When Salespeople are In the Firing Line

Important considerations when firing salespeople, guided by UK employment law circa 2005.

A picture of a man clearing his desk to illustrate the topic, firing salespeople.

Are you compliant with the law when firing salespeople? This guest article by Susan Clarkson discusses the issues:

Picture the scene – you employed a senior salesperson 5 months ago. You are paying him a good annual salary and a generous guarantee for the first 6 months. He was very successful in his previous company and you have high hopes.

Now, some 5 months on he is seriously below target and you are beginning to doubt that he will ever make the grade.

You have had some informal discussions with him about his performance. You were reassured by his confidence. You assumed he was just finding his feet and expected his hard work to pay off very, very soon.

You now think it is much more serious than that. You have noticed that he seems to be losing interest. He is not out at customer meetings or on the phone as much.

What do you do about declining performance?

You know that as an experienced salesperson, he must be aware that things cannot continue like this for much longer. You decide to have a strong word with him – if he doesn’t pull his finger out and make target this month, you will have to fire him.

The end of the month comes along and sure enough, he is still way below target. You get him into your office and tell him that he is being dismissed for poor performance.

He will receive a month’s pay in lieu of notice, he can keep the company car for the next month but that’s it. After all, he doesn’t have a year’s service so he can’t claim unfair dismissal – can he?

What’s wrong with this dismissal scenario?

Like it or not, there’s quite a lot wrong with that and since October 2004 your chances of ending up in a tribunal as a result of your actions, are much increased.

Suppose your company's disciplinary procedure is part of your contract of employment and you do not follow it (for poor performance issues as well as misconduct issues). In that case, an employee can take you to a tribunal for breach of contract.

If you lose, the employee will be awarded compensation equivalent to earnings for the period it would have taken to follow the procedure.

What might this dismissal consequence cost?

Following a standard disciplinary procedure for a case such as this would probably take about 3 months from start to finish (it may be more, it may be less), so you will have to pay out the equivalent of 3 months earnings. In addition, the bit of legislation mentioned above (The Dispute Resolution Regulations) means that by not following the statutory minimum procedure for dismissals you will see this payment increased by up to 50%. This is on top of the costly legal fees, your time, your company’s reputation etc. Shall I go on?

What can be learned from this story?

I suppose there are a few morals here. The main reason why a statutory minimum procedure was brought in last year was not to tie employers up in red tape, it was to ensure that employees were given a fair chance to get their performance up to an acceptable level and that employers could not get away with making snap decisions about them.

Out of interest, one of the best salespeople I know could have fallen foul of the above scene when he was not making the grade in his first 6 months. He has now been with the same company for more than 7 years and is regularly in the top 3 each month/quarter/year.

If you have management or supervisory responsibility for people, make sure you know your company's disciplinary and dismissal procedure – don’t expect others to pick up your pieces after the event when it is probably too late.

If your company doesn’t have a disciplinary and dismissal procedure, make sure you at least abide by the statutory minimum (see the steps at the end of this article) You may think you are saving your company money – but even if you are – what is the cost to your reputation as an employer and how does this sort of action affect your employee turnover?

Remember, people talk and above all promote their own agendas, which may not be the same as yours.

If in doubt – take advice.

The Statutory Discipline & Dismissal Procedure:

Write to the employee letting them know of the allegations against them (performance or conduct issues Invite them to a meeting to discuss the allegations
Hold a meeting with the employee and their colleague (if they wish to be accompanied) Notify the employee of your decision
If the employee wishes to appeal hold an appeal meeting

Inform the employee of your final decision

Exemptions: Employers are exempt from the three-step procedure in certain limited cases There is a modified two-step procedure to be used in very exceptional circumstances

WARNING: If the employer fails to follow this procedure an employment tribunal will judge the dismissal “automatically unfair” Failure to follow it leads to upward adjustments of compensation

Comments and questions to Susan Clarkson, Apollo Consulting, susan@apolloconsulting.co.uk

Firing salespeople is a last resort. If you need to address sales problems, assess sales competence, or hire the right salespeople, we can help. Telephone +44 (0)1392 851500. We will be pleased to discuss your needs or talk through some options. Alternatively, email custserv@salessense.co.uk for a prompt reply or use the contact form here.