Performance problems and PIPs

All companies aim to optimise performance, including the effectiveness of their employees. Godelijn Boonman of GMW lawyers explains what happens when employee performance becomes a problem and what a PIP means in practice.

When is performance a “problem”? Simply put, a performance problem can occur whenever an employee repeatedly underperforms in their role. As soon as an employer informs an employee that there is a performance problem, such as poor performance, the problem can be said to exist. While performance problems often negatively affect an employment relationship, a performance problem on its own does not automatically lead to dismissal. What happens thereafter is key. In the Netherlands, both employer and employee are expected to try to solve issues such as performance problems together before the situation reaches the point where termination of employment becomes justified.

What is a PIP?

A Performance Improvement Plan (PIP) is often, but not necessarily, a formal document that defines recurring performance problems, specific improvement goals that an employee needs to achieve, a time scale for doing so and the consequences when not achieved. An employer can choose to implement a PIP on any employee who has a performance problem, except for an employee who has already been declared sick. An employer will need to wait for the employee to get better first.

What does a PIP mean in practice?

The implementation of a PIP can be viewed in two ways:

1 – As an opportunity for the employee to improve, and/or

2 – As a signal that the employment is at risk.

By going through a PIP, an employer can give a poorly functioning employee the chance to succeed and perform well.

However, a PIP can also be used to build a case for demotion or dismissal. As such, it should be a red flag signal to the employee; there is a significant problem.

PIP process

Once a PIP has been implemented, both employer and employee have obligations they must fulfil.

The employer is obliged to help the employee turn their performance around by providing additional assistance, supervision or training. They must also document the PIP process. The employee is obliged to cooperate and actively participate in the PIP process. If the employee adopts a passive attitude, refuses to cooperate, or obstructs the PIP, then the employer can hold this against them.

Don’t get PIPped to the post

In practice, performance issues can quickly derail an employment relationship. If the implementation of the PIP does not lead to satisfactory performance, then it may be time to end the employment. If you have an underperforming employee, or if your employer presents you with a PIP, you would there­fore be wise to seek legal advice. An employment lawyer can explain your rights, risks and obligations, allowing you to make the best possible decisions.