by Kate Russell

Capability dismissal

The Employment Rights Act makes capability a fair reason for dismissal. Capability is defined as ‘capability assessed by reference to skill, aptitude, health or any other physical or mental quality’. It means that where an employee is not able to do his job for one of the reasons listed below, provided that procedure is followed correctly, it will be fair to dismiss.

There are two questions that need to be addressed for a capability dismissal to be in order.

  1. Does the employer honestly believe this employee is incompetent or unsuitable for the job?
  2. Are his grounds for that belief reasonable?

An employer will have to produce evidence of poor performance and show that this was the real reason for dismissing the employee.

Three types of capability

Dismissal on grounds of capability will be for one of three reasons:

  1. Lack of ability or skill
  2. Lack of capability because of ill health
  3. Loss of or failure to achieve a qualification.

Lack of ability or skill

This can be repeated minor incompetences or one serious incompetence. Examples of employees who have been held to be lacking in capability include:

  • A slow worker
  • An inflexible worker who was not prepared to adapt to change
  • A manager who, though successful in profit terms, failed to establish good working relationships
  • An employee who failed to reach the employer’s standards.

Lack of ability or skill is usually established over a period of time. Most failures of skill or ability will be fairly minor and addressed through the various stages of the disciplinary process. It is unusual for capability to be serious enough for to merit a dismissal for a first offence.


M was a farm manager whose technical qualifications and experience were not questioned by his employer. He made a number of small but persistent errors. He was warned about this and there were some initial improvements, but then matters deteriorated again. The employer concluded that he was not capable of performing his duties. M was dismissed and complained of unfair dismissal.

The court found that he had been fairly dismissed.

A one-off mistake which reveals gross incompetence or a fundamental incapacity to do the relevant work may lead to summary dismissal. The landmark case is Alidair v Taylor.


A commercial pilot, T, made a faulty landing while flying 77 passengers in reasonable weather conditions. No one was hurt, but the aircraft sustained considerable damage. A full enquiry was carried out and the faulty landing was found to be pilot error. T was dismissed. He claimed unfair dismissal saying that this was the first incident on a hitherto unblemished record and dismissal was unreasonable in the circumstances.

His claim of unfair dismissal was rejected by the Court of Appeal. Even though it was the first such incident, there are activities in which the degree of professional skills that must be required is so high and the potential consequences of the smallest departure from that high standard are so serious that one failure to perform in accordance with those standards is enough to justify the dismissal. This was one such case and the dismissal was accordingly fair.

Just because a mistake is serious, you still have to go through a proper process to establish the facts.

An inexperienced garage mechanic was instantly dismissed for not tightening a bolt on a car that he had been working on. The employment tribunal held that the dismissal was unfair because the employer had not followed a fair procedure under the ACAS code. The tribunal pointed out that the claimant was in the first year of an apprenticeship and under the direct supervision of an experienced mechanic, who should have checked his work.

Protected Conversations

The length of time involved, the disruption caused to the business and the possibility of a claim all mean that many employers will consider making a ‘without prejudice’ offer for an agreed exit from the business.

Protected conversations need to be handled carefully to ensure that, if a deal cannot be achieved, the discussions cannot be raised in subsequent litigation. An employer will often start the process by establishing their ‘open’ position by kicking off the capability procedure. Once the procedure has been initiated, you may want to approach the employee on a without prejudice basis indicating that you might be prepared to consider an agreed exit from the business.

At the same time, in order to protect yourself from allegations of unfair dismissal if you cannot reach a deal, you should make it clear to the employee that the business is prepared to go through with the capability process, if necessary. The employee should also understand that no decisions on the outcome of the process have been taken.

The use of settlement agreements should be carefully planned to ensure that you have considered your open position, the legal position, possible claims and potential costs (including legal costs).

Lack of capability because of ill health

If an employee isn’t able to perform his duties because of his ill health, it will be fair to dismiss provided that all the procedures are exhausted. An employer isn’t required to show that the employee couldn’t carry out all his duties, merely that the ill health affects the employee’s capability.

Long-term absence procedures

The key steps in managing long-term absence are listed below.

  • The employer should maintain regular and on-going communication with the employee.
  • The employer’s approach should be sympathetic and considered.
  • He should gather medical advice to assess whether the employee’s condition amounts to a disability and also the capability of the employee to undertake their role going forward. If the condition is a disability within the meaning of the Equality Act 2010, there is a legal requirement to make reasonable adjustments (see Disability discrimination).
  • In any event, the reasonable employer must consider what can be done to help the employee to remain in employment. Some examples may include reduced hours, light duties, change of job, change of place of work.
  • Be specific about the information required from the medical report – for example the nature of the illness, the ability of the individual to undertake their role, having provided a detailed description of responsibilities, the length of time the illness is likely to last, and any reasonable adjustments that would ease the situation.
  • A process of consultation and discussion should take place with the individual, subject to any recommendation by the doctor. Discuss options and listen to the employee’s proposals for his return to work.
  • If the cause of the illness is work related, the root cause should be investigated. Employers should discuss ways to reduce the influencing factors, perhaps with increased support, training or reallocation of duties. Could the employee return to work on a staged basis or on a part-time basis for a short period?
  • Record all steps and agreements in writing to confirm what is expected of the employee and also what steps the employer is going to take, so there is no confusion and all actions taken are seen to be reasonable.

P suffered from severe depression. During his absence his employer kept in close contact with him, refused to accept his resignation on one occasion and extended his sickness benefit. When the decision to dismiss was taken, the employer failed to consult P, relying only on a medical report that had been misconstrued. P complained that he’d been unfairly dismissed.

The court agreed. Even though the procedure had been perfectly adequate at earlier stages, when the decision to dismiss was taken the employer failed to consult P personally.

See Attendance Management.

Loss of or failure to achieve a qualification

Qualifications are defined as ‘any degree, diploma or other academic, technical or professional qualification relevant to the position which the employee held’.

A licence, permit or authorisation doesn’t fall into this category unless it is substantially connected to the aptitude or ability of the employee to do the job. Holding a driving licence will be a qualification where it relates to the aptitude or ability to do a job which necessitates driving.


M was recruited as a motor mechanic. The job advertisement stated that possession of a clear current driving licence was essential, but M’s contract made no mention of this. M was disqualified from driving and dismissed by his employer. He complained unsuccessfully that he’d been unfairly dismissed.

The court found that the possession of a driving licence was clearly an essential and continuing condition of his employment so that when he was dismissed it was a fair dismissal on grounds of capability.