What is Capability Dismissal?

By Matthew Reymes Cole
28 Jun 2023

Capability dismissal can be a contentious issue and one that often ends up at an employment tribunal. This is because it's a rather fluid term. It's dependent on the performance levels of your business.

If you need immediate advice on capability dismissal, get in touch with one of the Croner experts here or phone us on 0800 470 2806.

Capability dismissal must follow the capability procedure.

What is capability dismissal?

Capability dismissal is the type of dismissal that arises when an employee has capability issues when performing their job.


This could include not having the ability, skills or qualifications to complete the role they were hired to do. This includes any illnesses or disability, regardless of the reasonable adjustments put in place to help.

To be able to dismiss an employee for capability, two things need to be addressed.

  1. Why is the employee incapable of performing the role against their job description?
  2. Why haven't steps been taken to help them by the company?

You need to take all the steps required for the employee to have the opportunity to improve before they are considered for capability dismissal. You could for example put the employee on a performance improvement plan (PIP) before enacting the disciplinary procedure.

Dismissal on the grounds of capability

You can dismiss an employee for a variety of fair reasons. Capability is one of them. The term refers to a staff member's ability to perform their required responsibilities in their current role.

You may think they're incapable of performing the tasks required of them, while they feel they are performing adequately.

If you're thinking about conducting a dismissal, here are some factors you need to consider:

  • Are there personal issues contributing to their work ethic?
  • Do they have a disability that could affect their performance?
  • Should you consider it as a conduct issue where carelessness, negligence, or lack of effort affects performance?
  • Is your staff member affected due to a lack of knowledge, skill, or ability?
  • Did you provide the employee with all the tools they need to do their job (e.g. training)?

As a first step in any capability scenario, providing you’ve tried to handle the issue informally first, you should write a letter to them. In this, state how they've failed to meet their performance objectives.

You should also add that you wish to conduct a meeting with them to outline steps to improve moving forward, and how you can help.

If the problem is due to insufficient training, or a similar factor, follow your company procedure to try and assist your employee.

Provide the staff member with the time to improve. This is because the relevant support will then allow you to re-assess their situation. If this doesn't work, you have the right to dismiss them on capability grounds. This dismissal is following a full and thorough process.

a lady who is incapable of doing their job dur to illness.

a lady who is incapable of doing their job dur to illness.

In the event of illness

But what about dismissal on grounds of capability due to ill health?

If the employee is incapable of performing the tasks required of them because of ill health, you need to handle the situation sensitively.

If they have a disability, you can’t treat them less favourably on the basis of this.

If an employee can't perform their duties, and you have made reasonable adjustments to remove any disadvantages, it may be fair to dismiss them.

You should consider all options before conducting a capability dismissal on the grounds of ill health, including:

  • Getting a medical report from their GP.
  • Arranging an occupational health assessment.
  • Making reasonable adjustments if possible.
  • Allowing sufficient time to see whether their health improves.
  • Giving all available company support.

Medical capability dismissal isn’t by definition an unfair dismissal, but if handled incorrectly, this can lead to an unfair dismissal claim and large payouts via a tribunal.

Unfair dismissal for capability and pay

The cap for an unfair dismissal payout in this area currently stands at £105,707 compensation cap + £19,290 basic award cap (or unlimited compensation for a discriminatory dismissal).

If you handle the situation correctly, this can go some way to ensuring you won't need to make this payout. If you're looking for guidance on conducting a capability dismissal, Acas has guidance on the issue.

Speak to an expert

Dismissing an employee is never easy, if you need advice on how you should approach the situation, get in touch with one of Croner’s experts.

Croner has a team of award-winning, HR professionals and consultants who are specialists in their field. We've been helping businesses for over 80 years and our advice line is open 365 days a year, 24 hours a day. Why not speak to a Croner expert on 0800 470 2806.


Capability dismissal must follow the capability procedure.

About the Author

Matthew Reymes-Cole

Matt joined Croner in 2007 as an employment law consultant and has advised clients of all sizes on all aspects of employment law. He has worked within management positions since 2017 and currently oversees a team within the litigation department, whilst continuing to support a number of clients directly.

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