Performance dismissals, like misconduct dismissals, are often the end point of a series of procedures: an informal warning, a first warning, a final warning and finally a dismissal. Of course, sometimes stages are skipped as in cases of alleged gross misconduct where the first meeting may also be a meeting at which an employee is dismissed.
However, if an employer were to go straight to a final meeting and consideration of dismissal when the issue is that worker’s alleged performance it is much more likely warning bell’s should be ringing that this is a potentially unfair process – if a worker is not performing to an adequate level but the employer has taken no steps to help them improve/put them on notice of issue then a dismissal is going to much more susceptible to challenge (which is not to say it will always be unfair in a legal sense).
However, the basic idea is the same in conduct or performance issues and the advice in the ACAS Code on Disciplinary and Grievance Procedures applies to both scenarios that improvements should be specified and time bound to allow employee to improve. The Code states in the introduction that the Code applies to performance matters:
Disciplinary situations include misconduct and/ or poor performance. If employers have a separate capability procedure they may prefer to address performance issues under this procedure. If so, however, the basic principles of fairness set out in this Code should still be followed, albeit that they may need to be adapted.
However, what makes performance issues more difficult compared to misconduct is the period between a first warning, final warning and dismissal may be a matter weeks (I have seen cases go through the whole process to dismissal in ten weeks).
If you are an employee who for example receives a final written warning for performance and you know you have just four weeks to save your job it is understandable why, even if you think the warning was grossly unfair, you would not appeal. Why not focus on buckling down and trying to save your job, especially if the appeal will aggravate the very same persons who will decide on your continued employment?
That is an entirely rational – and some would say sensible – approach to take. It is also, as last year’s Employment Appeal Tribunal Decision in Fallahi v TWI Ltd (2021) shows, a risky one to take.
No Peeking Allowed
But before getting to the facts the wider position in law on the relevance of final warnings in misconduct dismissals needs to be introduced. Where a person is dismissed for misconduct and they were at that time already subject to a final written warning then in an employment tribunal the rule is that an tribunal will not look behind the circumstances of that warning unless there is evidence it was a ‘manifestly inappropriate’ warning. This has been affirmed on numerous occasions in the EAT and Courts but the decision in Davies v Sandwell Metropolitan Borough Council [2013] is most commonly cited.
This means the test to explore the validity of the earlier warning is much much harsher than whether the decision to issue a warning was ‘fair’ or ‘reasonable.’ As an aside this is the reason why, if representing a union member ahead of a dismissal meeting I always make the point of highlighting the unreasonableness of earlier decisions to the decision maker themselves as well so that it becomes part of the narrative of the current decision (it is a common issue, especially when unrepresented – which strangely many union members choose in non-dismissal scenarios). Any failure to appeal a warning is then unlikely to aid a employee if they later suggest that decision was unfair and not a safe basis to rely on for a later dismissal; the advice should also be, as the ACAS Code advises at paragraph 26 of the Code that “an employee feels that disciplinary action taken against them is wrong or unjust they should appeal against the decision.”
The Facts and Decision in Fallahi
The relevant facts in Fallahi are simply stated. In early January 2016 claimant was subjected to formal poor performance proceedings and targets were given to improve performance. Performance was still a concern and so the employer (the claimant said prematurely) brought forward matters and issued him a final written warning in July 2016 (the fact that this went straight to a final warning is arguably inconsistent with the ACAS Code in my view). Mr Fallahi did not appeal against that final written warning.
In November 2016 the employer relied upon the earlier warning and dismissed the claimant on capability grounds and a claim of unfair dismissal was pursued. The employment tribunal found the dismissal was not unfair. When determining whether the dismissal was unfair under the statutory test (section 98(4) of the Employment Rights Act 1996) it held that in the absence any evidence the final warning was manifestly unreasonable the legitimacy of the final warning was not in issue. In other words, the fairness of the dismissal would only be considered from the employer’s actions from the point of the final warning only.
It is this decision that the claimant sought to challenge in his appeal to the EAT. The central argument was that the ‘no peeking rule’ applied to disciplinary proceedings was not suited to the situation a claimant will often find itself in in a performance management context. The latter is by its nature fast paced and in reality all part of the same process and same perceived errors, unlike the situation in a disciplinary context. That argument was rejected.
It is easy reading the judgment (paragraph 23 onwards) to see why the claimant was aggrieved the employer did not follow its own capability policies and did not warn the applicant of the potential of a final warning, among other failings. However, adopting the position that final warning cannot be manifestly unreasonable if it was with the reasonable range of options (which is a very wide range of permissible options) even when inconsistent with published policies nevertheless affirmed the decision that such a final warning cannot be brought into the fairness calculation.
The decision in Fallahi does not therefore do any favours to employees, it reinforces the hurdle that the manifestly unreasonable test, taken together with the range of reasonable responses standard, puts up. On the one hand an employer can stack the decks against an employee in earlier stages of the process and escape scrutiny of these actions so long as it does not rise to manifestly unreasonable. It also ups the ante for the employee that there inclination to do their best to avoid conflict and focus on short term improvement to avoid dismissal is in fact an obstacle to fair treatment. If they are being treated unfairly they need to adopt an adversarial approach in objecting and appealing earlier warnings to ensure that these are in the mix at the later stages of the process.
It is often counterintuitive but the Mr Fallahi’s mistake was probably not appealing the imposition of the final warning even though, at the time, his livelihood was hanging by a thread and common sense would often recommend he should keep his head down.
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