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Wills & Probate

Must an employer perform formal performance reviews?

There is no legal requirement that employers complete performance reviews of employees, just as there is no requirement that an employer have just cause or prove misconduct to fire an employee. An employer may, however, be required by the terms of an employment contract, employee handbook or collective bargaining (union) agreement to review an employee annually, bi-annually or on some other basis. These requirements should be reviewed, known and followed.

 

Regardless, it is a good practice for employers to evaluate employees. It provides employers a means of focusing on the work product of the employee, identifying coaching and/or training opportunities and setting uniform criteria for determining promotions and raises.

 

Performance reviews also create a format for employers to document any issues or other disciplinary matters that later may serve as reasons for denying a promotion or raise, or lead to termination.

 

However, written performance reviews also can be a double-edged sword. If an employee is terminated for issues relating his or her performance, and earlier reviews that fail to mention these issues or are highly positive may provide support to the employee's argument that the stated reasons for termination were a pretext for discrimination by the employer. Thus, it is important that employers using performance reviews have a standardized system and properly record all relevant information regarding an employee's performance, good or bad. It is important to also document work issues and not simply write a great evaluation that means nothing. Otherwise, an employer's poor documentation practices could come back to haunt it.