Performance improvement plans and capability dismissal

Someone in your business is past probation and is not doing the job well enough. You have said so twice, both times in passing, and nothing is written down. The question in your head is how long this has to run before you can act on it.

The order matters more than the length. A capability case turns on what the file shows you did before the decision, and the first entry in that file is usually a conversation nobody recorded.

As checked on 12 October 2026, the fall in the unfair dismissal qualifying period from two years to six months is scheduled for 1 January 2027 and is not in force today. Unfair dismissal rights for employers. Check the implementation position before you act on it. Commencement regulations, SI 2026/559.

Decide whether this is capability or conduct

Section 98 of the Employment Rights Act 1996 lists capability and conduct as two separate potentially fair reasons for a dismissal, in subsection (2)(a) and subsection (2)(b). Subsection (3)(a) defines capability as the employee's capability "assessed by reference to skill, aptitude, health or any other physical or mental quality". Section 98, Employment Rights Act 1996.

Acas draws the line in a sentence each. As checked on 12 October 2026, it is a capability issue "if the problem is with the employee's ability to do something", and a conduct issue "if the problem is with the employee's behaviour, rather than their ability to do the job". Acas on problems with an employee's performance, last updated 23 June 2026.

Most small-business cases look like both at first, and Acas takes the obvious example head on. Someone regularly late for work could be late because of an impairment or condition, and where that is considered to be a disability the employer has to consider whether a reasonable adjustment is needed before taking disciplinary action.

Write down which route you are on, and why, on the day you decide. Our guide to misconduct or gross misconduct before you dismiss takes the conduct route, including the notice the classification decides. One carve-out on the other side: because the statutory definition reaches health, long-term sickness absence is capability too, but it runs as a different process under Acas's separate guidance on sickness and ending employment. This guide is about someone who is at work and not meeting the standard.

Check for a health condition before you start the process

This is the part that turns a performance problem into a discrimination claim, and it belongs before the process rather than inside it.

A person has a disability under the Equality Act 2010 if they have a physical or mental impairment and the impairment has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. Section 6, Equality Act 2010. Where a provision, criterion or practice of yours puts a disabled person at a substantial disadvantage compared with people who are not disabled, you have to take such steps as it is reasonable to have to take to avoid that disadvantage, and a failure to do so is itself discrimination. Section 20 and section 21, Equality Act 2010.

Acas treats a performance standard as something a reasonable adjustment can change, giving more time for written tasks, an adjusted shift pattern or specialist equipment as its examples. Acas on problems with an employee's performance. The plan you are about to write is the same kind of thing.

Section 15 reaches a capability process more directly. Treating someone unfavourably because of something arising in consequence of their disability is discrimination unless you can show the treatment was a proportionate means of achieving a legitimate aim, and that section does not apply at all if you did not know and could not reasonably have been expected to know about the disability. Section 15, Equality Act 2010. The defence is the employer's to prove, and it fails if you could reasonably have been expected to know, so not having been told is not enough.

Acas puts the practical duty in front of the procedure. Where someone cannot do their job because of their disability, or is not meeting the standard, the employer should follow a capability or performance procedure, but before doing so must make sure they have done all they reasonably can to support them. A full and fair procedure includes talking about the disability, how it affects them and their capability to do the job, and gathering evidence of the support put in place. Dismissal might be justified where the employer can show all four of the things Acas lists: that the person cannot do the job after everything has been tried to remove the barriers, that there is no other suitable role it could offer as an adjustment, that there is no other way the work can be done, and that the decision to dismiss is reasonable once all the circumstances have been considered. Acas says this is a complex area and that the employer should get legal advice before considering any dismissal, and it is explicit that an employer must not dismiss or discipline someone just because they are disabled. Acas on capability and performance when someone is disabled, last updated 10 September 2024.

The same holds where someone is neurodivergent, with one addition worth knowing in advance: Acas says an employer should offer support even if the employee only shares their neurodivergence once a formal procedure has started. Acas on performance, conduct and capability at work.

Pregnancy and maternity are protected characteristics in their own right, so performance concerns that surface soon after a return from leave need the same check first. Acas lists the people the Equality Act protects as anyone who works for an employer, contractors and self-employed people hired to personally do the work, job applicants and former workers, which is a list with no service threshold in it. Acas on discrimination and the law.

So the first entry in the file is not the plan. It is the record of what you asked and what support you offered.

Raise it informally, then put the plan in writing

Acas expects the informal attempt first and describes it concretely: talking privately with the person and anyone else involved, listening to their point of view, agreeing the improvements to be made, and setting up a training or development plan where it is a performance issue. Try these before starting a formal procedure. Acas disciplinary procedure, step by step, last updated 4 December 2025. Acas separately says it is important to keep a record of any conversations you have with an employee about performance. Acas on problems with an employee's performance, last updated 23 June 2026.

