The employer and the employee must jointly establish what is meant by ‘good performance’. The employer must also clearly indicate if he thinks that an employee is not performing well and how the employee can change this. The employer and the employee must set up an agreement, in which they also determine when they will evaluate this agreement.
An employee’s poor performance can take on such forms that there are grounds for dismissal. The law stipulates that an employer may terminate an employment contract with an employee if there are reasonable grounds for doing so and it is not reasonable to reinstate the employee.
However, before an employer initiates the termination of the employment relationship, he will have to work with the employee on improving his performance. A recent ruling by the Court of Appeal shows that failure to undertake a proper improvement process can be costly for the employer. The employee concerned had been employed by his employer since 2016. In 2019, the performance of the employee was assessed with a ‘5’. The employer noted a number of areas of concern and also made a remark about drawing up a personal development plan (PDP). Shortly afterwards, the employee drew up a PDP.
A conversation about the PDP and the (possible) appointment of a coach followed. A few months later, the employer announced that it had no confidence in the outcome of the improvement process and that the employer wanted to terminate the employment contract. The employee then reported sick. One day later, the employer presented a settlement agreement, which the employee rejected. One month later, the employee reported back to work. The employer then informed the employee that he was suspended from work with immediate effect. When the employee protested against this, the employer offered him to return to another position within the company. The employee declined this offer, whereupon the employer initiated legal proceedings to dissolve the employment contract on the grounds of poor performance.
The court rejected the request for dissolution. It was clear, however, that the working relationship had been irreparably disrupted. The court of appeal ruled that the disruption of the working relationship was the fault of the employer. By wrongly attempting to dismiss the employee on the grounds of poor performance, without first offering him the opportunity to improve his performance, the employer had acted in a seriously culpable manner. The employer should have constructively offered the employee the opportunity to improve his performance and should have provided him with guidance in doing so. The employer therefore had to pay a compensation of €75,000.
Provide a good improvement plan and coach the employee
For you as an executive, it is good to know what your position of proof is when you consider firing an employee for poor performance. The law gives an employer a certain amount of freedom to assess whether the employee is not not performing well.
However, this does not alter the fact that you, as an executive, must have a strong file to prove dysfunction. In addition, you must have gone through an improvement process with the employee, in which you have sufficiently supervised the employee.
Part of that guidance is to offer training or education, if necessary. In addition, you must regularly evaluate the objectives in the improvement plan. Also important to know in this case: the duration of an improvement plan depends, among other things, on the duration of the employment of the employee.
Only when the improvement process is unsuccessful and your organisation has no other suitable position available for the employee can dismissal be considered.
Do you have a question? Please feel free to contact me.
Court of Appeal, The Hague, 4 May 2021, ECLI(abbreviated):831.