The Supreme Court’s judgement of 14 June 2019 (ECLI:NL:HR:2019:933) revolves around the question what contribution an employer has to make to an employee’s performance improvement plan before the employee can be dismissed for poor performance.
The Supreme Court ruled that the assistance, support and guidance that may be expected from the employer in a specific case and the way in which this should be recorded, depends on the circumstances of the case and specified several points of view that are important in this respect. Below you find these points of view as formulated by the Supreme Court, and what the practical relevance is of this case. For more background, we set out the facts and circumstances of this case.
Relevant points of view for determining a performance improvement plan
In the appeal to the Supreme Court, the employee stated that the employer has to take on primary responsibility for determining a PIP. The Supreme court emphasizes that the law doesn’t provide for the manner in which employers have to give opportunities to employees to improve their performance. Employers have to offer a serious and real opportunity for improvement. The assistance, support and guidance of employers that can be expected in a particular case, and also the way in which this should be recorded, depends on the circumstances of the specific case. Subsequently, the Supreme Court provides for a number of different points of view that may play a role in this respect:
- nature, content and level of the function;
- education and professional experience of the employee;
- nature and extent of the employee’s unsuitability;
- duration of the poor performance as soon as the employee is informed about it;
- duration of the employment contract;
- action that has already been taken to improve the performance of the employee;
- the extent to which the employee is open to criticism and makes effort to improvement;
- nature and size of the business of the employer.
The abovementioned points of view also played a role in the judgment of the Court of Appeal and the employer has provided fairly intensive guidance in order to achieve improvement. Therefore, this judgment of the Court of Appeal is upheld by the Supreme Court.
In addition to the Decor ruling of 2018 – in which the Supreme Court determined that the employer has a certain degree of discretion to determine whether a situation of poor performance exists – this Ecofys judgement constitutes a second casebook judgement with respect to dismissal for poor performance. In order to achieve a successful personal improvement plan, employers must take in to account the abovementioned points of view. Furthermore, it is clarified that – in many cases – employees will have to show insight into where they are lacking performance and must also take an active approach to achieve improvement of their performance.
What were the facts and circumstances in this case?
Subdistrict court ruled that the personal improvement plan met the legal standards
The case of 14 June is about an employee who had been employed as a Senior Consultant since 2010 with a gross salary of nearly €5,500 per month. For the first three years she performed well, but in 2014 she did not meet some of her targets and was explicitly and extensively questioned by her manager about her performance and behavior. After another unsatisfactory assessment in 2015, her superior provided concrete feedback in 2016 in which he indicated that the employee (i) needs to improve the quality of her substantive work and (ii) needs to improve her way of communicating with customers and colleagues. He asked the employee to draw up a personal improvement plan (PIP), but the employee submitted a general plan to increase knowledge in her field within Ecofys. The manager then specified that he expected a PIP and discussed what a PIP should look like. Nevertheless, her performance assessment for the year 2016 was unsatisfactory again and she did not meet her sales targets either. In 2017, the employee received a compilation of all feedback and was given a last chance to deliver a concrete personal improvement plan, including specific targets that she could achieve within three months. Shortly thereafter, the employee provided a personal improvement plan. However, the employer felt that this plan does not include sufficiently clear milestones on the basis of which improvements in her substantive performance and behavior can be measured, and then decided to terminate her employment contract. The Subdistrict Court granted the employer's request and terminated the employment contract based on poor performance.
Court of Appeal agreed with the ruling of the Subdistrict court
The order of the Subdistrict Court was confirmed by the Court of Appeal Arnhem-Leeuwarden. In this respect, the Court of Appeal took into account that the function of employee included actively seeking cooperation with others, encouraging others to cooperate and independently resolving conflicts within a project team. In addition, the Court of Appeal found it important that the employee had already explicitly and comprehensively been addressed with regard to her performance and behavior since 2014 and that the employee’s unsuitability was caused by insufficient communication, internal conflicts and insufficient cooperation with colleagues and clients, as well as a lack of self-reflection and an inability to deal with feedback.
Supreme Court confirmed the judged of the Court of Appeal
Subsequently, the Court of Appeal ruled that one of the conditions of improvement is that the employee herself acknowledges her own shortcomings and also that the employee thinks along with the employer about the way in which, and the period within which, an improvement can be achieved. In any event, since September 2016, Ecofys has provided fairly intensive support through discussions and feedback in a process that was intended to improve her performance. Therefore, in light of the level of her job and her work experience, the employee also could have shown her own insight into her points for improvement and could have indicated which concrete measures/courses she needed in order to improve her performance. In March 2017, the employer concluded that the employee had still not succeeded in showing how she intended to achieve improvement of her performance and behavior with regard to the essential points of criticism regarding her performance. In view of all these circumstances, the Court of Appeal ruled that the employee had been given sufficient opportunities to improve her performance.