Key points

  • If an employee is dismissed on grounds of incompetence, the question whether his (or her) dismissal was fair or unfair will depend on whether, in the circumstances (including the size and administrative resources of his business or undertaking), the employer had acted 'reasonably' in treating incompetence as a sufficient reason for dismissing that employee; and that question shall be determined in accordance with equity and the substantial merits of the case (section 98, Employment Rights Act 1996).
  • Incompetence (or lack of capability) is a legitimate reason for dismissing an employee. In the Court of Appeal decision in Taylor v Alidair Limited [1978] IRLR 82, Lord Denning commented: 'Whenever a man is dismissed for incapacity or incompetence, it is sufficient that the employer honestly believes on reasonable grounds that the man is incapable or incompetent. It is not necessary for the employer to prove that he is in fact incapable or incompetent.' And, in E C Cook v Thomas Linnell & Sons Limited [1977] IRLR 132, the Employment Appeal Tribunal added that it is enough to establish incompetence as a reason for dismissal if a responsible employer came to that conclusion after a reasonable time and there is evidence to back that conclusion.
  • The tribunals and courts have applied a number of yardsticks over the years in determining the question whether an employer had acted reasonably or unreasonably when treating incompetence as a sufficient reason for dismissing an employee. These are explained in the following paragraphs.
Length of service
  • How long had the employee worked for his (or her) employer? If an employee has given several years' satisfactory service in the same or a similar job with the same employer, an employment tribunal is likely to be suspicious of the employer 's contention that the employee was incompetent. The tribunal will want to see evidence of any deterioration in performance sufficient to justify dismissing that employee. If, on the other hand, the employee was a relative newcomer (or a long- serving employee transferred to a new department), the fault may very well rest with the employer's recruitment, selection and training techniques. In which case, the tribunal may well ask to see evidence of a programmed attempt to train the employee and to improve his or her performance to the required standard.
Warning of shortcomings
  • Was the employee warned of his (or her) shortcomings? Were there any circumstances that may have prompted a temporary shortfall in performance? In other words, was the employee warned or given a chance to explain? Did discussions take place? Did the employer expect too much of the employee? Were there any circumstances that may have been overlooked? Did the employee have a debilitating or distracting domestic problem (eg, a sick child or spouse)? Were there factors beyond the employee's control that had a major and unforeseen effect on his or her performance, such as persistent staff shortages, a breakdown in communications, the loss of a major account, non-delivery of raw materials etc?
Provision of training and advice
  • What steps were taken to improve performance? Was training provided as an ongoing feature? If not, it is hardly reasonable to appoint, promote or transfer a man (or a woman), to deny him training, counselling and advice, and then dismiss him as incompetent. Nor is it reasonable to leave an employee to his own devices for weeks or months at a time on the assumption (too often misplaced) that he will have the sense to seek help and advice when he needs it.
Suitable alternative employment
  • Was the employee made aware of the consequences of his (or her) continued failure to improve his performance in his job? In Tiptools Limited v T W Curtis [1973] IRLR 276, the then National Industrial Relations Court took the view that a failure to warn an employee of the likelihood of dismissal could render the subsequent dismissal unfair, particularly if it is felt that a warning would have prompted an improvement in performance. Furthermore, if an employee has been appointed, promoted or transferred beyond the level of his abilities, his employer is under an obligation to consider the possibility of a transfer to more suitable work (if such work is available).
Incompetent or just lazy?
  • An employer must take care to distinguish between incompetence due to an inherent inability to function and the case of an employee whose poor work record is due to his (or her) own carelessness, negligence or idleness. The latter situations are more appropriately dealt with as cases of misconduct rather than of capability – when different criteria will be applied by the tribunals (see Sutton & Gates (Luton) Limited v Boxall [1978] IRLR 486).
Additional notes
  • An employee who is genuinely incapable of doing his (or her) job well should not be treated in quite the same way as the employee who is guilty of misconduct. Lack of capability (or incompetence) can be demonstrated in a number of ways, such as lack of skill and aptitude, poor qualities of leadership, lack of initiative, and so on. A long-serving employee, who is genuinely unable to adapt to modern techniques or technology, should not simply be discarded. He has an investment in his job and deserves as much consideration as the law and natural justice can provide. If an employer is careless in his recruitment and selection techniques, or fails to provide the necessary training and guidance needed to improve the qualities and abilities of his workforce, the employee can hardly be criticised for the shortcomings of his superiors. The test of reasonableness is likely to be more stringently applied in this area than in any other.
  • An employee dismissed on grounds of alleged incompetence does not qualify to pursue a complaint of unfair dismissal unless he (or she) was under normal retiring age and had been continuously employed for one year or more at the effective date of termination of his contract of employment.