Legal Matters
with McKinty and Wright


Team Performance & Employment Law, a Legal Health Check 

Part 1: Contracts of employment, staff handbooks and performance management policies

A Partner at McKinty and Wright, Louise Butler has extensive experience in litigation and dispute resolution including EL, PL, Disease and Employment claims with particular interest in education, care and the third sector. Highly skilled and client focused, Louise also provides Employment and HR Advice. Having presented on the topic at the opening event of MLN’s Management Month 2016, what follows is a summary taken from Louise’s talk: an introduction to the legal issues surrounding team performance. 

In my experience businesses often turn to lawyers when things have gone wrong. Carrying out a legal health check now and again can hopefully avoid problems, or at the very least put you in a better position if they arise.  

It is important to consider the following in the context of your own business. The question to keep in mind is, does your approach to performance management help your team succeed? 

Do you use “off the shelf” standard documents or are your contracts and policies drafted in a way that fully reflects the culture and values of your business? Do they help or hinder the running of your business? If you have employees in more than one legal jurisdiction do they comply with the law in that jurisdiction? Are your policies and procedures contractual? It is a lot to think about, but better that you think about it now rather than when an issue arises.

Last year the High Court in England gave us some insight into judicial thinking on the status of policies and procedures in the case of Sparks v Department for Transport [2015] EWHC 181 (QB), [2015] All ER (D) 62. This case considered whether the employer, the Department for Transport, was unilaterally entitled to change the terms of its staff handbook. 

The interested Unions on behalf of the employees would not agree to the changes on the basis that they were detrimental but the Department changed them anyway and the result was a test case before the Court. On the facts the Court held that certain terms in the absence management policy were “apt for incorporation” into the employee’s contracts. To put this in plain English, they found certain terms should be read as if part of the employment contract – and therefore that those terms could not be changed without consent.  

Helpfully, the case also gave some guidance on clauses that are unlikely to be “apt.” For example, a clause requiring a phone call to a manager on the first day of absence before 10.00am is unlikely to be considered contractual and is more likely to be considered aspirational.

What we can learn from the Sparks case is that, in general terms, it is better to make staff handbooks containing policies and procedures expressly non contractual, to make it easier to revise and amend as per business needs. For contractual provisions, make sure any clause which allows for amendment is sufficiently clear and unambiguous.  

It all comes back to the drafting of your contracts, policies and procedures and ensuring that your documents work for you and your team.

Contact Louise 

For further information find us at 

The content of this article is provided for information purposes only and does not constitute professional or other advice.

Part 2: Performance Management

Managing an individual’s performance and managing a disciplinary offence are two completely distinct matters. Too often these can be confused and it is important to bear in mind that the purpose of performance management is to achieve improvement not to sanction.  

How performance management is carried out within an organisation is largely a matter for that organisation and there is no one size fits all approach.  A good process will be strategic, integrated throughout the business, should deal with performance improvement, development and also managing behaviour. Performance management will largely be a mixture of formal processes, such as appraisals and also informal processes, for example establishing a culture were individuals are driven to work towards improvement.  

In reality performance management will also be about how you deal with poor performance.  Is it actively addressed or do you bury your heads in the sand and hope for the best?    

No one wants to see employees dismissed for poor performance.  If you think of the recruitment costs of replacing and employee alone, it is often in everyone’s interest that if there is an issue, you work towards improvement; however It is always possible that improvement will not be achieved and you therefore must make sure that the formal process you are following will stand up to scrutiny if you should end up before a Tribunal. That is the balance that you have to try and get right. 

When poor performance indicates that an employee appears to lack the necessary skill i.e. capability to do the job they are contracted to do, this can be one of the potentially fair reasons for dismissal. The purpose of a capability hearing as part of a formal performance management procedure is to:-

Set out how the required standards have not been met

Give the employee an opportunity to explain 

Discuss measures such as training , mentoring  or supervision which may improve performance 

Set targets for improvement and timescales for review

Verbal warnings, written warnings, final written warnings and ultimately dismissal are the usual meeting outcomes and the right of appeal should be given at every stage.

Some important things to remember are:-

The process should be fair and non-discriminatory

All managers involved in the process should have the appropriate training

An employee has a right to be accompanied to any meeting

In Northern Ireland the Statutory Dismissal Procedures still apply

Reasonable adjustments should be considered for employees with a disability

On the issue of disability the Court of Appeal in England in December 2015 in a case of Griffiths v the Secretary of State for Work and Pensions [2015] EWCA (Civ) 1265 made it clear that an employer’s duty to make reasonable adjustments for a disabled employee can and does apply to absence management policies.  This confirms what I have always considered to be best practice and is something to keep at the back of your mind as you work through any formal process.    

In the past I have provided legal advice in circumstances where, on paper, an employer was following best practice, but in reality they were using the Performance Improvement Plan as a “stick” and the employee ended up in a position were nothing he did was good enough. Unfortunately, there was only one way that relationship was going to end, so if nothing else, please remember performance management is about improvement not sanctions!

Contact Louise 

For further information find us at 

The content of this article is provided for information purposes only and does not constitute professional or other advice.

Part 3: Compromise Agreements 

A compromise agreement is a legally binding agreement which brings employment to an end. Often the reason stated for the termination of the contract is the resignation of the employee. Compromise agreements are recognised by statute and are the only way an employee can legally contract out of employment rights.  In return for this the Employee is paid a sum of money which can be tax free. 

By their very nature, compromise agreements are bound up in confidentiality and there is no way of knowing how often they are used by organisations to deal with performance issues.  CIPD figures in 2011 suggested that just under 39% were used in relation to performance or misconduct. To my mind, they are a tool of last resort but they are a tool that is often used when dealing with under performance. 

Some things to keep in mind are that to be legally binding the agreement must be:-
in writing, 
signed by both parties, 
the employee must have had the benefit of independent legal advice (often paid for or a contribution made by the employer), 
the legal advisor must be identified in the agreement and must hold professional indemnity insurance covering the advice, 
the agreement must relate to particular matters – that is the matters in dispute that are being “compromised”
and it must state that the statutory conditions have been satisfied. 

Just a couple of things to be wary of:-

1. Off the shelf agreements which are not drafted specifically for the circumstances at hand – worst case you could end up paying out a lump sum to an employee and still end up at Tribunal. 

2. The provision of references. Compromise agreements often provide for an agreed reference which will be appended to the agreement.  The provision of references has been considered by the Courts.  The House of Lords  in the case of Spring v Guardian Assurance plc [1994] IRLR 460 HL confirmed that there is a duty upon an employer to provide an accurate and fair reference. 

Therefore, providing a bad reference if it contained inaccuracies could led to an action in negligence.  In the context of Compromise agreements the reference will be agreed, but as an employer resist the urge to agree to something more positive that you could stand over just to get the deal over the line.  It could come back to bite you! 

Contact Louise 
For further information find us at 

The content of this article is provided for information purposes only and does not constitute professional or other advice.

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