Dismissal for Underperformance (Disfunctioneren)

Your employer has told you that your performance is insufficient and is threatening dismissal. This is an unsettling and stressful situation. However, dismissal for underperformance is not something your employer can simply decide overnight. Dutch employment law sets strict requirements that your employer must meet before being allowed to dismiss you on this ground. In this article you will find a thorough explanation of what underperformance means in legal terms, what obligations your employer has, what your rights are, and what options you have to challenge an unfair dismissal.

What is underperformance under Dutch law?

Underperformance (disfunctioneren) is one of the grounds for dismissal laid down in Article 7:669 lid 3 sub d of the Dutch Civil Code (Burgerlijk Wetboek, BW). This article states that the employer may terminate the employment contract if the employee is unfit for the proper performance of their duties, provided this unfitness is not caused by illness or disability.

Underperformance can take different forms. It may concern the quality of your work, your productivity, your way of communicating with colleagues or clients, your ability to meet targets, or your general professional conduct. Importantly, the law distinguishes between underperformance and culpable conduct. Underperformance means that you are unable to perform at the required level, not that you are unwilling. If your employer claims you are deliberately refusing to work properly, this falls under a different dismissal ground (culpable conduct, sub e).

The assessment of underperformance is always relative: your performance is measured against what may reasonably be expected of someone in your position, given your experience, education, and the circumstances of the job. A junior employee cannot be held to the same standard as a senior professional, and an employee who was hired without certain skills cannot be blamed for lacking those skills if the employer was aware of this at the time of hiring.

Requirements your employer must meet

Dutch employment law places the burden primarily on the employer when it comes to dismissal for underperformance. Your employer must meet several cumulative requirements before a dismissal on this ground can succeed. If even one requirement is not met, the dismissal will fail. These requirements are:

1. Timely notification of underperformance

Your employer must have informed you clearly and in a timely manner that your performance is considered insufficient. This notification must be specific: it is not enough for your employer to make vague remarks such as "we are not happy with your work." The employer must identify concrete points of concern, explain what is expected of you, and indicate in which areas your performance falls short. General dissatisfaction without documented specifics is insufficient.

2. A genuine improvement plan (verbetertraject)

After notifying you of the performance issues, your employer must offer you a realistic and concrete improvement plan. This plan should contain clear objectives, measurable criteria, a reasonable timeframe, and regular evaluation moments. The plan should be tailored to the specific areas of underperformance. A generic plan that does not address your actual shortcomings will be considered insufficient by the court.

3. Adequate support and guidance

Your employer is obliged to provide you with the necessary support to improve. This may include coaching, training, mentoring, adjustments to your workload, or other forms of assistance. The type of support must be appropriate to the nature of the underperformance. If you lack certain skills, the employer should offer training. If the problem is related to your working conditions, the employer should address those conditions.

4. Reasonable time to improve

You must be given a reasonable period to demonstrate improvement. What is "reasonable" depends on the nature of the underperformance, the complexity of the role, and the duration of your employment. For a long-serving employee, a longer improvement period is typically expected. As a general guideline, courts often consider periods of three to six months, but this can vary significantly depending on the circumstances.

5. Reassignment considered

Before resorting to dismissal, your employer must have investigated whether it is possible to reassign you to a different position within the organisation. This obligation (herplaatsingsplicht) applies to all reasonable dismissal grounds and is explicitly required under Article 7:669 lid 1 BW. Only if reassignment is not possible or not reasonable can dismissal proceed.

The improvement plan (verbetertraject)

The improvement plan is the cornerstone of any underperformance dismissal case. Without a proper improvement plan, your employer's dismissal request will almost certainly fail. A legally adequate improvement plan should contain the following elements:

• Specific objectives: clear, concrete goals that describe exactly what improvement is expected. Vague objectives such as "improve communication" are insufficient; the plan should state, for example, "respond to client emails within 24 hours" or "achieve a minimum accuracy rate of 95%."
• Measurable criteria: the plan must include objective criteria by which improvement will be assessed. This prevents subjective evaluations and protects both you and the employer.
• Reasonable timeframe: the duration of the improvement plan must be realistic given the nature and scope of the required improvements. A complex role change may require six months or more, while specific behavioural adjustments might be achievable in a shorter period.
• Regular evaluations: scheduled evaluation moments (e.g. bi-weekly or monthly) where progress is discussed and documented. These evaluations should be conducted in writing, and you should receive the reports.
• Coaching and support: concrete forms of support offered by the employer, such as training courses, coaching sessions, a mentor, or reduced workload during the improvement period.
• Consequences: the plan should clearly state what will happen if the objectives are or are not met, including the possibility of dismissal if improvement is insufficient.

