IANAL, but it is possible to do this under UK law - employees in the UK can be fired for any or no reason for the first 2 years, providing they are not being discriminated against (religion, gender etc). After that, they can be fired if it is for fair reason, and a fair process is followed. Underperformed is a fair reason, and formal stack ranking is a fair process (i.e. no discrimination). The employer would need to update people on their performance regularly, and provide ailing employees with help to improve. Underperformed sales staff are fired regularly like this pretty much everywhere.

It is true that firing employees does expose an employer to litigation / tribunal, which can be expensive. However, an employer that is doing stack ranking and is prepared for that sort of thing would not fall victim to the usual things that get companies in trouble - not having good enough performance metrics to justify firing the only X in that department, or assigning unpleasant work to employees to drive them out (which can be seen as constructive dismissal).

I have also noticed some large companies hiring the bulk of their staff as contractors, and 'firing' them for 3 days a year so that they don't become employees. This would make them basically at will employees, but I am not sure how well this would stand up if tested.

This book is cool: http://www.cm-murray.com/little-books/little-book-of-uk-empl...

ROTFL - you have no idea mate. - contrary to belief in Europe you can fire people for poor performance fairly easy and in the Uk employers can do stuff which would end them up in court in even right to work states - ie artificially make a subsidiary go bust to avoid paying statutory redundancy (so that the tax payer pays).

And soory if that sounded harsh but you can manipulate any PRP system to get that result - it was an openly admitted fact that every year the scores where manipulated to put the right number of people in the CAT 4 (in need of improvement) who where targeted for redundancy.

Even getting a CAT 2 or 1 wouldn't keep pace with inflation

(UK at least...)

You couldn't just point blank fire the bottom x% each year based on their ranking, you'd need to give the bottom x% warnings and put them on an improvement plan (so they have a chance to improve) and then, for those that don't, you can sack them.

Even then it may be tricky if you are cutting too deeply. Taking it to the extreme you couldn't use this method to fire the bottom 99% of employees as a tribunal would take that as constructive dismissal.

Firing the bottom 5%, after appropriate warnings/etc, is in the realms of possibility as there's a good chance that the employer can provide documentary proof that the employees fired were performing below expectations should a disgruntled employee take them to tribunal (which, sadly, now costs the dismissed employee £250 to file the claim and £950 if it goes to a hearing.)

Recently former BT employee here. The primary affects of stack ranking at BT is on bonus and raises. If you receive a sufficient number of sub-standard rankings then you would go through the usual UK process of being given warnings which tally up and could eventually lead to dismissal. It definitely is not the case that they fire the bottom x%.