Handling performance, dismissals and redundancy

Letting someone go, managing poor performance or making roles redundant is never easy. For small business owners in particular, these decisions can feel personal as well as practical.

In most cases, good people management comes down to a few basics: be clear, be fair, follow a proper process and keep good notes. Businesses that have issues, are usually because difficult conversations are put off, their process isn’t followed or matters are rushed.

The three issues

Before looking into the formal processes, it is important to determine what each of the issues is. These situations may sound similar, but they need to be handled differently.

With redundancy, this is focussed on the needs of the business, and usually occurs when there is less work than the capacity, a role is no longer needed or as part of a re-organisation. This will be where a company is parting ways with an employee, not because of anything the employee has done, but because of the business itself.

When addressing performance issues, it is all about the capability of an individual, and whether they are able to complete the job to the standard required, but it can also be related to conduct of staff, such as bad behaviour, breach of company rules, or other issues. It is the case that by addressing matters, it is both important in terms of process, but also can resolve issues for the long term.

Lastly, where an individual’s performance or conduct does not improve, or unacceptable conduct, then it may be the business wishes to dismiss the employee so they ceased to be employed.

Process, process, process

In all of the above three situations, it is vital that the proper process is followed. With dismissals, a failure to follow the process can be considered an ‘unfair’ dismissal and this is even the case where the outcome was correct.

For conduct issues, this usually means investigating the facts, setting out the concerns clearly, sharing the evidence, holding a meeting, allowing the employee to respond, and offering an appeal.

For performance issues, it often means explaining the concerns, giving examples, setting realistic targets, offering support or training, allowing time for improvement, and reviewing progress. As part of this, a Performance Improvement Plan (or PIP) can be implemented and then continue to be tracked over time.

For redundancy, the process should include consultation with staff, a clear business reason (i.e. the role does not exist anymore), consideration of alternatives, fair selection criteria where needed, and a right of appeal.

A fair process will not remove all disagreement, but it does show that your business acted reasonably and responsibly.

Manage performance early

Performance problems are often left too long. Many managers hope things will improve on their own or avoid the conversation because it feels uncomfortable. In reality, delay usually makes matters worse.

Early, clear feedback is usually the best place to start. If someone is struggling, explain what is not working, what good looks like, and what support is available. It is important to be specific and set specific, trackable goals, as being vague does not help.

As above, implementing a PIP can be useful, but it should be realistic and fair. This can include the concerns, what is expected, a timeframe for improvement, and potentially any agreed support that can be given. On this, addressing what will occur if performance does not improve can be included too.

It is also important to think about whether health, disability, stress, caring responsibilities or wider workplace issues may be affecting performance. In some cases, reasonable adjustments or extra support may be needed.

Small business tip: Keep performance targets realistic. If your team is small and workloads are already stretched, make sure any improvement plan reflects what is actually achievable.

Handle redundancy carefully

Redundancy should be about the role, not the individual. It can be a fair reason for dismissal, but only if the situation is genuine and handled properly. This includes ensuring a proper process is followed.

You should be able to explain clearly why the redundancy situation has arisen. For example, has work reduced, has the business restructured, has technology changed the role, or do costs need to be reduced?

Consultation is a key part of the process. Employees should understand what is being proposed, why it is happening, and how it may affect them. They should also have a real chance to ask questions and suggest alternatives.

If more than one employee does similar work, you may need to create a fair selection pool and apply objective criteria, such as skills, qualifications or performance records. These criteria should be used carefully and consistently.

Before confirming redundancy, consider alternatives such as reduced hours, redeployment, voluntary redundancy or changes to duties.

Small business tip: If you are close to making redundancies, take time to explore lower-cost options first. A temporary change in hours or duties may help you keep valuable people and skills in the business.

Keep records

Good record keeping can make a real difference. Keep notes of meetings, copies of letters, performance targets, consultation notes, redundancy scoring and the reasons behind your decisions. However, make sure that these are stored confidentially.

This is not about creating paperwork for the sake of it. It is about being able to show what happened, why decisions were made, and that the employee had a fair chance to respond. If you find yourself in a tribunal, rightly or wrongly, it will be helpful to have a record of the decision making process.

Your records should be accurate, professional and written on the basis that they could one day be seen by someone outside the business.

Small business tip: Store notes, emails and letters in one place from the start. This saves time if you need to explain your decisions later.

The wider business impact

Formal processes do not only affect the person involved. They can also affect the wider team, customer service and day-to-day operations, especially in a small business where each person may cover several responsibilities.

Plan communication carefully. Share only what is appropriate, protect confidentiality, and think about how the remaining team will be supported.

It is also worth checking what support is available. For example, some businesses have legal expenses insurance or employment support helplines that can help when workplace issues arise.

Final thoughts

The key message is simple: do not rush. It is vital a proper process is followed. Where communicating, clear and considered is the way forward and ensure that a record is kept of this.

The costs to a business of taking the necessary time, following the correct process and being fair are much better in the long term than the stress or consumption of time where things are done wrong and an employment tribunal claim arises.

If you would like to discuss structuring your business, then you can reach out to Chamber Member Acumen Law, who can be reached through their website here, or by calling 01273 447 065.

If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk