The removal of the default retirement age (DRA) brings a renewed focus to this issue. Where in the past managers may have avoided dealing with the underperformance of an older worker because they were about to retire, this option is no longer available. If underperformance is identified, managers are going to have to tackle it.
Now that employees are not required to retire at 65, some will want to work for longer which will affect workforce planning issues. Only asking older employees when they plan to retire is potentially age discrimination. Employers should not be the first one to ask when an employee wants to retire and managers should always ask about short, medium and long term plans. As a result, employers will need to review their appraisal systems and ensure that workforce planning discussions are included in everybody's appraisal, regardless of age.
If an employer is going to appraise an employee's performance, the employee must be aware of what standards are expected of them. Standards should be objectively assessed and should not differ purely for reasons of age. A key aspect will be to identify training or support needs. Employers should be aware of any underlying reasons for poor performance, for example, is the employee underperforming because of a disability? If so, the employer will have an obligation to make reasonable adjustments.
Feedback in appraisals should not come as a surprise. If underperformance is identified then early intervention and informal support are the best way to deal with this.
After a reasonable time, if the employee has not achieved what is expected, then a move to the formal process will be necessary. Most employers will have a performance management or capability policy and the Advisory, Conciliation and Arbitration Service (ACAS) have published guidance on what the basic procedure should entail. Whilst compliance with the ACAS Code of Practice is not a legal requirement, it will be referred to by a tribunal when deciding whether a fair procedure has been followed. ACAS recommends:
- Investigating the poor performance;
- Informing the employee in writing of the concerns;
- Conducting a capability meeting (normally this will involve following an internal policy);
- Informing the employee of the decision in writing, and;
- Allowing the employee the right to appeal.
Employers should issue at least one warning before inviting an employee to a dismissal meeting. In practice most employers will issue two. Before taking a decision to dismiss, the employer should consider whether there is the possibility of offering the employee alternative employment. Moving them to a role which plays to their strengths may be the answer.
Implementing a performance management process incorrectly may result in one or more of the following claims or problems arising:
- Unfair dismissal: the decision to dismiss or the process followed was not reasonable or fair in the circumstances.
- Discrimination: an employee may bring a claim that they are being discriminated against because of age. Given the fact that health can deteriorate as one gets older, there may also be a risk of disability discrimination.
- Grievance/breach of contract/constructive dismissal: if the performance management process is not carried out properly, an employee may first of all raise a grievance, and could resign and claim constructive dismissal.
- Bullying and/or harassment: because performance management is such an emotive issue, employees may perceive that they are being harassed or bullied by their manager.
- Stress at work/sickness absence: most people find performance management very stressful. Some will become unwell. Managers should ensure that when employees do return to work that they are given a period of time to get back up to speed before monitoring resumes. Employees should be advised that the period of absence will not count towards any monitoring period which has been put in place.
Managing underperformance on a formal basis is one of the most difficult things a manager can do. It is essential that performance is built into the culture of the organisation as a whole and is applied consistently across workers of all ages. In this way, the benefits gleaned from an effective performance management process will be seen not only in light of the removal of the DRA, but across the workforce in general.
Dave Palmer is a solicitor in the employment team at UK law firm Dundas & Wilson