First published: March 16th 2022
Last updated: August 17th 2023 

As an employer, you’ll be well aware that employees have good days and bad days. For the most part, staff will meet expectations and get their work done on time and to the best of their ability.

For any number of reasons however, an employee’s performance may deteriorate and when this happens, it can be a difficult scenario for their managers to handle.

Usually, an informal meeting can help identify the cause of a decrease in productivity and a solution can be found. But if that doesn’t work, you will need to consider a more formal approach…

Capability in the workplace

Capability in the workplace refers to an employee’s ability to carry out the functions and duties of the job they’re employed to do. Employment law in Ireland recognises that employers are not obliged to employ someone who is not capable of doing their job.

If an employee can no longer perform the job you hired them to do, you can take action to terminate their employment.

You must ensure that any such dismissal is preceded by a fair procedure however allowing the employee to state their case and where relevant improve their performance.

The benefit of a capability policy

A capability policy should specify how capability issues in the workplace will be addressed. It should outline the obligations of both the employer and employees.

The aim of a capability policy is to set out how you will deal with underperformance in a fair and consistent manner.

Before turning to your policy, you should assess the situation fully and see where you can support employees to improve. It’s best to try to resolve any issues informally before taking disciplinary action, which should be the last resort.

Another important aspect of your capability policy is that it should work in conjunction with related policies, such as induction, probation and disciplinary policies.

Two main types of capability dismissal

How you manage a capability issue will depend on whether it’s a conduct/performance issue or a medical capability issue.

Here’s how to approach the two main types of capability dismissal processes.

Capability due to performance

When a performance issue comes to your attention, set out measurable targets to help the employee improve. When you do this, also make the employee aware of the consequences if no improvement is made within an agreed timescale.

A performance management system will help you monitor and review the employee’s performance. It could be the case that the employee needs extra support or training to reach the expected standards of work.

When dismissing an employee on competency grounds for persistent poor performance, you need to be sure the decision you reached concerning the employee’s capability was arrived at in a fair manner.

To establish whether the decision was fair, the WRC will typically ask employers:

• Did you believe that the employee is incompetent to carry out the job?
• If so, did you have reasonable grounds to sustain that belief?

To answer the second question to the satisfaction of a WRC Adjudication Officer, you will need evidence demonstrating that your decision to dismiss was preceded by a disciplinary process that complied with the rules of natural justice and fair procedures.

Capability due to ill health

Having an employee absent for an extended period (or on an intermittent basis) for health reasons is not sustainable for a business.

Long-term absence due to ill-health may lead to a medical capacity dismissal. As with dismissal due to performance, you must follow a fair procedure to minimise the risk of an unfair dismissal.

When carrying out a medical capacity dismissal, you will need medical evidence confirming that the employee’s return to work or recovery is unlikely. If there is conflict between the medical evidence presented by both parties, seek an independent opinion before confirming the dismissal.

A dismissal on medical capability must follow the principles of natural justice. You should:

• Ensure you’re in full possession of all material facts regarding the employee’s condition.
• Ensure the employee receives fair notice that you’re considering a medical capability dismissal.
• Provide the employee with an opportunity to defend and prove their case.

If the employee is incapable after a medical expert deems them to be, ensure you explore reasonable accommodations that could help the employee, e.g., changing the employee’s hours of work.

Ireland’s employment equality legislation sets out a wide definition of disability. If the employee’s medical issue falls within the definition of disability, you must explore what reasonable workplace changes would allow the employee to continue in their role before deciding if dismissal is an appropriate course of action.

Expert HR guidance on employee capability

An underperforming employee is a very difficult situation for managers to handle.

To ensure your organisation handles this scenario in compliance with Irish employment law, speak to one of our expert HR consultants today on 01 886 0350.