Can an employer dismiss an employee for poor performance?

Yes — capability is one of the five potentially fair reasons for dismissal under Section 98 of the Employment Rights Act 1996. However, a tribunal will scrutinise whether you followed a fair and reasonable process before dismissing. Simply telling someone they're not good enough and terminating their employment will almost certainly result in an unfair dismissal claim.

What a Fair Process Looks Like

1. Informal discussions — raise concerns early and give the employee a chance to respond
2. Clear expectations — ensure the employee knows the required standard through clear objectives
3. Support and training — provide the tools and help needed to improve
4. Performance Improvement Plan — a formal plan with measurable targets and a timeframe
5. Formal capability hearing — following the ACAS Code of Practice
6. Right to appeal — the employee must be able to appeal any dismissal decision

What Tribunals Look For

An employment tribunal will consider:

• Was the employee clearly told their performance was below standard?
• Were they given a reasonable opportunity and support to improve?
• Was the process consistent with how other employees have been treated?
• Was dismissal a proportionate response, or could the employee have been redeployed?
• Was the procedure followed correctly at every stage?

Important Distinctions

• Capability vs conduct — poor performance is a capability issue ("can't do"), not a conduct issue ("won't do"). Different procedures apply
• During probation — employees with less than 2 years' service (6 months from 1 January 2027) generally can't claim unfair dismissal, but can still claim discrimination

Dismissing for poor performance is one of the highest-risk areas in employment law. Our employment law specialists can guide you through every step. Get expert advice.

Sources

• Employment Rights Act 1996 — Section 98
• ACAS — Managing Performance

What's Changing in 2026–27

Updated August 2026: Under the Employment Rights Act, from October 2026 the time limit for bringing most tribunal claims doubles from 3 months to 6 months. From January 2027, employees will need only 6 months' service — down from 2 years — to claim ordinary unfair dismissal, and the compensatory award cap (£123,543 from 6 April 2026) is removed entirely. The pressure is already visible: employment tribunals received 50,000 new claims between January and March 2026, up 39% on the previous year (MoJ tribunal statistics), with 64,000 single claims waiting at the end of March 2026. Getting the process right first time has never mattered more.