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Dismissing an employee that fails to meet budget

  • This case shows that employers are considered to be the best judge of whether a performance target is realistic.
  • The Employment Tribunal will only substitute its opinion if the target is demonstrably unreasonable or unfair.
  • This is a relatively high threshold and the evidence of unreasonableness or unfairness therefore needs to be quite compelling.
  • Employers must follow a fair process including advising the employee of the improvements or standards required and allowing a reasonable time for the employee to attain those standards before a dismissal is justified.

It is common for employers to set performance requirements for employees to achieve. For sales people, this usually takes the form of a sales target or budget. Can an employee be dismissed for failing to achieve budget? What if the budget/target is unrealistic? The Employment Tribunal dealt with these issues in a recent case.

Turners Auctions employed a new employee as a sales consultant. It set sales targets for him to meet, which he formally agreed to and accepted. For over a year the employee constantly failed to achieve the targets set. As a result, he was given a series of warnings and eventually dismissed.

The employee brought a personal grievance against Turners. He claimed that the warnings given to him and his subsequent dismissal were unjustified because the sales targets were unreasonable given the market conditions at the time, and that this was something that he had no control over. He also claimed that Turners had not provided him with proper training and support.

Turners disputed this and said that he had failed to perform to its requirements, despite counselling, warnings and opportunities to improve, and that his dismissal was justified.

In deciding the case, the Employment Tribunal held that it was not to be the judge of whether the standards set by Turners were too high, unless they were demonstrably unfair or unreasonable. In this case they were not. The employee was consulted about the targets and had agreed to them. His sales performance was also inferior to that of other staff in similar positions.

He had been told in very clear terms on numerous occasions what was expected of him, and had been given ample time to achieve the standards required (he had been on a monthly performance management programme for around a year). He had failed to achieve those standards and consequently his dismissal was justified.

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