What Are Capability Procedures and Why Are They Important?

Sometimes, an employee will not meet the standards set by you. This can be because of many reasons, so always investigate the situation before taking any action.

It would be a detriment to your business to terminate someone hastily, so investigations are always a useful step. However, there may be a point where your intervention is necessary.

Employment law sets out two key fair reasons for dismissal: conduct or capability.

Here we will look at capability, which is the employee’s ability to do their job. We outline what the procedure you need to follow is, so you avoid unfair dismissal claims.

What is a capability procedure?

Capability issues relate to an employee’s ability to perform their role and is to be distinguished from their conduct. So, a capability process is how you manage this when it becomes a formal issue at work.

A written capability policy and procedure should be in place to ensure that employees are aware of and understand the required standards of work and attendance in the workplace. This should be in the staff handbook, which will detail examples.

Conduct denotes a wilful breach of rules, while a lack of capability is concerned with, for example, skills or aptitude. It may be an issue when an employee is trying hard to do well but can’t meet targets. Dismissals will occur when there is a lack of capability.

Why do I need a capability procedure?

Capability is one of the potentially fair reasons for dismissal. A formal capability procedure makes it less likely that a dismissal you make for capability reasons is considered unfair at an employment tribunal.

A suitable set of employer policies will include both capability and disciplinary procedures. The capability dismissal procedure will usually include various elements, including informal and informal processes.

When dealing with issues around poor performance or incapability because of ill health as an employer there are several related issues which could lead to employment tribunal claims. (for example, disability discrimination) or which could turn into other procedures relating to discipline or dismissal.

As a result, it’s vital that you have a clear and fair process and understanding of how to manage matters relating to capability.

If used correctly, employment law capability procedures can be an effective way to manage employee performance and prevent you from making dismissal decisions without first addressing any underlying factors and giving staff the opportunity to improve.

What should the process be like?

The procedure should allow you to consider ways in which you can help your employee improve their performance and work together to ensure that performance improves to an acceptable standard.

Some of the steps that are recommended are as follows:

• Consider informal resolution.
• The investigation. 
• Invitation to a formal meeting. 
• The capability meeting. 
• Warnings. 
• Further performance reviews.
• Deciding what happens if your performance does not improve.
• Dismissal.
• Appeal.

If an employee is not meeting the required standards at work, then employers should first consider holding an informal meeting with them to discuss this hoping they improve their performance on their own accord.

If, after a capability review procedure, the employee does not improve then the employer may decide to begin the formal capability procedure.

As a first step, they should complete an investigation into the employee’s performance, gathering evidence that highlights where they are falling short. This may vary depending on their job role; however, it could include evidence of poorly executed work or customer complaints.

You would then need a formal hearing to which the employee should be formally invited, using a capability procedure template letter.

The next steps should follow the employer’s capability policy and procedure.

After the meeting, you may decide that a formal warning is appropriate, telling the employee that further formal action will be taken if they do not improve.

You should agree on ways to help the employee, which could include extra supervision or more training.

An employment capability procedure will set out increasing sanctions for continued under-performance which will eventually lead to dismissal. However, an employment tribunal will expect that the employer has exhausted all reasonable attempts to coach the employee towards better performance. Failure to do this can result in an unfair dismissal regardless of the fact that there are valid concerns about the employee’s capability.

Types of capability procedure

There are different types of capability procedure at work dependent on the situation, including an ill-health capability procedure, otherwise known as medical capability procedure.

You must not follow the process for performance with someone who is having ill health issues, or the process won’t be fair.

Poor performance

You must first rule out that it is not simply a lack of application. For example, the employee may simply not like the job and put in little effort.

If there is no lack of application and it is a lack of ability, this is when the poor performance capability procedure begins. The employee should be informed, in writing, of:

• Exactly how their work is not meeting the required standard.
• The expected standard(s). 
• The timescale of expected improvement and that the employer will assess the employer at that time.
• Support, coaching and/or training that will be given to the employee.

Providing that you have given the employee the above information and that it is reasonable, and with sufficient detail so that they can make those improvements, then you can consider dismissal at the end of the improvement notice period should the required standard(s) not be met.

Ill health

Where an employee is off sick for a prolonged period and it is believed unlikely that they will be well enough to return to work within a reasonable timeframe, you can fairly dismiss ensuring you follow a proper procedure.

Before you can justify dismissal on the grounds of sickness, you must:

• Investigate the circumstances to find out how long it’s likely to be until the employee returns.
• Invite the employee to a meeting to discuss all the information you have to put forward their point of view and if they think their role should remain open for a longer period of time. 
• Take fit notes into account.

The investigation should include speaking with the employee and investigating the medical issues.

You can ask the employee to allow an approach for a medical opinion although the employee can refuse. You should know any approach falls under the General Data Protection Regulations (GDPR) and the Access to Medical Reports Act.

Capability procedure template letters

There can be several letters sent during the process. These include:

• Invite stage 1 capability meeting.
• Stage 1 capability meeting outcome letter.
• Stage 1 capability review meeting outcome. 
• Invite stage 2 capability meeting.
• Stage 2 capability meeting outcome letter. 
• Stage 2 capability review meeting outcome letter.
• Invite stage 3 capability hearing. 
• Stage 3 capability hearing outcome letter.
• Stage 3 capability review meeting outcome letter.

It is essential you send these letters during the process, so it is documented for tribunals to look over. Get in touch with our expert HR documentation team to help advise on these letters.

Expert support on dismissals with Peninsula

It can be difficult to work out if an employee isn’t performing because of conduct or capability, and equally as hard to manage. Knowing how to support your employee through any capability issues can help you save on recruitment costs and any disruptions to business.

But sometimes, your best efforts won’t work. So, you need to know a fair procedure for this to avoid an unfair dismissal claim. That’s where we come in.

Our employment law and HR consultants can help with this. Peninsula clients get access to 24/7 HR support from our specialists.

Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.