This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Detailed guide to legal issues when employment is terminated after performance reviews in England and Wales. Explains capability as a fair reason for dismissal, procedural requirements, tribunals' approach to performance evidence, discrimination risks, and practical steps for employers and employees.
Performance reviews and appraisals are central to how employers manage and assess employee contributions. However, when these assessments lead to dismissal, legal issues can arise if the process or outcome breaches employment rights or contractual protections. In England and Wales, an employee dismissed because of performance must be treated fairly, supported appropriately, and given a clear process before termination. Failure to do so can give rise to claims such as unfair dismissal, wrongful dismissal, and discrimination. This article explains the legal landscape, procedural requirements, evidence considerations, potential risks, and practical guidance when termination follows performance reviews.
Legal Basis for Performance‑Related Termination
Capability as a Fair Reason
Under section 98(2)(a) of the Employment Rights Act 1996, dismissal may be fair if the reason relates to an employee's capability to do the job for which they are employed. Capability concerns performance or ability to meet required standards. Poor performance must be supported by reliable evidence and handled fairly.
The Role of Performance Reviews
Performance reviews or appraisals can contribute to evidence that an employee consistently failed to meet agreed performance standards. Standard practice is not mandated by law, but documented reviews help employers demonstrate that concerns were raised, understood, and addressed before dismissal. Reviews should be based on clear metrics or key performance indicators (KPIs) understood by both parties.
Fair Procedure Before Dismissal
Follow a Capability or Performance Management Process
Employers should:
- Hold regular reviews that reflect performance objectively;
- Institute performance improvement plans (PIPs) with specific targets and timelines;
- Provide feedback, training, coaching or mentoring to support improvement;
- Document all steps taken to help the employee improve.
Performance management should be framed as supportive rather than punitive. Employers are encouraged to record discussions and assess whether additional support could help the employee meet expectations. Tribunals scrutinise whether steps taken were genuine and reasonable.
Informal and Formal Stages
An informal chat about performance concerns can be a preliminary step. If these concerns persist, the employer should progress to a formal capability procedure with clear written warnings, meetings, and evidence. At formal meetings employees have the right to be accompanied by a colleague or trade union representative.
Opportunity to Improve
A capability dismissal must usually follow a reasonable period for improvement. This includes repeated PIP cycles with documented targets and support. Immediate dismissal based solely on isolated performance reviews, without prior warnings or improvement opportunities, may be unfair. A tribunal may find that the process was insufficient even where performance concerns were genuine.
Evidence and Documentation
Performance Reviews and PIPs
Documented performance reviews are compelling evidence of performance issues, provided they are consistent and based on objective criteria. Employers should record:
- Performance assessments against KPI targets;
- Minutes of meetings where performance issues were discussed;
- PIP details, timelines, and outcomes;
- Records of training or support offered.
Supporting Special Circumstances
When performance issues might relate to a disability, tribunals consider whether reasonable adjustments were offered. Reasonable adjustments are changes that remove disadvantage, such as altered duties or additional support, and are required by the Equality Act 2010 if the employee has a qualifying disability. Failure to accommodate disability can lead to claims of discrimination even where performance was the nominal reason for dismissal.
Tribunal Assessment: Fairness and Reasonableness
Unfair Dismissal Claims
An employee with at least two years' continuous service can bring an unfair dismissal claim if their dismissal was not for a fair reason or the employer did not follow a fair procedure. Tribunals evaluate whether the employer acted reasonably “within the range of reasonable responses”. This includes examining whether sufficient opportunity was provided to improve and whether performance reviews were credible indicators of capability.
Tribunals may increase compensation by up to 25 % if an employer unreasonably fails to follow the Acas Code of Practice on disciplinary and grievance procedures.
Procedural Deficiencies
Tribunals have found dismissals unfair where:
- No formal warnings or improvement plans were given before termination;
- Performance standards were not clearly communicated;
- The process was not genuinely designed to help the employee improve; or
- The employer failed to consider alternatives such as retraining or role changes.
For example, in a recent Scottish tribunal, a dismissal for performance was found unfair because the employer failed to issue formal warnings even after multiple reviews showing poor output. The tribunal emphasised the need for procedural fairness rather than solely focusing on performance outcomes.
Capability vs Conduct
Distinguishing capability from conduct affects the process. Capability relates to performance or ability; conduct relates to behaviour. Although both can justify dismissal, they follow slightly different procedural pathways. Employers should apply the capability procedure for performance issues, helping ensure the process aligns with legal expectations.
Risks and Discrimination Considerations
Disability and Underlying Causes
Where performance issues are linked to health or disability, employers must explore reasonable adjustments and support. Failure to do so can lead to claims of unlawful discrimination alongside unfair dismissal. Employers should gather medical evidence, consider occupational health assessments, and keep records of discussions about adjustments.
Perceptions of Bias or Arbitrary Standards
Appraisals lacking objectivity can be challenged. Employers must ensure performance standards are clear, measurable, and uniformly applied. Subjective or inconsistent reviews that are not supported by evidence can undermine the fairness of a dismissal.
Practical Guidance for Employers and Employees
For Employers
- Document performance reviews, PIPs, support offered, and outcomes.
- Set clear, measurable standards and communicate them early and often.
- Ensure performance improvement processes are fair and allow time for genuine progress.
- Provide training and support before considering disciplinary action.
- Consider alternatives to dismissal, such as role modification or retraining.
For Employees
- Keep records of performance reviews and feedback.
- If placed on a PIP, document targets, meetings, and support provided.
- Raise concerns in writing if you believe the process is unfair or discriminatory.
- Engage with performance management constructively and seek clarification about expectations.
- Use grievance procedures if necessary before pursuing a tribunal claim.
Common Questions
Can an employer dismiss me after a performance review without formal warnings?
A tribunal will consider whether the process overall was fair. Sole reliance on a review without warnings, improvement plans or opportunity to address issues is likely to be unfair where the employee has qualifying service.
Does every poor review lead to dismissal?
No. Employers should provide support and formal improvement processes before dismissal. Poor reviews alone are not sufficient grounds for termination without following fair procedures.
How much time should be given to improve performance?
There is no fixed statutory timeframe. The period should be reasonable and proportionate to the job role and issues raised, allowing the employee a fair chance to improve.
Summary
Termination following performance reviews engages important legal principles in England and Wales. Employers must treat performance concerns seriously and fairly, providing clear standards, opportunities to improve, documented support and adherence to capability procedures. Failure to do so can lead to claims for unfair dismissal or discrimination. Performance reviews that are objective, consistent and well documented form key evidence in defending such claims, while employees should engage with processes, retain records, and raise concerns where procedures do not align with legal expectations.