During the improvement plan, it is essential that you cooperate actively. Refusing to participate in the improvement process can weaken your legal position. However, cooperation does not mean you must accept unreasonable demands. If the plan contains objectives that are impossible to achieve within the set timeframe, or if the support offered is inadequate, you should raise these concerns in writing.

What your employer must prove

If your employer requests the subdistrict court (kantonrechter) to dissolve your employment contract on the ground of underperformance, the employer bears the burden of proof. This means your employer must demonstrate to the court that:

• You have been underperforming relative to what may reasonably be expected in your position.
• You were informed of the underperformance in a timely and specific manner.
• You were given a genuine opportunity to improve, including a proper improvement plan with measurable goals.
• The employer provided adequate support and guidance during the improvement period.
• You were given a reasonable period to improve.
• Despite all of the above, your performance did not improve to an acceptable level.
• Reassignment to a different suitable position is not possible or not reasonable.
• The underperformance is not caused by illness or disability.

Employers typically need to present a substantial dossier (personeelsdossier) to meet this burden of proof. This dossier should contain performance reviews, written warnings, the improvement plan with evaluation reports, documentation of coaching and training offered, and evidence that reassignment was considered. A weak or incomplete dossier is often the reason why dismissal requests for underperformance are rejected.

The court assesses the evidence in its totality. A few negative performance reviews alone are usually not sufficient. The court looks at the overall picture: how long has the employee worked for the company, what was the employee's performance history before the complaints arose, was the employee properly supported, and was the improvement process fair and objective?

When dismissal for underperformance fails

Dismissal for underperformance is one of the most difficult grounds for employers to successfully use. Courts are critical and regularly reject these requests. Common reasons for rejection include:

• No or insufficient improvement plan: the employer did not offer a concrete improvement plan, or the plan was too vague, too short, or unrealistic.
• Lack of support: the employer failed to provide adequate coaching, training, or other assistance during the improvement period.
• Insufficient time: the improvement period was too short given the nature and complexity of the required changes.
• Unclear expectations: the employer did not specify clearly enough what was expected, making it impossible for the employee to know exactly what to improve.
• Late notification: the employer only raised performance concerns shortly before requesting dismissal, without having addressed the issues earlier.
• Positive performance history: the employee had a long track record of satisfactory performance, and the sudden claims of underperformance are not credible.
• Relationship issues disguised as performance: the employer is actually dealing with a disrupted working relationship but is framing the situation as underperformance.
• Medical cause: the underperformance is actually caused by illness or disability, in which case the employer must follow the illness-related procedures instead.
• Reassignment not considered: the employer did not investigate whether the employee could be placed in a different suitable position.

If the court rejects the dismissal request, your employment contract continues. However, this does not always mean the situation is resolved. In some cases, the employer may try again after addressing the deficiencies in the procedure, or the parties may negotiate a settlement agreement.

The dismissal procedure

Unlike dismissal for economic reasons (which goes through the UWV), dismissal for underperformance is a personal ground and must be handled through the subdistrict court (kantonrechter). The procedure works as follows:

1. Filing the request: your employer files a petition (verzoekschrift) with the subdistrict court requesting dissolution (ontbinding) of the employment contract on the ground of underperformance (sub d).
2. Your defence: you receive the petition and have the opportunity to submit a written defence (verweerschrift). In this defence, you can challenge the claims of underperformance, point to procedural shortcomings, and present your side of the story.
3. Oral hearing: the court holds a hearing (mondelinge behandeling) where both parties can present their arguments and the judge can ask questions.
4. Court decision: the court either grants or rejects the dismissal request. If granted, the court determines the end date and any severance pay.
5. Appeal: both parties can appeal the decision to the Court of Appeal (gerechtshof) within three months.

It is strongly advisable to engage a lawyer when you receive a dismissal petition. The procedure involves legal arguments and evidence assessment, and a skilled lawyer can identify weaknesses in your employer's case that you might miss.

Settlement agreement as alternative

In practice, many underperformance cases do not end up in court. Instead, the employer and employee negotiate a settlement agreement (vaststellingsovereenkomst). This is often the pragmatic outcome when both parties recognise that the working relationship has become difficult.

