Not every employee always performs as an employer expects. Sometimes results fall short, certain skills are lacking, or the work isn’t being done as desired. We refer to this as poor performance. But when does this constitute grounds for termination? And what can the employer and employee do to improve the situation or reach a solution? In this blog, we explain the rules that must be taken into account.
When is performance considered unsatisfactory?
The first question that must be answered is whether there is a case of poor performance. An employee is considered to be underperforming if he or she does not meet the requirements that can reasonably be expected of the position. This may involve, for example, the quality of the work, failure to meet objectives, or a lack of certain skills.
The law stipulates that an employee is not considered to be underperforming if they fail to meet the job requirements because they are ill, lack training, or due to working conditions. For example, if an entire team is underperforming, this is likely due to working conditions rather than to individual employees. In that case, an employee cannot be held responsible for this.
Warning
As soon as it is determined that an employee is underperforming, it is important to clearly warn him or her of this. The employer must then inform the employee about what is not going well and what is expected of the employee. It is advisable to do this in writing.
Courts expect employers to clearly inform the employee in this warning of the consequences of a lack of improvement, such as reassignment or, at the very least, termination. This may seem harsh, but it is essential for a proper warning.
Drawing up a performance improvement plan
If the employee has not improved, or has improved only to an insufficient degree, after receiving a warning, the next step is an improvement plan. Through this improvement plan, the employer must give the employee a serious and realistic opportunity to improve. The applicable rules set strict requirements for an improvement plan. The most important ones are:
- Prepared in writing and regularly evaluated in writing
- Sufficient time for improvement
- Providing tools for improvement, such as training or coaching
- Clear and achievable goals
- Clear consequences
Exactly what the improvement plan should look like and how long it should last varies by individual employee. It must be tailored to the position and the nature of the shortcoming. For example, more may be expected of an employee in a higher-level position than of an employee in a lower-level position.
Furthermore, an improvement plan is not a substitute for an onboarding program. The employer is required to provide an onboarding program even without an improvement plan. Even in situations where the employee is performing their job adequately but there is room for growth, an improvement plan is generally not warranted.
If an employee refuses to participate in a performance improvement program, this may be grounds for termination at this stage.
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If there is no improvement, or insufficient improvement, as a result of the improvement process, and a second improvement process is not a reasonable option, then reassignment must be considered. The employer must then determine whether the employee can be placed in another suitable position within the organization.
In exceptional cases, the employee may be expected to accept a different, lower-level position. This is referred to as a demotion. However, a demotion cannot simply be imposed unilaterally. The employer must, among other things, take into account the employment contract and the rules governing changes to terms and conditions of employment.
Prohibition on Termination and Illness
It is common for employees facing performance issues to also experience illness—either because their illness impairs their performance or because the performance review process triggers the illness. In the event of illness, a prohibition on termination applies, protecting the employee from dismissal. If there is no connection between the poor performance and the illness, an employer may sometimes still dismiss the employee while they are on sick leave.
Dismissal through the courts
If the performance improvement plan does not yield the desired results and reassignment is not a viable solution, the employer may request that the subdistrict court terminate the employment contract on the grounds of poor performance. The employee is then entitled to a transition payment. When determining the end date of the employment contract, the judge takes the notice period into account.
The judge determines whether the legal requirements have been met. For employers, a carefully compiled case file is therefore of great importance. Employees, in turn, can have the court assess whether the criticism is justified, whether they were given sufficient opportunity to improve, and whether the conditions for termination have been met. If the employer has not done enough to facilitate improvement, the judge may block the termination or award additional compensation— reasonable compensation —in addition to the transition payment.
Termination with a Settlement Agreement
Court proceedings are not always necessary. The employer and employee can also reach an agreement regarding the termination of the employment contract and set it forth in a settlement agreement (VSO). This agreement outlines the termination date and any compensation the employee will receive.
Advice on Dismissal for Poor Performance
Termination for poor performance requires careful preparation. It is important that a performance improvement plan meets all requirements and is well-suited to the employee’s situation. Additionally, all steps must be followed carefully and in a timely manner.
Our employment law attorneys advise employers and employees on termination due to poor performance. We are happy to help you identify the options, risks, and next steps and determine an appropriate strategy.
