Managing Employee Underperformance: A Fair and Compliant Approach

Why performance improvement plans matter

A recent employment tribunal case saw a social media worker awarded over £20,000 after being dismissed for not posting enough content and making typos. The key issue? The employee was not given sufficient warning before being let go.

This case serves as an important reminder to employers: handling employee underperformance requires a structured, fair, and legally compliant process. Failing to follow proper procedures can result in costly tribunal claims, reputational damage, and unnecessary workplace disruption.

Identifying and addressing underperformance

Performance concerns can arise for various reasons and impact different roles in different ways. A customer service employee who mishandles client interactions could harm a company’s reputation, just as a social media worker failing to meet output expectations could affect marketing efforts.

However, before taking formal action, employers must ensure they are assessing performance fairly. Standards should be clearly communicated from the outset through inductions, regular appraisals, and development meetings. Employees should also understand the consequences of underperformance and the steps involved in addressing it.

The importance of clear communication

When an employee is underperforming, direct communication is essential. Employers should:

• Outline performance expectations clearly
• Identify specific areas where the employee is falling short
• Offer support and guidance on how improvements can be made

Raising concerns about underperformance can be sensitive, and employees may react defensively. Some may take stress-related sick leave, further complicating the situation. Approaching these discussions with empathy and openness can help prevent unnecessary escalation.

The role of informal warnings

Before escalating to formal action, an informal conversation should take place. This is an opportunity for the employer to:

• Explain performance concerns
• Provide clear examples of underperformance
• Understand if there are underlying issues, such as personal challenges or health conditions, affecting work

If an employee is struggling due to external factors, offering reasonable adjustments or support can lead to a more positive resolution. Employees who feel supported are more likely to improve and remain engaged with their work.

When to implement a performance improvement plan (PIP)

If an employee’s performance does not improve following informal discussions, a performance improvement plan (PIP) may be introduced. A PIP provides a structured framework for:

• Documenting performance concerns
• Setting clear improvement targets
• Defining a timeline for progress

The first stage of a PIP involves notifying the employee of their underperformance and providing a set period to improve. If no improvement is made, the PIP progresses to a more formal stage, which may lead to a final warning and, ultimately, dismissal on capability grounds.

Ensuring PIPs are constructive, not punitive

PIPs should be designed to motivate employees, not penalise them. To be effective, a PIP should:

• Be tailored to the individual, setting achievable and measurable targets
• Offer necessary support, such as training or mentoring
• Encourage open dialogue between employer and employee

A common concern is that PIPs may be perceived as unfair or overly critical. To mitigate this, discussions should be handled sensitively, with a focus on improvement rather than blame. Asking employees for their input and listening to their concerns can help create a more positive process.

The importance of employee representation

Employees have the right to be accompanied at formal meetings by a colleague or trade union representative. Having a third-party present can help ensure discussions remain balanced and provide reassurance to the employee.

A fair and legally compliant approach

Managing underperformance fairly requires clear policies, structured processes, and empathy. Employers should:

• Set clear expectations from the outset
• Provide fair and consistent feedback
• Follow structured disciplinary procedures if necessary
• Offer employees the opportunity to improve before considering dismissal

A well-managed approach to underperformance can lead to positive outcomes for both employers and employees, reducing legal risks and improving overall workplace morale.

How we can help

If your business needs expert legal advice on handling employee performance issues, our employment law specialists can help. Contact us today for guidance on implementing fair and compliant processes.