Fewer appraisals, more legal risk?

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Increasing numbers of organisations are considering moving away from formal appraisals. But in doing so employers need to bear in mind a number of management and legal issues.

There remains no substitute for well prepared and thorough feedback, however it is delivered, both in terms of managing staff performance and reducing legal risk if problems arise.

Appraisals should ideally contain no surprises, although often they do. A move to more frequent appraisals may help remove this potential for surprise. But if continuous feedback replaces formal appraisals the feedback will need to be meaningful.

Managers also need to appreciate the perennial problems that can arise from ducking issues in appraisals – too often one still finds that the most recent appraisal form is spectacularly unhelpful when trying to defend a decision to award a low bonus, or embark upon a capability process, if there has been no mention of performance issues.

If an employer's feedback structures become less formal and more episodic, potentially with less direct HR input, proper records of what is discussed may not be kept and the quality of records could decline. Claims of constructive dismissal, unlawful discrimination or even irrational bonus awards may become more challenging to defend if businesses do not ensure that managers keep suitable records of their interactions with employees, and any decisions taken as a result. The greater the risk of there being a dispute about what feedback was given and the basis for it, the greater the risk of claims from disgruntled employees. 

Managers need to ensure they keep sensible records without overburdening themselves and their staff with excessive notes and minutes of meetings. They also need to bear in mind that undue and arguably defensive formality may detract from the resolution of a performance issue.

Nonetheless, employers changing their appraisal arrangements to provide more immediate and effective feedback need to consider how such a move fits in with their processes with regard to bonus awards, salary review, formal performance management ‎and record keeping. This will minimise their exposure to claims and increase the prospects of successfully defending them.

Charles Wynn-Evans is a partner at international law firm Dechert

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