A Jamie HR manager's guide

The manager's guide to performance and appraisals

A practical guide for managers and small businesses on setting performance standards, running appraisals and giving feedback, handling underperformance fairly, and the capability dismissal rules affected by the unfair dismissal changes coming in 2027.
Clear standards
Fair capability process
2027 law changes

Good performance management runs all year, not just at one annual appraisal.

This guide sets out what ACAS guidance recommends for setting objectives and running appraisals, how to support an employee whose performance is falling short, and what the law requires if a formal capability process leads to dismissal. It also covers the change to the unfair dismissal qualifying period from 1 January 2027.

What's inside
Setting performance standards3
Writing SMART objectives4
Running regular reviews and appraisals5
Feedback throughout the year6
Supporting someone to improve7
Moving to a formal capability process8
Evidence and record-keeping9
Capability as a fair reason for dismissal10
Unfair dismissal: what's changing in 202711
Getting performance management right12
How Jamie HR helps13

Setting performance standards

ACAS guidance recommends agreeing objectives that are fair and specific to the role.
  • ACAS guidance states that objectives should be fair and reflect the employee's usual tasks and workload.
  • Set out what is expected in each role, so the employee knows what a good standard of work looks like.
  • Agree objectives with the employee rather than issuing them unilaterally.
  • Review and update objectives as the role or business needs change.

Writing SMART objectives

ACAS guidance recommends framing objectives using the SMART criteria.
  • ACAS guidance recommends objectives that are specific, so the employee is clear about what they will actually do.
  • Make each objective measurable, so both of you know whether it has been achieved.
  • Set objectives that are achievable and realistic for the role and the individual.
  • Keep objectives relevant to the employee's job and responsibilities.
  • Give each objective a reasonable, time-bound deadline.
  • ACAS guidance refers to objectives built this way as SMART objectives.
Manager tip
Write each objective down and share it with the employee, rather than leaving it as a verbal understanding from a meeting.

Running regular reviews and appraisals

ACAS guidance recommends conducting regular performance reviews for every employee.
  • ACAS guidance states that employers should conduct regular performance reviews for anyone with the legal status of employee, at least once a year.
  • Use a review to discuss what the employee is doing well and any areas for improvement.
  • Prepare for each review and give the employee time to prepare too.
  • Keep a written record of what is discussed at each review, and share it with the employee afterwards.

Feedback throughout the year

ACAS guidance is clear that performance management does not stop between formal reviews.
  • ACAS guidance states that alongside more formal performance reviews, managers should still talk to employees informally about their performance on a regular basis.
  • Share feedback close to the event it relates to, rather than saving it for the next scheduled review.
  • Hold regular check-ins, sometimes known as one-to-ones, as well as any annual or formal appraisal.
  • Offer coaching where it helps the employee build a skill or improve an approach.
Manager tip
Note down anything significant you discuss in an informal check-in, in case it is needed as evidence of a pattern later.

Supporting someone to improve

ACAS guidance recommends helping an employee improve before any formal procedure begins.
  • ACAS guidance states that employers should take steps to try to help someone improve, before starting a formal disciplinary or capability procedure.
  • Offer support such as coaching, mentoring or additional training.
  • Consider a performance improvement plan (PIP) where informal support has not resolved the issue.
  • ACAS guidance states that a performance improvement plan should set out specific objectives for the employee, a reasonable timeline to meet them, and any further support or training they need.
Manager tip
Set a review date within the performance improvement plan itself, so both of you know when progress will be assessed.

Moving to a formal capability process

Where informal support and a performance improvement plan have not resolved the issue, a formal process may follow.
  • Formal capability procedures are about the employee's ability to do the job, which is distinct from a conduct or disciplinary issue about behaviour.
  • ACAS guidance describes possible next steps where an employee does not improve, including extending the timeline in a performance improvement plan, a final written warning, or dismissal if the issue continues.
  • Whatever procedure is used, it must be in line with the ACAS Code of Practice on disciplinary and grievance procedures.
  • If you hold a separate capability procedure, follow that procedure consistently, since a tribunal can take a failure to follow it into account.
Watch out
The ACAS Code of Practice on disciplinary and grievance procedures applies to poor performance as well as misconduct. An employment tribunal can adjust an award by up to 25% for an unreasonable failure to follow the Code.

Evidence and record-keeping

A fair capability process depends on evidence built up over time, not a single meeting.
  • ACAS guidance states that it is important for employers to keep a record of any conversations they have with employees about performance.
  • Keep records of regular, fair performance reviews that show a consistent pattern of performance issues.
  • Keep records of any performance improvement plan and whether its objectives were met.
  • Share written records with the employee, so there is a shared account of what was discussed and agreed.

Capability as a fair reason for dismissal

Capability is one of the potentially fair reasons for dismissal set out in the Employment Rights Act 1996.
  • Section 98(2)(a) of the Employment Rights Act 1996 lists a reason relating to the capability or qualifications of the employee for performing the work they were employed to do as a potentially fair reason for dismissal.
  • Section 98(3) of the Act defines capability by reference to skill, aptitude, health or any other physical or mental quality.
  • ACAS guidance states that dismissal should be a last resort, and that employers should first consider adequate resources, training, changing an employee's current duties, or finding a different role for them.
  • A fair capability dismissal still depends on following a fair process throughout, in line with the ACAS Code of Practice on disciplinary and grievance procedures.
Watch out
A capability reason being potentially fair under section 98 does not make a dismissal automatically fair. An employment tribunal will also examine whether the process followed was reasonable.

Unfair dismissal: what's changing in 2027

The qualifying period for unfair dismissal protection is getting shorter under the Employment Rights Act 2025.
  • Right now, an employee normally needs two years' continuous service to bring an ordinary unfair dismissal claim.
  • From 1 January 2027, the qualifying period for this protection reduces to six months.
  • This means a capability dismissal for an employee with six months' or more service will need to withstand tribunal scrutiny in circumstances where, today, a shorter-serving employee could not bring an ordinary unfair dismissal claim at all.
  • Discrimination and automatic unfair dismissal claims, such as those linked to pregnancy or whistleblowing, have never had a qualifying period and are unaffected by this change.
Watch out
From 1 January 2027, build a fair, evidenced capability process into every case involving an employee with six months or more service, not only those who have passed two years.

Getting performance management right

A summary of the essentials covered in this guide:
  • Agree clear, SMART objectives with each employee and put them in writing.
  • Hold a formal review at least once a year, and give feedback informally throughout the year as well.
  • Offer support, coaching or training before considering a performance improvement plan.
  • Move to a formal capability process only where informal support has not resolved the issue, and follow the ACAS Code of Practice on disciplinary and grievance procedures throughout.
  • Keep a written record of every review, conversation and improvement plan.
  • Treat dismissal as a last resort, and prepare for the unfair dismissal qualifying period change in January 2027.

How Jamie HR helps

Jamie HR keeps objectives, reviews and performance improvement plans recorded in one place, ready if a decision is ever challenged.
  • Appraisal and review records held against each employee, with dates and outcomes in one timeline.
  • Objective tracking so managers and employees can see agreed goals and progress.
  • Performance improvement plans documented and stored alongside the rest of the employee record.
  • Policy library so managers can apply the same capability process consistently across the business.
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This guide is general information, accurate to the best of our knowledge as of 2026, and is not legal advice. Employment law changes and every situation is different, so for a specific case take professional HR or legal advice. Sources: ACAS, gov.uk and the Employment Rights Act 1996 (as amended).