This case (link in Dutch) concerns an employee who had been employed by the employer for almost ten years. The employee’s recent appraisal report showed that her performance was adequate. The employee had also received (annual) bonuses and salary increases due to her good performance. Both in 2020 and 2021 the employee received a so-called ‘swingfactor’ bonus (which was only awarded to employees who had made an exceptional contribution). Nevertheless, in December 2021, the employer formed the opinion that the employee was underperforming in her role and, subsequently, submitted a dissolution request to the subdistrict court due to underperformance.
The subdistrict court denied the employer’s request, mainly due to the fact that – in the view of the subdistrict court – the employer had not offered the employee a fair chance to improve her performance:
- For example, while the employer had provided the employee with tips about how to deal with work-related stress, the employer had omitted to inform the employee about the consequences (in this case: dismissal) if she would fail to improve her stress management.
- Until the moment that the dissolution request was submitted, the employee was unaware that her employer was of the opinion that she was underperforming. The employer had omitted to provide the employee with a sufficient performance improvement plan (PIP) from which the employee could have derived (i) that she was underperforming and (ii) that neglecting to improve her performance could result in dismissal.
- The argument of the employer was that the company made use of a so-called ‘empowerment policy’ (no file building with warnings and reprimands, but encouragement, as a result of which the employer could not explicitly speak to the employee about her underperformance). However, the subdistrict court ruled that the maintenance of such policy does not relieve an employer of its (legal) obligation to inform its employees of their underperformance in due time and to give them sufficient opportunity (through an adequate PIP) to bring their performance up to standard.
Practical lessons from this judgement – The do’s and don’ts regarding underperformance
The court ruling underlines the importance of (timely) providing an underperforming employee with clarity on (i) the existence of their underperformance and (ii) the consequences if their performance is not improved within a reasonable time frame. In that context, we recommend employers to observe the following points when being confronted with employee underperformance:
- Ensure to discuss the underperformance with the employee in a timely manner and record (and confirm) these discussions in writing. During the discussion, ensure to identify the specific areas where the employee is underperforming (and explain to the employee what would be an adequate level of performance and what he/she could do to reach such level). Especially if your company works with an empowerment policy, please note that such policy does not relieve you from your obligations in light of underperformance.
- Ensure to offer the employee sufficient opportunity to bring their performance up to standard. Depending on the employee's position, the period offered for this purpose may be several weeks to months. If the employer can help the employee by offering, for example, further training or coaching, then the employer should provide such help (of course, within reasonable bounds).
- Ensure to agree upon an adequate PIP with the employee. This performance trajectory should link the employee's performance to objective goals for improvement (where possible).
- Ensure to have interim evaluations with the employee regarding their performance (i.e., the progress with the PIP) and confirm these evaluations in writing.
If the employee's performance is still not up to standard after completion of the PIP, you may aim at the unilateral termination of their employment contract. However, in that case, please note that a dismissal request can only be granted by the subdistrict court if there is no ban on termination (e.g., the employee’s illness) and there are no redeployment options for the employee.
It is essential to the outcome of the case to ensure that the underperformance (and the corresponding improvement plan) is properly documented and carried out consequently. Therefore, if you are faced with underperformance of an employee, please feel free to reach out to us for guidance and/or advice. We are of course happy to assist on such matter.