1. © Shepherd and Wedderburn LLP Appraisals and Performance Management Presentation by Kim Pattullo 4 November 2008

2. 2Appraisals and Performance Management Appraisals

3. 3 Performance Management – Setting the Legal Framework Performance/capability is one of the potentially fair reasons to dismiss (s 98(2) ERA 1996) But fairness: S98 (4) (a) depends on whether, in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee: and (b) shall be determined in accordance with equity and the substantial merits of the case Currently also SDDPs must be followed

4. 4Appraisals and Performance Management Performance Management – Setting the Legal Framework WILL v SKILL Disciplinary or capability procedure Employee knows what to do Employee does not know/ is not able/something has happened Deliberately choosing to do/ not do Disciplinary procedure Chastising Capability procedure Supportive

5. 5Appraisals and Performance Management Recent employee, never made the grade Consider whether any discrimination or other issues Provide assessment and support Watch out for probationers (see later) Good employee in past, recent promotion Does employee understand role? Has employee received training and mentoring? Does employee need a bit more assistance e.g. computer software understanding/repeat training Good employee for several years, recent unexplained dip in performance where has performed well in the past Ideally get to the bottom of the issue Or at least be able to demonstrate attempts to do so Investigate more widely any objective evidence e.g. sales appointments and sales results Highly likely to be an underlying issue e.g. ill health, problems at home, bullying/harassment at work Effort Effort+Effort+++ Management need to make a decision on what they believe is happening Performance Management – Setting the Legal Framework

6. 6Appraisals and Performance Management Fairness Issues To demonstrate fairness, are key legal issues managers should have at the forefront of their minds: 1.TRUST AND CONFIDENCE DUTY What is it – contractual term – risk = constructive dismissal What does it mean in practice - Managers need to advance plan -Emotionally in control – not flustered/ill prepared -Contemporaneous discussions – not stored up for annual appraisal -Careful choice of words and appropriate tone -In order to avoid employee perception of unreasonable treatment -Realistic targets and timescales for improvement -Training and support provided -Proper explanation - not “I just want you to do better”

7. 7Appraisals and Performance Management Fairness Issues 2.DISCRIMINATION ISSUES Sex* Race* Disability* Sexual orientation Religion Age*

8. 8Appraisals and Performance Management Fairness Issues 3.EVIDENCE IN TRIBUNAL Tribunal will focus on: the employee has been made aware of the poor performance, support has been provided, opportunities to improve and warnings of consequences if insufficient improvement. how much effort been made to retrieve the poor performance (depends on size of employer, how long employee has worked for the employer etc) the procedure followed, including following the employer’s policy does the objective evidence support the view of poor performance - previous appraisals -pay awards and letters -objective evidence e.g. sales figures, time recording etc - glowing customer reviews

9. 9Appraisals and Performance Management Practical Tips 1. APPRAISALS Whilst helpful in setting objectives and reviewing, can lead to results-oriented view, focussing on what is achieved and ignoring the how and the longer term development issues Widely acknowledged that annual appraisal = blunt instrument Whilst helpful as part of the paper trail in a Tribunal case, unlikely of itself to solve performance issues Preferred aim = performance management throughout the year by managers, backed up by regular appraisals

10. 10Appraisals and Performance Management Practical Tips (Cont) 1.APPRAISALS (Cont) Managers need to have the soft skills, including coaching to facilitate these objectives This includes encouraging the shooting stars by - communicating regularly - incentivising - ascertaining what is motivating beyond financial And includes early review and ascertaining performance issues in others

11. 11Appraisals and Performance Management Practical Tips (Cont) 2.PROCEDURE/POLICY ISSUES Currently, need to follow SDDPs. However – ACAS CODE OF PRACTICE will replace SDDPS (April 09) Focus on: –Informal Resolution –Mediation –“Soft skills” of managers must be highly evolved Are differences to the SDDPs 25% uplift in awards for failure to comply with new Code; Guidance will be a benchmark used by Tribunals to measure the employer’s handling of poor performance Managers’ training  strong recommendation to revise policy now (and separate from disciplinary policy)

12. 12Appraisals and Performance Management Practical Tips (Cont) 3.DON’T BE A SLAVE TO A POLICY THOUGH: See IGEN v WONG (Court of Appeal 2005)  Employee believed appraisal was unfair and refused to sign appraisal form  Employee was subject to disciplinary procedure for the refusal  Managers could not provide adequate explanation (burden of proof)  Race discrimination was inferred  High emotion/frustration of managers governed their behaviour

13. 13Appraisals and Performance Management Practical Tips (Cont) 4. MANAGERS STILL THINK THEY CAN DISMISS PROBATIONERS WITHOUT CONSEQUENCES ANSTEY V ADVANTAGE HEALTHCARE GROUP LTD (ET 2006) Employee on probationary period No regular performance review throughout probationary period Employee informed manager she was pregnant A week later she was dismissed for “poor performance” Burden of proof Inferred that dismissal was on grounds of her pregnancy

14. 14Appraisals and Performance Management Practical Tips (Cont) 5. INVESTIGATE BACKGROUND REASONS FOR POOR PERFORMANCE AND ACT ON WHAT YOU FIND DICKENS V O2 PLC (Court of Appeal 2008) During appraisal, employee reconfirmed she was suffering stress-related illness and could not cope Employer told her to contact occupational health but took no further action Shortly after appraisal, employee signed off work from anxiety and depression and never returned Employer held liable for psychiatric ill health

15. 15Appraisals and Performance Management Practical Tips (Cont) 6. THE INHERITED MESS Old manager gave glowing appraisals and avoided performance management New manager comes in and actively manages performance Support needed for new manager – otherwise risk of bullying/harassment claim

16. 16Appraisals and Performance Management Questions Any questions?

17. © Shepherd and Wedderburn LLP Employment Shepherd and Wedderburn LLP Kim Pattullo