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Dealing with low performers

Many employers have problems with low performers, whose performance at work is disproportionate to their salary and who, in various respects, ruin the working atmosphere, too. The following article sets out the most important elements to take into account in order to solve the low performer problem.

When is someone a low performer?

According to the jurisprudence of the German Federal Labour Court (Bundesarbeitsgericht, BAG), an employee can be considered a low performer when his performance is, on average, lower than 66% of the performance of a comparable employee over a longer period of time.

The drop in performance can be due to one of two different sets of circumstances: in the first situation, the low performer wants to perform at 100% level, but is unable to do so for personal reasons (“wants to, but can’t”). The second situation is one in which the low performer is able to perform at 100% level, but chooses not to do so (“can, but doesn’t want to”).

Practical Tip: In both situations, it is important that the employer accurately documents the low performer’s drop in performance so that he is able to evidence the poor performance before court in the case of a later legal dispute. In order to ensure that the evidence will stand up in court, the record must also state which employee is comparable to the low performer and why, and it must be clearly shown, if possible, that the low performer only provides on average less than 66% of the performance of the comparable employee.

Options for solving the low performer problem:

We recommend that you take the following approach to solve a low performer problem:

Strict dismissal during the probationary period

If it becomes clear during the first six months of an employment relationship that a new employee is a low performer and, despite discussions during appraisal meetings, the situation does not improve, the employment contract should be terminated during the probationary period. Terminating the employment relationship during the first six months of the probationary period has the significant advantage that the Act against Unfair Dismissal (Kündigungsschutzgesetz) does not yet apply. This means that the employment relationship can be terminated without the need to justify the termination on operational or personal grounds or on grounds of conduct. Instead, it is sufficient to declare that the employee does not fit in well with the rest of the team or has not fulfilled expectations, for example. Moreover, the notice period is generally shorter during the probationary period than it is for the termination of an employment contract after the end of the probationary period, so that the employer can also save money on the employee’s salary.

Practical tip: A letter of termination issued during the probationary period must be signed by an authorised person, e.g. the managing director or the head of the HR department, and the original must be provided to the low performer. Accordingly, the notice will not be effective if the letter of termination is signed by the managing director or head of HR, but it is then sent to the low performer by fax or as a scan attached to an email. It is also important to prove receipt of the letter of termination: the low performer should either be asked to sign a copy of the letter to confirm receipt or it should be hand delivered to the low performer in the presence of a reliable witness.

Consistent written warnings

If you, as employer, have the impression that an employee’s drop in performance as compared to that of his colleagues is based on the fact that the low performer could perform at 100% level, but simply – for whatever reason – has chosen not to perform at this level, we recommend that you issue a written warning. In our experience, a written warning will often have a positive effect on a low performer, as it provides the low performer clear limits with respect to his poor attitude to work. If, despite the written warning, the low performer continues not to perform in breach of his duties, the written warning can form the basis for the later termination of the employment contract for reasons of conduct (see the next point).

Practical tip: It is important for evidence, that any warning is issued in writing and that the low performer either confirms the receipt of the written warning by signing a copy, or that it is hand delivered to the low performer in the presence of a reliable witness.

Termination of the employment contract on conduct grounds following the issue of a written warning

If, despite the written warning, the low performer is still not prepared to perform at the level expected under the employment contract, it would be possible to issue a letter of termination on conduct grounds. In such a case, the employer should be able to demonstrate and prove the following elements in particular:

  • The low performer culpably performs at a level that is more than 1/3 below the average level of performance of a comparable employee over a longer period of time.
  • The low performer was issued a written warning for

    his poor performance but there was no change in his performance despite sufficient opportunity for improvement.
  • A balance of interests will fall in favour of the employer. This will particularly be the case when the low performer has performed poorly from the very beginning of the employment relationship or at least over as long a period as possible, and his performance has interrupted business operations or he has even caused specific damage with his poor performance.

Precautionary issue of a letter of termination based on personal grounds

Generally, an employer will not know for certain, whether the employee performs poorly because he chooses not to perform at the contractually required level (termination based on conduct) or because the low performer is unable to perform at that level (termination for personal grounds). Moreover, facts are often quite mixed, so that poor performance can be ascribed to both a lack of commitment and a lack of capability. In addition, the pressure on employees in actions against unfair dismissal will be greater when it is argued that the termination of the employment contract is based on both conduct and personal grounds.

Practice tip: Where the termination of an employment contract with a low performer is based on conduct, this should always be in combination with personal grounds.

For termination on personal grounds, the employer should be able to demonstrate and prove the following elements in particular:

  • The low performer involuntarily falls short by at least more than 1/3 of the average level of performance of a comparable employee over a longer period of time due to personal reasons
  • The prognosis is negative, so that the low performer is still expected to perform poorly in the future
  • There is no less severe means, which would help eliminate the employee’s poor performance (such as retraining, training or transfer to a more suitable position)
  • The balance of interests will fall on the side of the employer. This will especially be the case when the low performer is relatively young, the root of the poor performance is of a work nature, and the low performer has performed poorly from the beginning of the employment relationship or at least over as long a period as possible.

Amicable solution

Finally, it is also possible to separate amicably from a low performer, through the conclusion of a cancellation and settlement agreement. The main advantages of an amicable separation are that there does not need to be (clearer) grounds for termination and it helps avoid the costs, risks and loss of time associated with a legal dispute. However, it is recommend that a letter of termination be used to initiate amicable separation negotiations. This letter should preferably be well prepared, in order to reinforce the separation and limit the risk of the low performer playing for time.

If you have any questions related to this topic, please feel free to contact Dr Andreas Reuther (Lawyer, Licensed Specialist for Labour Law).

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