In the recent case of Fallahi v.TWI Ltd, the Employment Appeal Tribunal (the EAT), considered whether a tribunal is required to look behind an employer’s final written warning when determining whether a dismissal was fair.
In this case, the employer had concerns about the claimant’s performance as Senior Project Manager. After consistently failing to meet targets, the claimant was put on a performance management plan, with his targets to be reviewed on three different dates.
However, prior to his review meetings, the employer concluded that the claimant had made insufficient improvement, held a capability hearing, at which the claimant was given objectives, a review period and a final written warning.
A number of review meetings took place. Before the end of the review period, the employer concluded that the employee was nowhere near meeting the objectives. The employer gave the claimant the option of continuing with the review period or leaving the company with a month’s compensation. This offer was rejected by the claimant and, although there were settlement discussions, it became apparent that no agreement was going to be reached.
The claimant failed to attend a number of performance and capability hearings, on the grounds of sickness, although an occupational health adviser considered he was well enough to attend. The employer, therefore, made the decision to dismiss the claimant on the ground of capability.
The claimant made an unfair dismissal claim, alleging that there were a number of procedural shortfalls that rendered his dismissal unfair. In particular, the claimant relied on the fact that he was not provided with a copy of the employer’s capability procedure and was also given his final warning before any of the dates for performance review had arrived.
The Employment Tribunal (the ET) decision
The ET dismissed the claim, stating that the reason to dismiss the employee fell within the band of reasonable responses. In reaching this decision, the ET applied the “manifestly inappropriate” test, which established that it is not for a tribunal to look behind a final written warning if it is concluded that the written warning was issued in good faith and was not “manifestly inappropriate”. The claimant appealed against this decision.
The EAT decision
The EAT dismissed the appeal, finding that the use of a final warning was appropriate, both procedurally and substantively and that the dismissal was fair. In reaching this decision, the EAT made specific reference to the fact that, in this case, the ET was required to judge the reasonableness of the dismissal, and not the reasonableness or appropriateness of the final warning.
In this case, when assessing the reasonableness of the decision to dismiss, the EAT emphasised that the issuing of the final written warning was only one of the factors to be taken into account. The EAT also took into account that the claimant had a prolonged period of poor performance and that, despite the claimant’s engagement with the performance management plan, continually failed to meet targets. The EAT, therefore, upheld the ET’s findings that: (1) the dismissal was fair and fell within the band of reasonable responses; and (2) that the ET was not required to go behind the written warning in reaching this conclusion.
What does this mean for employers?
This decision will be welcomed by many employers. If an employer is faced with dismissing an employee on capability grounds, they can take comfort in knowing that that the reasons for issuing any prior written warnings will not be considered by the tribunal, as long as they can show that the warnings were made in good faith and were not manifestly inappropriate. Instead, the tribunal will look at the circumstances of the dismissal as a whole and consider whether the reasons to dismiss the employee were reasonable.
If employers are faced with underperforming employees, it is beneficial to engage with the employee at an early stage and to exhaust an informal performance improvement plan first, if appropriate. If poor performance persists, the employer should then make the formal capability procedure available to the employee and explain the potential outcomes should performance not improve. This is also a timely reminder to employers to make it clear to employees the precise reasons for their dismissal. The employer should ensure that it has a paper trail of all capability meeting minutes and outcome letters, so that if the employee later decides to challenge the employer’s decision, it is able to defend it.