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New hire gone wrong?

With the best recruitment practices in the world, mistakes do happen inside and outside of the probation period. Do we persevere with an unsuitable person, run the risk of employment law furore by dismissing, or aim to reach a settlement?

It’s a popularly held belief that dismissals outside of a probation period are risky; lesser known is the fact that the probation period has absolutely no standing in law. In the UK we have a 2 year run with all new employees (joining after 6th April 2012, or a year if they started before then) and so under ordinary circumstances the fair dismissal of an ineffective employee within these timelines (providing contractual notice is given) should be pretty easy to achieve.

Assuming all options to rescue the person’s performance have failed, there are three main considerations:

  • What are the risks of dismissing?
  • How do we dismiss?
  • What can we learn from this?

Addressing the first option, the risks really depend on the reasons for the failure of the person. If these are for any reason that could be defined as a ‘protected characteristic’ under the Equality Act, then great care should be taken and the methodology if dealing with these, which includes cases connected with pregnancy and disability falls outside of the scope of this article. Providing the person’s poor performance does not fall within the scope of the Equality Act then it should be relatively straight forward to proceed.

Nevertheless, an employee may assert that the reason for dismissal was due to their protected characteristic, even it wasn’t, and it is important to assess each case carefully to evaluate the risks.

Moving on to the second question, the options are really a) with a Settlement Agreement and b) without one. Using a Settlement Agreement will increase costs but will ensure that the employee won’t pursue any legal case (i.e. under the Equality Act) against the employer and so is the safest option from that point of view. The counter to using one is that while the employee with less than 2 years’ service may bring a discrimination claim (or a claim under some other limited categories) they will not be able to bring a straightforward unfair dismissal claim as they do not have sufficient service. A further argument in favour of Settlement Agreements however is that these can include anti-disparagement Clauses and other post-employment requirements. Better not to have your soon to be ex-employee washing his dirty laundry in public and possibly tarnishing your business and employment reputation at the same time.

If on an assessment of the facts, the possibility of a discrimination claim is discounted and the individual is similarly judged to be unlikely to bring a claim that qualifies for legal protection in any of the other categories that are not subject to the 2 year service requirement, then a Settlement Agreement at least from a legal perspective may be overkill – again each case should be carefully considered on its merits and there will be a lot to take into account.

Irrespective of whether or not a Settlement Agreement is used, contractual notice must also be paid (and a decision taken on whether the individual works this or, if their contract allows, it is to be paid in lieu) and accrued holiday must also be paid in respect of their employment including the notice period if they are to work it.

Finally the third question, the one most frequently overlooked, but often the one in the long term that has most value for the employer: ‘What can we learn from this?’ Often the root of the problem can be traced to decisions taken during the recruitment process, or to the design of the process itself. Whilst poor induction practices can be remedied later, poor recruitment decisions cannot. Thomas International estimated that the internal cost of a recruitment programme (i.e. excluding agency fees etc.) averages £2.5K. That’s an average and actual examples in our experience are an awful lot higher, and when factoring in Settlement Agreement costs etc. can easily run past £5K. It is very much worth reflecting on why things went wrong and what we can do to prevent future recurrence.

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