The laws around performance management and what they cover
The law covering performance at work generally falls within three areas:
Employment Rights Act 1996 (ERA)
The Employment Rights Act 1996 (ERA) is a key piece of legislation in the United Kingdom that outlines various rights and responsibilities of employers and employees. Within this framework, 'capability' and 'incapability' pertain to the grounds for fair dismissal of an employee.
- Capability under the ERA refers to the employee’s ability to perform their job duties, considering their skill, aptitude, health or any other physical or mental quality. [Section 98 (3) (a)]. It acknowledges that an employee must meet certain performance standards to fulfil their role effectively. A dismissal on grounds of capability is considered fair if the employer can demonstrate that the employee is unable to perform their job to the required standard despite appropriate support and training.
- Incapability typically refers to situations where the employee's inability to perform their job is due to ill health or other factors beyond their control. Incapability must relate to ‘work of the kind which he was employed by the employer to do’. [S98 (2) (a)].
It’s unreasonable and unlawful to discipline or dismiss a person because they are not capable of doing a job for which they are not employed. It’s important, then, to ensure staff have up-to-date descriptions reflecting their current work, which might be quite different from the work they were originally employed by the organisation to do, and that they have been trained and supported through any changes to their work over time.
For a dismissal to be fair under these grounds, the employer must provide evidence that they have considered reasonable adjustments or alternatives before deciding to terminate the employment. This includes exploring other suitable roles within the organisation or allowing sufficient time for recovery and improvement.
Proper procedures, including adequate documentation and supportive measures, are crucial to legitimising any such dismissals.
- For more information on performance dismissals, please see Unfair Dismissal Law – an LRD guide for union reps
The Employment Relations Act 1999
The Employment Relations Act 1999 grants employees the right to be accompanied by a trade union representative or a colleague during grievance and disciplinary hearings [Section 10].
This is relevant when meetings are being arranged to discuss an employee’s capability. The legislation ensures employees are supported during potentially stressful and critical discussions about their performance or capability.
Under the Act, employees can:
- choose a trade union official, certified by the union; or
- a fellow worker to accompany them.
Your role as a representative includes presenting and summarising the employee's case, providing moral support, and offering advice. However, you’re not permitted to answer questions on the employee’s behalf.
This right applies to all employees (regardless of whether the employer recognises a trade union). Employers must accommodate this representation and can’t penalise employees for asserting this right.
In Northern Ireland, the equivalent legislation is the Employment Relations (Northern Ireland) Order 1999.
Employment Act 2008
The Employment Act 2008 repealed the Employment Act 2002 which laid down statutory procedures for resolving workplace disputes.
Since the Employment Act 2008, UK employers are no longer bound to follow a prescriptive process when dismissing an employee on capability grounds. Instead, they must be mindful of the Acas Code of Practice on Disciplinary and Grievance Procedures.
Employment tribunals have the power to increase the sum awarded to a dismissed employee by 25% if an employer has failed to comply with the Code.
In Northern Ireland, the equivalent legislation is the Employment Act (Northern Ireland) 2010. Acas does not apply. Instead, it is the Labour Relations Agency.
Data Protection Act 2018 (DPA)
The Data Protection Act 2018 (DPA 2018) incorporates the provisions of the EU General Data Protection Regulations (GDPR) and governs the processing of personal data in the UK.
The Act mandates that any processing of employee personnel files and occupational health information in capability assessments must be lawful, fair, and transparent. Employers must have a legitimate basis for accessing and using this information, such as the employee's consent or the necessity for performance management.
Sections 10 and 11 of the DPA 2018 provide the framework for processing special category data, which includes health information. Data must be relevant and limited to what is necessary for a capability assessment.
Employers must ensure the information is accurate, kept up to date, and securely stored to prevent unauthorised access.
Access to Medical Reports Act 1988
The Access to Medical Reports Act 1988 entitles employees to access medical reports prepared by a medical practitioner for employment or insurance purposes before they are obtained by an employer.
