Misconduct vs Poor Performance: Know the Difference Before You Act

One of the most significant and least discussed sources of unfair dismissal liability for UK employers is the misidentification of employee conduct as either misconduct or poor performance. This distinction affects the legal process that must be followed and comes into sharp focus at Employment Tribunal when the reasonableness of an employer's response is assessed. This article explains how the distinction operates in practice, what each process requires of employers, and what the consequences are for businesses that follow the wrong procedure.

 What This Means for UK Tech Employers

Employment lawyers regularly see businesses, particularly in the fast-paced tech sector, struggle to distinguish between a won't do and a can't do situation. Whilst the end result may look the same, the legal path required to address each is fundamentally different. Misidentifying the issue can lead to successful claims for unfair dismissal, even where the underlying reason for wanting to end the employment relationship was entirely valid.

1. The Legal Distinction Between Misconduct and Poor Performance

The distinction lies in the degree of employee control over the behaviour or outcome in question.

• Misconduct (won't do): this is a disciplinary issue. It involves a deliberate or negligent act, a breach of rules, or behaviour that falls below the required standard of conduct. It is often a one-off event or a series of deliberate behavioural choices or failures.
• Poor performance (can't do): also known as capability, this arises where an employee is making a genuine effort but lacks the skills, aptitude, or ability to meet the required standards.

Before commencing any formal process, employers should take advice to ensure the correct procedure is identified from the outset.

2. Tech-Specific Examples: Where the Lines Can Blur

In a technology environment, the distinction between misconduct and poor performance is not always immediately apparent. The following examples illustrate how the same category of issue can fall on either side of the line.

Data Misuse

• Misconduct: an engineer intentionally downloads a client database to take to a competitor, or accesses sensitive payroll data out of curiosity. This is a conduct issue and will frequently constitute gross misconduct.
• Poor performance: a junior developer inadvertently leaves a confidential document publicly accessible because they did not fully understand the security configuration. This is likely a capability issue requiring training and supervision.

Security Breaches

• Misconduct: an employee repeatedly ignores mandatory multi-factor authentication protocols or uses unauthorised shadow IT software despite clear warnings and policies.
• Poor performance: an employee falls for a highly sophisticated, targeted phishing attack. This will usually point to a need for improved security training rather than disciplinary action.

Time Recording and Billing

• Misconduct: time padding, or claiming hours for work that was never performed. In professional services or billable tech consultancy, this is frequently treated as a fundamental breach of trust constituting dishonesty.
• Poor performance: an employee consistently fails to log hours by the required deadline because they struggle with organisation or find the internal system difficult to use effectively.

3. Different Legal Processes: Capability and Disciplinary Procedures

The ACAS Code of Practice on Disciplinary and Grievance Procedures applies to both misconduct and capability cases, but the internal process differs significantly between the two.

The Capability Process

• Identify the specific gap between actual performance and the required standard.
• Provide meaningful support, including training, mentoring, or workload adjustment.
• Set a formal Performance Improvement Plan with SMART targets and a defined review period.
• Allow a reasonable timeframe to improve before progressing to formal warnings.

The Disciplinary Process

• Conduct a prompt and impartial investigation into the facts.
• Hold a formal disciplinary hearing at which the employee can state their case.
• Apply sanctions proportionate to the seriousness of the conduct, ranging from a first written warning through to summary dismissal in cases of gross misconduct.

Why This Matters in Practice

• Unfair dismissal risk, treating a genuine capability issue as misconduct and dismissing without a proper support process is unlikely to be found reasonable by a tribunal.
• Precedent risk, treating serious misconduct as a performance matter can make it harder to dismiss other employees for similar behaviour in the future.
• Gross misconduct misclassification, failing to recognise a data theft or dishonesty issue as gross misconduct, can set an inappropriate organisational precedent.
• Discrimination exposure, an inconsistent approach to misconduct and capability cases can give rise to claims of discriminatory treatment under the Equality Act 2010.
• Process conflation, where conduct and performance are interlinked, running both processes simultaneously without legal advice, significantly increases litigation risk.

Why Work with a Specialist Employment Lawyer

Identifying the correct process at the outset is the most effective way to protect the business from costly Employment Tribunal claims.

• Advise on whether the facts support a capability or disciplinary process, or whether both procedures are required.
• Review the proposed approach before any formal steps are taken to assess litigation risk.
• Ensure consistency of treatment across the workforce to minimise the risk of discrimination claims.
• Provide representation or strategic advice where a tribunal claim has been threatened or issued.

Identifying the Right Process Before You Act

Businesses should be aware of the legal distinction between misconduct and poor performance and take advice before commencing any formal process. Ensuring you follow the correct procedure from the outset is not optional, it is a legal requirement that will be scrutinised by an Employment Tribunal if a claim is brought.