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Capability Procedure

Employment Law

How should you manage poor work performance?

A Performance Improvement Plan (PIP) process should be used for managing poor performance in the workplace.

This should be used when your employee has been previously advised of performance deficiencies and discussions and informal steps have been unsuccessful.

You should discuss these shortcomings with your employee as part of your capability review to find out whether their performance issues are due to a lack of training, resources or due to their ill health.

Support such as training or mentoring will need to be put in place as part of the capability review if management issues are identified.

If an employee has health problems and they are likely to be disabled within the meaning of the Equality Act, reasonable adjustments to the PIP process need to be made. If this does not happen there could be claims made against you and your company for disability discrimination.

What is a Performance Improvement Plan (PIP) procedure?

This is a process whereby agreed goals and targets are monitored over a set period, usually 3 months, in order to ensure improvement as part of employee performance evaluation laws.

If objectives are not met, which are assessed at regular meetings, disciplinary warnings should be issued as part of a capability dismissal process. Your employee should be given the right to appeal any disciplinary sanction including dismissal.

Can you offer a Settlement Agreement instead of a PIP Process?

This is one of the most common uses for a Settlement Agreement as this offers an alternative to going down a capability procedure. You should make it clear that accepting a Settlement Agreement is the employee’s choice and a capability dismissal is not a foregone conclusion. We can advise as to the amount of compensation to offer so that the Settlement Agreement is a swift and fair solution.

For expert advice on Capability Procedure, Personal Improvement Plans and Settlement Agreements, contact our Employment Law Team today on 01273 609911, or email

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