Under this Act, an employer must obtain the consent of the employee (or potential employee) to request a medical report. Employees have the right to be informed of their rights under the Act, request to see the report before it is sent to the employer and withhold consent if they choose.
If they request access, they can review the report, request amendments for inaccuracies, or attach a statement of their views if the doctor refuses to amend it. This would cover investigations into the employee’s health with a view to eventual dismissal.
A medical report is defined as a report prepared by a medical practitioner who has been involved in the clinical care of the individual.
The definition would exclude a report prepared by a nominated independent doctor or occupational health practitioner after a one-off examination. If an employee previously received treatment from an occupational health practitioner, this meets the requirements of the Act.
The employee should be given access to any subsequent report prepared by that doctor for employment purposes.
Health and Safety at Work Act 1974 (HSWA)
The Health and Safety at Work Act 1974 (HSWA) is a foundational piece of legislation relating to the health, safety, and welfare of employees in the workplace.
Under the HSWA, employers have a duty to create a safe working environment, which directly impacts employee performance.
The Act requires employers to:
- conduct regular risk assessments
- implement appropriate safety measures
- provide adequate training
- maintain safe equipment and premises.
These responsibilities can ensure that employment conditions meet certain safety standards, reducing hazards that could affect an employee's ability to perform their job effectively.
- For more information, see LRD’s Handbook on Health & Safety Law
In Northern Ireland, the equivalent legislation is the Health and Safety at Work (Northern Ireland) Order 1978.
The Management of Health and Safety at Work Regulations 1999
Under the Management of Health and Safety at Work Regulations 1999, employers are legally required to conduct suitable and sufficient risk assessments to identify and mitigate workplace hazards. This responsibility includes assessing risks to all employees, including disabled staff.
Employers' obligations under the Regulations directly relate to addressing employee capability and performance by ensuring a safe and supportive work environment.
By conducting thorough risk assessments and implementing necessary health and safety measures, employers can prevent work-related injuries and illnesses, thereby maintaining employee wellbeing.
Any assessment should:
- focus on staff’s safety requirements to do the work — for example, provision and training to use equipment, particularly for those deemed vulnerable under health and safety regulations
- review and break down tasks to determine any actual or potential hazards posed to workers and others
- examine the work environment for physical/psychological hazards and mitigate any risks to staff health, safety and wellbeing.
In conjunction with the risk assessment, employers should seek advice from the Equality and Human Rights Commission (EHRC). The EHRC provides guidance on legal obligations under the Equality Act 2010, which include making reasonable adjustments for disabled employees to prevent disadvantage.
In Northern Ireland, the equivalent legislation is the Management of Health and Safety at Work Regulations (Northern Ireland) 2000.
Equality Act 2010
The Equality Act 2010 plays an important role in shaping how performance and capability issues are handled in the workplace.
The Act mandates that employers must not discriminate against employees based on the protected characteristics of:
- Age
- Disability
- Gender reassignment
- Marriage and civil partnership
- Pregnancy and maternity
- Race
- Religion and belief
- Sex
- Sexual orientation
The Act requires that employers adopt fair procedures when addressing performance issues. This includes ensuring that any performance management or capability assessments do not disproportionately disadvantage employees with protected characteristics.
For example, if an employee with a disability faces performance issues, the employer must consider whether reasonable adjustments have been made to accommodate their needs before taking action.
Employers must provide equal opportunities for all employees to demonstrate their capabilities and improve performance. This means offering appropriate support, training, and adjustments where necessary, and conducting performance evaluations impartially and transparently.
To comply with the Equality Act 2010, employers should implement clear, fair performance management procedures, ensure all employees are treated equitably, and actively address any potential discriminatory impacts in their capability assessments and performance reviews.
This approach promotes a diverse and inclusive workplace and helps avoid legal challenges related to discrimination.
- For more information, see the LRD publication Law at Work 2024
The Equality Act 2010 does not apply to Northern Ireland. Instead, Northern Ireland has its own set of equality and anti-discrimination laws, including specific laws to protect people from workplace discrimination based on their political beliefs. This is enforced by a separate tribunal known as the Fair Employment Tribunal.