the necessity of commencing the process and compromises the fairness of the process.
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Rushing
Case law indicates a PIP should generally run for at least 12 weeks.
If the process is truncated without good reason and the employee is dismissed, this dismissal may be found to be unjustified. Procedural fairness is particularly important in the area of performance management. Employees need to be given sufficient time to improve.
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Not adjusting as appropriate
Formal improvement management processes are stressful for employees. During the course of a PIP, if the employer becomes aware of an employee’s disability, or some other matter (such as bereavement) that may be affecting their performance, they must be prepared to pause, modify, or stop the process altogether as appropriate.
It’s important to note that the tips in this article are high level. If you are considering commencing a performance management process, we recommend seeking tailored advice from Lane Neave’s Employment Law team early in the process.
