The Importance of Formal Performance Reviews

The Importance of Formal Performance Reviews

There is no legal requirement that employers perform formal performance reviews of employees, just as there is no general requirement that an employer have just cause 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.

Why Do Employers Need Performance Reviews?

Even in situations where an employer is not required to conduct performance reviews, it is a good practice for employers to do so. It provides employers a means of evaluating employees, identifying coaching and/or training opportunities, and setting uniform criteria for determining promotions and raises.

Performance reviews also create a way for employers to document any performance issues or other disciplinary matters that later may serve as reasons for denying a promotion or raise, or lead to termination. Employers then will have documentation to support their employment decisions should an employee attempt to bring legal action against the employer. This is one of the first things a wrongful termination lawyer will ask for in the event of a firing.

The Negative Side of Performance Reviews

However, written performance reviews also can be a double-edged sword for employers. If an employee is terminated for issues relating his or her performance, earlier performance 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. Otherwise, an employer’s poor record-keeping practices could come back to haunt it.