Dear Arvinderm,
Before you impose any decision on staff, you needs to call both (staff & Manager) for open discussion and find out the reason. May be the Manager's rating based on personal biasness instead of annual performance or may be not. Therefore, you need to carefully analyze the situation.
If the staff still dissatisfy then approach management, provide them factual report based on open discussion and seek their opinion / decision and convey the same to the staff.
Hope the suggestion may help you at some extent to resolve the issue.