Is a performance improvement plan legally required? No. The law requires a fair reason and a reasonable decision, and no Act or Code names a plan. What Acas does is list the evidence an employer might hold in a capability dismissal, and "performance improvement plans showing a failure to improve" is on that list, next to records of regular, fair performance reviews. Acas on dismissals for capability or conduct, last updated 23 June 2026. A plan is the usual way of showing the things section 98(4) asks about. It is not a box that makes a dismissal safe.

Acas says a plan should set out specific objectives, a reasonable timeline to meet them and any further support or training the person needs, and that the employer should talk it through with them to be sure they understand it. Acas on problems with an employee's performance.

On the consequence of not meeting the standard, Acas gives two outcomes. Where the person improves but not to the level agreed in the plan, the timeline in the plan can be extended. Where the issue continues, it may lead to a final written warning and then a dismissal. Say which of those you are describing, in the plan, in writing, before the review date arrives.

The support side is more than goodwill. Acas states that employers must provide "adequate resources" for an employee to do their job, and that this might include giving them training. Before dismissal it says to consider changing the person's current duties if possible, or finding a different role for them if there is one, and that dismissal should be a last resort. Acas on dismissals for capability or conduct.

No source sets a length for the plan. A reasonable timeline is the one the objectives need, long enough for the training or support you promised to actually happen. Nor do the sources answer whether the process can be shortened because earlier plans for the same person were handled badly: neither Acas nor GOV.UK addresses it, and the file you have is the file the process is judged on. Where the concerns first appeared during probation, our guide to the six-month unfair dismissal qualifying period sets out the reviews that are meant to catch them.

The Code itself may change, and has not changed yet. Acas closed a consultation on a revised Code on 23 September 2026 and is reviewing the responses; no outcome and no implementation date have been published. The draft would move informal resolution inside the Code. That is a proposal, and the 2015 Code is the one you follow today. Acas consultation on the draft Code.

Run the formal stage the way the Code expects

If you use a separate capability procedure rather than your disciplinary one, the Code still reaches it. Acas's guidance says a separate capability procedure must still be in line with the Acas Code of Practice on disciplinary and grievance procedures. Acas on dismissals for capability or conduct. The Code's own wording, at paragraph 1, is softer and more useful: where an employer prefers to address performance issues under a separate capability procedure, "the basic principles of fairness set out in this Code should still be followed, albeit that they may need to be adapted". Acas Code of Practice on disciplinary and grievance procedures.

What the Code asks for in a poor performance case: notification in writing with enough information about the poor performance and its possible consequences for the person to prepare their answer, normally with copies of any written evidence, and with the time and venue and a note of the right to be accompanied (paragraphs 9 and 10); the meeting held without unreasonable delay but with reasonable time to prepare (paragraph 11); the decision given in writing (paragraph 18); and an appeal heard without unreasonable delay and, wherever possible, by a manager not previously involved in the case (paragraphs 26 and 27).

On warnings the Code says what is usual, not what is required. Where an employee is found to be performing unsatisfactorily it is usual to give a written warning; a sufficiently serious first instance may go straight to a final written warning; and a first or final written warning should set out the nature of the poor performance, the improvement required with a timescale and how long the warning will remain current, with the consequences of a further failure to improve within the set period following a final warning (paragraphs 19 to 21). Neither the Code nor any statute fixes a number of warnings, and no source sets how long one stays live. The Code's requirement is that you tell the person, not that you pick a particular period. Acas Code of Practice on disciplinary and grievance procedures.

GOV.UK sets out the same escalation under a misconduct heading, phrased throughout as performance or behaviour: a meeting, a first written warning, a second meeting and a final written warning, then a third meeting if the standard is still not met. Keep notes of all meetings and give copies to the employee. GOV.UK on dismissals for conduct or performance, updated 5 October 2026.

Then the companion question. Whether a meeting carries the statutory right to be accompanied does not depend on what you call the procedure. Section 13(4) of the Employment Relations Act 1999 defines a disciplinary hearing, for the purposes of the section 10 right, as a hearing which could result in a formal warning, in some other action in respect of the worker, or in the confirmation of a warning or other action. Section 10 and section 13, Employment Relations Act 1999. Paragraph 13 of the Code says the same from the other side: the right applies where the meeting could result in a formal warning or other disciplinary action, and at appeal hearings.

So a formal capability meeting that could end in a warning carries the right. An informal performance conversation that cannot end in a warning does not, and nor does an investigation meeting, where Acas states there is no legal right to be accompanied but that it is good practice to allow it. Acas on holding investigation meetings. If someone declines to attend an informal review without a representative, the answer is not that they have no right at all. The right attaches to the formal meeting, and allowing a companion at the informal one is yours to decide, and often the sensible call where it also works as a reasonable adjustment.

