Poor Performance Dismissals – Health, discrimination and senior staff risks 

Capability is one of the potentially fair reasons for dismissal under section 98 Employment Rights Act 1996. Capability issues can include performance issues.

To defend a poor performance dismissal successfully, an employer must show that it acted reasonably and followed a fair process. In practice, that means having clear standards, evidence of underperformance, and giving the employee a genuine opportunity to improve.

However, while the principles for managing poor performance are well established, certain situations carry heightened legal risk. HR professionals should approach these cases with particular care, as procedural missteps can quickly turn an otherwise fair dismissal into an unfair or discriminatory one.

Under the Employment Rights Act, unfair dismissal qualifying period has been reduced to six months, read more here.

Performance and ill health 

If poor performance may be linked to physical or mental health, employers must tread carefully. The first step is a conversation with the employee about how their condition affects their work. In some cases, minor changes may resolve the issue. Where concerns persist, medical evidence is often essential to understand prognosis, capability and whether the employee may be disabled.

If the employee is disabled, the duty to make reasonable adjustments applies. Adjustments might include changes to duties, targets, deadlines, working hours or equipment, or providing additional support. Even where the employee is not disabled, following medical advice and demonstrating flexibility is good practice and reduces the risk of an unfair dismissal. ​​​​​​​

Discrimination and consistency 

Performance management must be applied consistently. Treating employees differently for similar performance issues can expose employers to discrimination claims, particularly if the difference correlates with a protected characteristic such as sex, race or age. Managers should apply the same standards and consequences unless there is a genuine, objective justification, such as health-related adjustments.

Tone also matters. Heavy-handed or personal criticism can stray into harassment, especially where comments touch on protected characteristics. Performance discussions should remain objective, evidence-based and focused on work output, not personal circumstances. ​​​​​​​

Senior employees and warnings 

Managing performance at senior level can be challenging. Objectives are often strategic, long-term, or less measurable. Tribunals recognise that senior employees are usually aware of expectations and the consequences of failing to meet them, which may reduce the number of warnings required. However, this does not remove the need for a fair process.

Only in exceptional cases will dismissal without warning be fair, where allowing time to improve would be futile and place an unreasonable burden on the business. This was reinforced in Zen Internet Ltd v Stobart, where the Employment Appeal Tribunal held that even for a CEO, it will be rare for dismissal to be fair without at least basic procedural steps such as warnings, a chance to improve and a right of appeal.

Although the dismissal in Zen was unfair, compensation was reduced under the Polkey v AE Dayton Services principle, because the employee would likely have been dismissed following a fair process. Crucially, the EAT accepted that this hypothetical process could start from when concerns were first clearly raised. ​​​​​​​

Evidence at the point of dismissal 

Finally, employers must base decisions on up-to-date evidence. In Sabourin v BT Group plc, the Employment Appeal Tribunal confirmed that dismissing managers must consider performance right up to the point of dismissal, not simply rely on historic evidence that justified earlier warnings.

In poor performance cases, careful handling, consistency and contemporaneous evidence are often the difference between a defensible dismissal and costly litigation. ​​​​​​​

So What?

Capability dismissals are frequently challenged not because performance concerns were unfounded, but because the process fell short. Employers who combine early health discussions, consistent treatment across teams and clearly evidenced decision-making place themselves in a far stronger position if the dismissal is later scrutinised. ​​​​​​​
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