By Purity Ngigi- Sundays

In the current digital age, employers are increasingly automating their management systems to make work more efficient.

There has been an increase in using performance management systems to track employees performance and performance improvement tools to help underperforming employees improve their performance. It is now customary practice to place employees on Performance Improvement Plans (PIPs) in the event of poor performance. 

However, while these systems make work more efficient, employers must ensure that they use the systems within the employment law guidelines. 

In a recent court case, the court awarded an employee eight months of damages for unfair termination amounting to Ksh 6.5 Million after finding out that the employee’s termination was based solely on a performance management system gone awry. 

Facts of the case

The employee had been employed for 26 years, 24 of which the employee’s records indicated that she was a good performer who rose through the ranks from a junior to a senior employee. In the last two years before her termination, the employer moved the employee to a different job title where she was said to be underperforming. She was on various occasions taken through capability meetings, warnings and finally termination. 

The employer’s performance management system, which rated the employee as ‘underperforming for two years, informed the capability meetings and warnings, placing the employee on a PIP and ultimately her termination from employment. 

The court noted that while the performance management system rated the employee as underperforming, feedback from the employee’s reviewers showed that they were impressed. According to the court, the feedback from the reviewers did not indicate circumstances that would conclusively suggest that the employee was underperforming. Some reviewers noted that the employee was working hard and was not afforded ample time to realise significant growth in her new role.

The employer relied on the performance management system’s rating in its decision to terminate the employee without regard to the feedback from the reviewers. The court held that the reason for termination was not fair and valid as required by the Employment Act.

The court further indicated that for a performance management system to be considered objective and reliable, the system must:

1. in the first instance establish that there is indeed underperformance on the part of the employee;
2. once underperformance has been established, the employer must seek to understand the reason for such underperformance, especially in a long-serving employee; and 
3. finally, the employer must seek to rectify the work environment that has caused the employee to be underperforming.

Courts have consistently ruled that employers should utilise performance management tools to improve an employee’s performance. Employers should not use the tool as a mere gateway for terminating an employee.

You can read more about this case and see our post on the legal guidelines for implementing a PIP.