The reason to get the procedure right is section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. Where a claim in a jurisdiction listed in Schedule A2 concerns a matter to which a relevant Code applies and the employer unreasonably failed to comply with the Code on that matter, the tribunal may increase any award it makes to the employee by no more than 25 per cent, if it considers that just and equitable. Section 207A, Trade Union and Labour Relations (Consolidation) Act 1992. The test is the matter the claim concerns, not the title on your policy document.

Keep the file, and give the January date an owner

By the end of the process the file should hold the dated notes of the informal conversations, the plan itself, the written invitation to each formal meeting, the notes of those meetings and the outcome letters. That is the list the Code, Acas and GOV.UK between them describe, and none of it can be written afterwards.

There is no retention period to quote. The ICO's position is that data protection law sets no retention period for workers' personal information, that you should set your own in a retention policy or schedule and record what each type of information is for, and that a one-size-fits-all approach will not do. ICO on collecting and keeping employment records, guidance under review following the Data (Use and Access) Act. For a capability file the honest answer is the tribunal horizon: on 1 October 2026 the limit for the majority of claims rose from three months to six, which is why the file needs a review date rather than an open shelf. Government guidance on tribunal time limits. Our guide to how long to keep leaver records sets the retention window against that six-month limit.

Health notes are a separate job. Anything about the person's physical or mental health is special category data, and the ICO says that in addition to a lawful basis you must identify a condition for processing under Article 9, that many of the Schedule 1 conditions also require an appropriate policy document, and that you must keep health information particularly secure, with access limited to those who need to see it. ICO on data protection and workers' health information. In practice the occupational health report and the notes of the adjustment conversation should not sit in the same folder as the performance notes.

The date that fixes which rule applies is 1 January 2027, when the qualifying period for ordinary unfair dismissal falls from two years to six months in England, Scotland and Wales. Unfair dismissal rights for employers. What matters for a capability process is regulation 4 of the commencement regulations: the change bites where the effective date of termination falls on or after that day, including where the dismissal itself happened before it. Commencement regulations, SI 2026/559.

That is a scheduled change, and it answers the timing question this guide opened with. The rule that applies is fixed by the date the employment ends, not by the date you opened the plan. A process begun now that runs a plan, a review and an appeal into the new year is judged under the six-month rule, whatever the person's service was when you began. Our Employment Rights Act key dates page carries the rest of the timetable.

The same government guidance makes the other half of the point: you can still dismiss for a reason such as poor performance if the decision to dismiss is fair, which includes following a suitable fair process. It suggests independent advice when you update policies for the new qualifying period. Unfair dismissal rights for employers.

So one task this week. Take the people currently on an informal footing, decide which is a capability matter and which is conduct, and write the first dated note for each. Before a decision about an individual, check the current guidance and seek appropriate advice.

Common questions

Is a performance improvement plan a legal requirement?

No. Section 98 of the Employment Rights Act 1996 requires a potentially fair reason and a reasonable decision, and no Act or Code of Practice names a performance improvement plan. Acas lists "performance improvement plans showing a failure to improve" among the evidence an employer might hold in a capability dismissal, which makes a plan the usual way of showing the process rather than a duty in itself. Acas on dismissals for capability or conduct. Section 98, Employment Rights Act 1996.

Does the right to be accompanied apply to a capability meeting?

It depends on what the meeting could result in, not on what the procedure is called. Section 13(4) of the Employment Relations Act 1999 defines a disciplinary hearing, for the purposes of the section 10 right, as a hearing which could result in a formal warning, in some other action in respect of the worker, or in the confirmation of a warning or other action. A formal capability meeting that could end in a warning therefore carries the right; an investigation meeting does not, though Acas says it is good practice to allow a companion there. Section 13, Employment Relations Act 1999. Acas on holding investigation meetings.

How many warnings do you have to give for poor performance?

No Act or Code fixes a number. The Acas Code says that where an employee is found to be performing unsatisfactorily it is usual to give a written warning, that a sufficiently serious first instance may go straight to a final written warning, and that the warning should set out the improvement required with a timescale and how long the warning will remain current. GOV.UK sets out a first written warning, a final written warning and a third meeting if performance is still not up to standard, under a heading about misconduct but phrased throughout as performance or behaviour. Acas Code of Practice on disciplinary and grievance procedures. GOV.UK on dismissals for conduct or performance.

What if the performance problem is linked to a disability?

Deal with that before the process rather than during it. Acas says that where someone cannot do their job because of their disability, or is not meeting the standard, the employer must make sure they have done all they reasonably can to support the disabled person before following a capability or performance procedure, and must not dismiss or discipline anyone just because they are disabled. Under section 15 of the Equality Act 2010, unfavourable treatment because of something arising in consequence of a disability is discrimination unless it is a proportionate means of achieving a legitimate aim, and the knowledge defence is lost if you could reasonably have been expected to know. Acas on capability and performance when someone is disabled. Section 15, Equality Act 2010.