First published: February 3rd, 2022
Last updated: July 24th, 2023
Your employees are human and sometimes their work performance may dip.
In many cases, an informal chat with the employee can help shed some light on any issues that are affecting their ability to complete their duties. Once the issue is identified and the employee receives some relevant support, their performance will improve and no further action will be necessary.
If the informal approach doesn’t work however, there may be questions about the employee’s ‘capability’ to do their job.
What is capability?
Capability in the context of employment law refers to an employee's skill, aptitude, health, or any other physical/mental quality that allows them to complete their duties. Employment law recognises that employers may need to dismiss staff who no longer have the capability to complete their work.
Even if an employee’s performance is good, you may need to start a dismissal process based on capability if they are uncooperative, absent too often or persistently late.
If an employee’s behavioural issues are causing problems for your business, you may need to consider carrying out a dismissal process based on their capability or capacity to do the job. For example, if the employee is uncooperative, they may not get along with clients.
Capability policy
A capability dismissal will be lawful if an employee doesn't have the capability, competence, or qualifications to perform the work which they’re employed to do.
The purpose of a capability policy is to clearly set out the how the business will address capability issues that arise in the workplace.
First of all, you need to take steps to support and enable your employees to work effectively. An informal discussion with the employee will often prevent the need for formal disciplinary action, which should only be a last resort. A mutually agreed performance management solution should be explored first to help the employee overcome any capability issues.
Performance-related capability dismissal
The test to determine whether a dismissal related to employee competency is fair is similar to the procedure used for misconduct:
- Do you believe that the employee is not capable of carrying out the job?
- If so, do you have reasonable grounds to sustain that belief?
The procedure you follow to establish the basis for the dismissal must comply with the rules of natural justice and the terms of your written disciplinary procedures.
There is one key difference in competency cases, however. You must outline the nature of the performance issues that you need the employee to improve.
Before moving to dismiss on the grounds of competence, you must first highlight the performance issues to the employee and grant them an opportunity to improve. With the right training or other workplace supports, the employee may turn things around.
Medical capability dismissal
Before confirming a dismissal on the grounds of medical capability, you should obtain detailed medical evidence confirming that the employee’s return to work or recovery is unlikely.
It may be the case that there's a conflict between the medical evidence presented by both parties in relation to the most likely date of return to work. In the absence of agreement between medical teams, you’ll need an independent medical opinion before confirming a capability dismissal on the ground of poor health.
A dismissal based on medical capability must follow the principles of natural justice. You should:
- Make sure you’re in full possession of all material facts concerning the employee’s condition.
- Ensure the employee receives fair notice that the question of a medical capability dismissal is being considered.
- Provide the employee with an opportunity to prove their case.
- If the employee isn't capable after a medical expert deems them so, ensure you explore reasonable accommodations that could render the employee fully capable (for instance, possible alternatives include changing hours of work).
Unfair dismissal laws and capability
Most unfair dismissal claims arise when an employer fails to follow fair procedures prior to confirming a dismissal.
The Workplace Relations Commission will examine the following questions in an unfair dismissal claim which are also applicable in cases involving capability:
- Did the employer believe that the employee was guilty of misconduct as alleged?
- If so, did the employer have reasonable grounds to sustain that belief?
- Did the employer carry out as much investigation into the matter as was reasonable before dismissing the employee?
- If so, was the penalty of dismissal proportionate to the alleged misconduct?
The best way to minimise the risk of unfair dismissal claims is to have thorough disciplinary policies and procedures in place and to follow them strictly before confirming a dismissal.
Free Download: Unfair Dismissal
Expert employment law advice on capability
The management of employees with capability issues is a challenging area for business owners to handle.
To find out more about how to manage concerns around capability in your workplace, speak with one of our expert HR consultants today on 1800 719 216