Performance appraisal is a process that includes the assessment and evaluation of the employee’s performance in an organisation. Many organisations regularly conduct an evaluation process in order to analyse the performance of their employees when performing work tasks and achieving organisational goals. Performance appraisal has become one of the key processes in organisations and an important tool that enables the identification of talented employees and those who need additional training, all with the aim of improving organisational efficiency. Performance appraisal is carried out in both private and public organisations, however, performance appraisal in public organisations (including local and regional self-government) includes certain peculiarities and legal regulations that must be followed. The main objective of the empirical research was to examine individual and organizational effects of the evaluation process that occur among employees in local self-government. For the purpose of the research, an online questionnaire was created that collected 80 responses from local self-government employees. Based on the collected data, it was established that the majority of employees do not perceive the evaluation process as fair, and that it is not sufficiently connected to material compensations. However, some of the respondents point out the feedback after the appraisal as a positive side of performance appraisal and believe that performance appraisal does not necessarily cause bad interpersonal relations or working atmosphere.