Underperformance Policy Writers
What are Underperformance Policies?
Underperformance policies outline how a business manages situations where an employee is not meeting the expected standards of performance in their role.
These HR policies provide a clear, fair and structured process for identifying issues, offering support, and taking appropriate action where improvement does not occur.
What Do Underperformance Policies Cover?
An underperformance policy typically includes:
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Definition and examples of underperformance
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Informal and formal performance management processes
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Setting performance objectives and review periods
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Support measures such as training or mentoring
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Meetings, documentation and timelines for improvement
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Escalation to formal disciplinary action if needed
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Links to appraisal and capability procedures
A clear policy helps managers address performance concerns consistently and constructively, giving employees the opportunity to improve with appropriate support.
It also protects the business by ensuring fair treatment, reducing the risk of disputes or claims of unfair dismissal, particularly where performance concerns lead to formal action.
By dealing with underperformance early and fairly, organisations can improve productivity, boost morale among high-performing staff, and maintain a culture of accountability and continuous improvement.
Legal Basis
Underperformance dismissals fall under "capability", one of the five fair reasons in the Employment Rights Act 1996 (s.98).
Fair process is set by the ACAS Code of Practice on Disciplinary and Grievance Procedures (failure to follow can lead to up to a 25% uplift in compensation) and the implied term of mutual trust and confidence.
The Equality Act 2010 protects disabled employees from disability discrimination, including discrimination arising from disability, a frequent feature of capability cases.
The Employment Rights Bill proposes day-one unfair dismissal protection (currently two years' service), making capability process discipline far more important from the date of commencement (expected 2026).
Common Compliance Pitfalls
- Skipping informal management. Tribunal expects an informal stage focused on training, support and clear standards before formal capability.
- Improvement targets that are unmeasurable. "Improve attitude" or "be more proactive" is not actionable; targets must be SMART and benchmarked.
- No occupational health input on long-term issues. Where ill-health may be a factor, OH input is essential before any formal warning.
- Reasonable adjustments not considered. Disability-related underperformance requires the s.20 adjustments duty to be applied first.
- Probation period dismissals at month three. Without documented evidence of standards, support and feedback, even probation dismissals can found a discrimination claim.
Sector-Specific Considerations
Regulated roles: SMCR Certification Regime, healthcare professional regulation and teaching standards add a competence-fitness layer above the standard capability process.
Public sector: Bespoke capability procedures (e.g. STPCD for teachers) take precedence over ACAS-only process.
Sales and target-driven roles: Variable-pay underperformance requires careful linkage between PIP targets and contractual scheme rules.
What Policy Pros Delivers
Our Underperformance Policy package includes the main policy, an informal management framework, a Performance Improvement Plan (PIP) template with SMART target methodology, a manager script for difficult conversations, an OH referral letter, a reasonable-adjustments procedure cross-reference, and an outcome letter suite (informal review, formal warning, final warning, dismissal).
