Non-performance and the Performance Improvement Plan under Dutch law

𝑨 π’„π’π’Žπ’Žπ’π’ π’’π’–π’†π’”π’•π’Šπ’π’ 𝒐𝒇 π’Žπ’‚π’π’š π’†π’Žπ’‘π’π’π’šπ’†π’“π’” π’Šπ’”: 𝒄𝒂𝒏 𝑰 π’…π’Šπ’”π’Žπ’Šπ’”π’” 𝒂𝒏 π’†π’Žπ’‘π’π’π’šπ’†π’† π’Šπ’ 𝒄𝒂𝒔𝒆 𝒐𝒇 𝒏𝒐𝒏-π’‘π’†π’“π’‡π’π’“π’Žπ’‚π’π’„π’†?

The answer to this question is ‘yes’. An employment agreement can be terminated via the subdistrict court provided that the statutory requirements for termination due to non-performance are met, or if the employee agrees to a termination of the employment via a termination agreement. Often a termination agreement is the preferred route because of the costs associated with a court case and the fact that a court judges the non-performance file of the employer. However, also in case of a termination agreement, it is important that the employer has a sufficient non-performance file in light of his negotiation position. On average, more than 80% of the termination requests based on non-performance are refused by the subdistrict court due to not meeting the legal requirements.

To be able to achieve a termination based on non-performance, an employer must be able to meet the following legal requirements (and be able to prove it in case of court proceedings):

1. the employee is unsuited to perform the stipulated work for reasons other than illness or defects;
2. the employer has notified the employee of this in a timely manner and has provided him with sufficient opportunities to improve his performance. In this regard, the employer and employee must follow a Performance Improvement Plan (β€˜PIP’));
3. the unsuitability is not the result of insufficient attention on the part of the employer for training or for the employee’s working conditions;
4. reassignment to another suitable position within the organisation is not available within the period equal to the statutory notice period.

𝐏𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐈𝐦𝐩𝐫𝐨𝐯𝐞𝐦𝐞𝐧𝐭 𝐏π₯𝐚𝐧
A Performance Improvement Plan (β€˜PIP’) consists, as a rule of thumb, of a (jointly drawn up) improvement plan and regular evaluations recorded in evaluation reports. The PIP must in any case include the following:

a. what the employee should improve (points of improvement as targets; need to be objective in nature and measurable, so that any improvement can actually be measured);
b. what the desired result is;
c. in what way the improvement will be achieved (strategy, actions, duties); and
d. within what time frame the improvement should occur (on average a PIP has a duration of 6 months up to 12 months, depending on the degree of non-performance).

The 𝐒𝐧𝐟𝐨𝐠𝐫𝐚𝐩𝐑𝐒𝐜 below shows a roadmap that provides insight into a (sufficient) non-performance process and the steps to be taken.

non-performance roadmap

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