What is a capability policy? Get your free capability policy template

Your capability policy helps you with performance management – because while every business hopes its employees are the best possible fit for the job, sometimes things don’t work out.

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Capability for the role was cited as a factor in nine out of ten disciplinary procedures, according to Acas. But good performance management can avoid the need for disciplinary action – and your capability procedure is at the heart of that process.

Simply Business has teamed up with Farillio to offer a series of downloadable legal documents that you can customise for your own business. One of those is a free capability policy template, which you can download below. You can also read our quick-start guide to introducing a capability policy in your business.

Why use a Farillio template for your capability policy?

Every business is different, with unique legal requirements. However, most small firms can’t afford dedicated legal counsel. To tackle this, Farillio offers a range of downloadable, customisable legal document templates that you can adapt for your own business.

What is a capability procedure in employment law?

The ‘capability’ of an employee is their ability to perform the work expected by the employer to the proper standard. A number of factors could impact capability, including skill, training, and health.

A capability policy is at the core of a good performance management strategy. Unlike a disciplinary procedure, a capability policy should encourage improving the employee’s performance so it meets the company’s expectations.

However, a capability policy will also explain that actions (including dismissal) may be considered if performance does not improve.

Why does my business need a capability procedure?

The overarching aim of a capability procedure is to help an employee improve their performance. It's about encouragement and support, as opposed to the punishment involved in disciplinary proceedings.

And by having a capability policy, you can demonstrate to your employees that you're willing to take their concerns seriously, and that you won't immediately resort to punitive actions in the event of underperformance. It also signals that you're sensitive to each employee’s unique circumstances, including health, training and related concerns.

But a capability policy also protects employers. While it should encourage and support, it also needs to make clear that continued underperformance may end in dismissal.

What’s included in the capability policy template?

Our capability policy template includes:

• an outline of the purpose of the policy, and reassurance that it's intended to support the employee
• an explanation, however, that continued failure to achieve the required standards could result in disciplinary action or dismissal
• details of informal counselling meetings that will take place when a manager has concerns about performance
• an explanation that a formal capability procedure will be triggered when concerns or targets raised in the informal session have not been met or sustained
• an explanation that a formal capability procedure could be triggered in circumstances where there has been a fall in performance significant enough to warrant it without an informal warning
• details of the formal procedure: first formal warning; final written warning; and dismissal
• information on how an employee can appeal against a warning or a decision to dismiss, and details of how an appeal will be handled

If you’d like to make changes and don’t have Adobe Acrobat, you can also download our capability policy template in Word format.

The attached document has been produced by Farillio so we can’t take responsibility for its contents. We’d recommend you take professional advice before making any important decisions based on its contents.