Important considerations when firing salespeople - guided by UK employment law.
Guest article - May 2005
Picture the scene – you employed a senior sales person 5 months ago – you are paying him a good annual salary and because they were very successful in their previous company, a generous guarantee for the first 6 months.
Now, some 5 months on they are seriously below target and you are beginning to doubt that they will ever make the grade. You have had some informal discussions with them about their performance but were originally reassured by their confidence that they are just finding their feet and all their hard work will pay off very, very soon………You now think it is much more serious than that. You have noticed that they seem to be losing interest – they are not on the phone as much or out at customer meetings.
What do you do?
You know that as an experienced sales person, they must be aware that things cannot continue like this for much longer. You decide to have a strong word with them – if they don’t pull their finger out and meet target this month, they will be on their way! The end of the month comes along and sure enough, they are still way below target. You get them into the office and tell them that they are being dismissed for poor performance. They will receive a month’s pay in lieu of notice, they can keep their company car for the next month but that’s it. After all, they don’t have a year’s service so they can’t claim unfair dismissal – can they?
So, what’s wrong with that?
Like it or not, there’s quite a lot wrong with that and since 1st October 2004 your chances of ending up in a tribunal by doing the above are much increased.
If your company disciplinary procedure is part of your contract of employment and you do not follow it (for poor performance issues as well as misconduct issues), an employee can take you to a tribunal for breach of contract.
If you lose, the employee will be awarded compensation equivalent to earnings for the period of time it would have taken to follow the procedure. Clear as mud? Let’s put it this way, following a standard disciplinary procedure for a case such as this would probably take about 3 months from start to finish (it may be more, it may be less), so you will have to pay out the equivalent to 3 months earnings. In addition, the bit of legislation mentioned above (The Dispute Resolution Regulations) means that by not following the statutory minimum procedure for dismissals you will see this payment increased by up to 50%. And this is on top of the costly legal fees, your time, your company’s reputation etc. Shall I go on?
What is the moral of this story?
I suppose there are a few morals here.
The main reason why a statutory minimum procedure was brought in last year was not to tie employers up in red tape, it was to ensure that employees were given a fair chance to get their performance up to an acceptable level and that employers could not get away with making snap decisions about them. Out of interest, one of the best sales people I know could have fallen foul of the above scene when he was not making the grade in his first 6 months. He has now been with the same company for more than 7 years and is regularly in the top 3 each month/quarter/year.
If you have people responsibility, make sure you know your company disciplinary and dismissal procedure – don’t expect others to pick up your pieces after the event when it is probably too late.
If your company doesn’t have a disciplinary and dismissal procedure, make sure you at least abide by the statutory minimum (see flow chart at the end of this article)
You may think you are saving your company money – but even if you are – what is the cost to your reputation as an employer and how does this sort of action affect your employee turnover? Remember, people talk and above all promote their own agendas, which may not be the same as yours.
If in doubt – take advice.
The Statutory Discipline & Dismissal Procedure
Write to the employee letting them know of the allegations against them (performance or conduct issues
Invite them to a meeting to discuss the allegations
Hold a meeting with the employee and their colleague (if they wish to be accompanied)
Notify the employee of your decision
- If the employee wishes to appeal hold an appeal meeting
Inform the employee of your final decision
Employers are exempt from the three-step procedure in certain limited cases
There is a modified two-step procedure to be used in very exceptional circumstances
If the employer fails to follow this procedure an employment tribunal will judge the dismissal “automatically unfair”
Failure to follow it leads to upwards adjustments of compensation
Comments and questions to Susan Clarkson,
Apollo Consulting, firstname.lastname@example.org
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