Pay and Benefits

It is not surprising that the Government has already made it clear that the changes suggested to unfair dismissal in the leaked Beecroft report, which essentially amount to the dismantling of the current laws, are very unlikely to progress beyond speculation.

 

This debate will play to the perception among some employers that the current law unduly restricts their ability to dismiss poor performers from their organisations. However, the reality is that many employers do not appreciate the flexibility they have. Often this is because of ignorance, poor advice and a general risk averse attitude. This can be addressed through educating business owners and training managers to be proactive and robust in their decision making.

 

The current law permits dismissal of underperforming employees provided that a fair procedure is followed and that the employer makes a “reasonable decision”. The factors that govern fairness and reasonableness are things, such as: Was the employer clear with the employee about what the problem with their performance was? Did the employee get a chance to put it right? Had they been warned it could lead to their dismissal? Did they get a chance to explain the reasons why they felt they were underperforming? Was the decision impartial and objective?

 

These are not necessarily high hurdles for the employer to clear. Most managers believe they have been clear with employees about these things and despite this, the employee fails to improve, or maintain improvement. Cases often come down to whether managers have made notes of conversations they have had with employees to address these points, ie can the employer provide evidence that the decision was reasonable?

 

The reference to “coasting” employees in the report is interesting because it chimes with a complaint we hear from a lot of our clients about employees that are difficult to deal with. However, there is nothing in the current unfair dismissal law that restricts a manager’s ability to address this issue robustly. Most HR professionals know this, and their frustration is with the managers in their own organisations who fail to take responsibility for managing their teams. The unfair dismissal law only protects employees from a sudden decision, without prior warning, to dismiss in circumstances where they have not been given explanation or opportunity to improve. Even then, that protection only applies to employees with 12 months’ service, although this will soon to be extended to two years’ service. Therefore, employers who identify poor performance early on have even more freedom to dismiss.

 

The best advice to frustrated HR professionals, business owners and managers is to invest time early on in “actively managing” staff, which includes being clear about expectations and dealing promptly with any shortfall. Many managers feel insecure about tackling poor performing staff because they fear provoking grievances and complaints, eg “I am being bullied by my manager”. However, it is a misconception that such complaints have to stall a performance management process. Managers may need training and support in how to be proactive while staying on the right side of the law. Investment in that training and sharing accurate information with managers about what the law really permits them to do (rather than allowing myths to justify a passive management style) is money and time well spent.

 

The real burdens faced by employers are the steps they have to take to protect themselves against the much more onerous obligations set out in the Equality Act, eg the protection that employees who suffer from ill-health are given. These have a real impact on the robust and consistent management of performance, and can carry significant sanction for the ignorant or unsuspecting employer. The recommendations in this report would not impact on these laws. Our clients tell us that it is these sorts of claims they fear, not least because they apply from the employees’ start date (earlier in relation to equality obligations during the recruitment process) and can lead to unlimited compensation.

 

Our recent client survey told us that 81 per cent of organisations had settled a claim last year that they considered weak. They did so due to the cost and management time of defending it, despite being confident that they had not breached the law. It is this lack of confidence in the tribunal system and the excessive time and resource employers are required to put in to fight weak or malicious claims that employers want the Government to change. Our survey tells us that these are the changes that would make a real difference to employers.

 

Leah de Vries is a Senior Associate in the Employment Group at Pinsent Masons LLP