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On capability measurement

I asked google gemini, “Is there a law that requires an employer to judge poor performance against a standard minimum level?” and supplemented it with, “what about section 98 of the Employment Relations Act?”

It replied in detail, although qualifying its advice as being from an AI and not from a lawyer. This answer related to capability assessments. Section 98 of the Employment Relations Act, distinguishes between capability and conduct.

These queries were originally undertaking while thinking about stack ranking and whether it was illegal in the UK. Its preordained failure rate divorces the decision from a judgement on performance and turns it into a competition. This I believe to be unfair and unreasonable. What it says on capability is more nuanced.

There is no single “minimum standard” law that dictates exactly what performance levels every job must meet; however, employment law does require that employers act fairly and reasonably when managing poor performance.
In the UK, the legal framework is built on the expectation that an employer must be able to justify any action taken (such as dismissal for “capability”) by demonstrating that they held an honest and reasonable belief that the employee was not performing to the required standard, and that they followed a fair process to address it.
Here is how the law and best practices interact with performance standards:

1. The Implied Contractual Term

There is an implied term in every contract of employment that an employee will perform their role to the minimum standard required. Because “minimum standard” varies significantly from role to role, the law looks at whether the employer has clearly defined these expectations. If an employer wants to rely on poor performance as a reason for dismissal, they must be able to show that the employee was made aware of what was expected of them and failed to meet those expectations.

2. The Role of the ACAS Code of Practice

While not a “law” in the sense of a statute, the ACAS Code of Practice on Disciplinary and Grievance Procedures is the benchmark used by Employment Tribunals to judge whether an employer has acted fairly.
  • Fair Process: To avoid claims of unfair dismissal, employers should typically follow a process that includes informing the employee of the shortfall in performance, providing necessary training or support, and giving the employee a reasonable opportunity to improve.
  • Consequences: Failure to follow the ACAS Code does not automatically make a dismissal illegal, but if an employee wins an unfair dismissal claim, a tribunal can increase their compensation by up to 25% if the employer unreasonably failed to follow the Code.

3. Objective and Measurable Standards

When an employer initiates a Performance Improvement Plan (PIP) or disciplinary action, they are generally expected to:
  • Define the standard: Clearly and objectively set out where the employee is falling short.
  • Set measurable targets: Explain exactly what is required to reach a satisfactory standard.
  • Provide a reasonable timeframe: Give the employee a realistic period to improve based on the nature of the role and the specific performance issues.

4. Equality Act 2010

If an employee has a disability (as defined by the Equality Act 2010), the employer has a legal duty to make reasonable adjustments to the performance standards or the process itself. If an employer holds a disabled employee to a standard that they cannot meet because of their disability—without first considering reasonable adjustments—that could lead to a claim of disability discrimination.

Summary for your situation

If you are concerned about how your performance is being judged, keep in mind:
  • Transparency: You should have been clearly told what the standards are for your role.
  • Support: You are generally entitled to support, training, and a fair opportunity to improve before any formal disciplinary action (like dismissal) is taken.
  • Documentation: Employers should keep records of performance issues, as these are necessary to justify any formal action later.
If you are facing a formal performance process, ensure you understand your company’s specific capability policy, as they are often more detailed than the minimum requirements of the law.
Disclaimer: I am an AI, not an attorney. Employment law is highly fact-specific. If you are facing formal disciplinary action or potential dismissal, you may wish to consult with a qualified employment solicitor, your trade union, or ACAS for advice tailored to your specific circumstances.
The second part of the answer is as follows,
Section 98 of the Employment Rights Act 1996 (ERA) is the cornerstone of unfair dismissal law in the UK. While it does not set a specific “statutory minimum standard” of performance that applies to every job, it establishes the legal framework that employers must use to justify dismissal based on performance.

How Section 98 Works

Section 98 does not dictate what “good” performance looks like for your specific role; instead, it defines “capability” as a potentially fair reason for dismissal.
Under Section 98(2)(a), “capability” is defined as an employee’s skill, aptitude, health, or any other physical or mental quality. To use this as a fair reason for dismissal, the employer must satisfy a two-stage test:

1. The “Reason” Test (Section 98(1) & (2))

The employer must prove that the dismissal was for a “potentially fair reason.” For performance issues, this means showing that the employee was genuinely unable to perform the work to the standard required for that specific role.

2. The “Reasonableness” Test (Section 98(4))

Even if the employer has a valid reason (e.g., poor performance), the dismissal is only fair if the employer acted reasonably in treating that reason as sufficient to dismiss the employee.
Tribunals assess “reasonableness” by looking at:
  • Procedural Fairness: Did the employer follow a fair process? This is where the ACAS Code of Practice becomes critical. Tribunals look for evidence that you were clearly informed of the performance standards, warned that you were falling short, and provided with the necessary support, training, or resources to improve.
  • Equity and Merits: The tribunal considers whether the employer’s actions were appropriate given the size and resources of the business.
  • Support and Opportunity: A fair process requires giving an employee a genuine, reasonable opportunity to improve (often through a Performance Improvement Plan or “PIP”) before moving to dismissal.

Key Takeaways regarding “Standards”

  • Standards are set by the employer: The law does not set the bar; your employer does. However, those standards must be clear, transparent, and attainable. “Moving the goalposts” or setting vague expectations is frequently cited as evidence of an unfair process.
  • Context matters: The “reasonableness” test is highly contextual. What is a “reasonable” performance standard for a senior executive at a large firm may differ from that of a junior role in a small business.
  • Equality Act interactions: If performance issues are linked to a disability, Section 98 procedures must be balanced against the duty to make “reasonable adjustments” under the Equality Act 2010.
In short, Section 98 doesn’t give you a universal performance baseline, but it prevents employers from dismissing you for poor performance without following a fair, evidence-based, and supportive process. If they fail to provide clear standards or deny you the opportunity to improve, they may struggle to prove they acted “reasonably” under Section 98(4).
Disclaimer: I am an AI, not a lawyer. Employment tribunal outcomes depend heavily on specific evidence and facts. If you believe you are being judged against unfair or arbitrary standards, you should consult your contract, company handbook, and seek advice from a professional body like ACAS or a trade union representative.

See also https://share.gemini.google/EGASSM9gOznC

 

Posted: 16th August 2026

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