A settlement agreement can offer several advantages over a court procedure:

• Speed: a settlement agreement can be concluded quickly, while a court procedure can take months.
• Certainty: both parties know the outcome, unlike a court procedure where the result is uncertain.
• Negotiation: the terms (severance, end date, references) are negotiable, whereas the court decides based on legal criteria.
• Privacy: a settlement agreement is confidential, while court proceedings are in principle public.
• Unemployment benefits: a properly drafted settlement agreement preserves your right to unemployment benefits (WW-uitkering).

If your employer's underperformance case is weak (e.g. no proper improvement plan), you are in a strong negotiating position. Your employer knows that a court is likely to reject the dismissal request, which gives you leverage to negotiate a more favourable settlement. In such cases, the severance pay in the settlement agreement may be significantly higher than the statutory minimum.

Severance pay and equitable compensation

If your employment is terminated on the ground of underperformance, you are in principle entitled to the statutory severance pay (transitievergoeding). This applies regardless of whether the termination occurs through a court decision or a settlement agreement. The statutory severance pay is calculated as follows: one-third of a monthly salary for each full year of service, with proportional calculation for the remaining period.

Equitable compensation (billijke vergoeding)

In addition to the statutory severance pay, the court may award equitable compensation (billijke vergoeding) if the employer has acted culpably (ernstig verwijtbaar handelen of nalaten). In underperformance cases, equitable compensation may be awarded if the employer:

• Failed to offer any improvement plan and proceeded directly to dismissal.
• Set up a sham improvement plan designed to fail rather than to genuinely help the employee improve.
• Created or contributed to the underperformance, for example by failing to provide necessary tools, training, or a reasonable workload.
• Used underperformance as a pretext while the real reason for dismissal was something else entirely.

The amount of equitable compensation is determined by the court on a case-by-case basis. There is no fixed formula. The court considers the severity of the employer's culpable conduct, the consequences for the employee, and what the employee would have earned if the employment had continued. Equitable compensation can range from a few thousand euros to tens of thousands, or even more in exceptional cases.

Practical tips for employees

If you are facing dismissal for underperformance, the following practical tips can help protect your position:

• Document everything: keep copies of all correspondence, performance reviews, meeting notes, and emails related to your performance. Written evidence is crucial in any legal proceeding.
• Respond in writing: if you disagree with your employer's assessment of your performance, put your objections in writing. This creates a record that can be used later.
• Cooperate with the improvement plan: participate actively and demonstrate willingness to improve. Refusal to cooperate weakens your position considerably.
• Challenge unreasonable demands: if the improvement plan contains objectives that are impossible, unrealistic, or not properly supported, raise your concerns in writing.
• Seek legal advice early: do not wait until you receive a dismissal petition. A lawyer can advise you on how to strengthen your position during the improvement process and can help you negotiate if a settlement agreement is proposed.
• Check for medical causes: if your performance issues are related to health problems, inform your employer and consult the company doctor (bedrijfsarts). Underperformance caused by illness falls under a different legal regime with stronger protections.
• Consider your own position: sometimes a departure on favourable terms may be better than a prolonged conflict. A well-negotiated settlement agreement can provide financial security and a fresh start.

Frequently asked questions

Can my employer dismiss me immediately for underperformance?

No. Dismissal for underperformance requires a careful procedure including timely notification, a concrete improvement plan, adequate support, and reasonable time to improve. Only after this process, if your performance remains insufficient, can your employer request the subdistrict court to dissolve the employment contract. Underperformance alone is never a ground for summary dismissal.

What is a reasonable duration for an improvement plan?

There is no fixed legal minimum, but courts generally expect an improvement plan to last at least several months. Common durations range from three to six months, depending on the nature of the underperformance and the complexity of the role. For long-serving employees, courts often expect a longer improvement period.

What if I disagree with my employer's assessment of my performance?

You have the right to challenge your employer's assessment. Put your objections in writing and provide concrete examples that demonstrate your performance is satisfactory. If the assessment is based on subjective opinions rather than measurable criteria, this weakens your employer's case. Nevertheless, it is important to cooperate with the improvement process while documenting your disagreements.

Am I entitled to severance pay if dismissed for underperformance?

Yes. If the court dissolves your employment contract on the ground of underperformance, you are entitled to the statutory severance pay (transitievergoeding). Additionally, the court may award equitable compensation if the employer is found to have acted culpably. In a settlement agreement, the severance pay is negotiable and may be higher than the statutory minimum.

Can I be dismissed for underperformance if I am ill?

No. Article 7:669 lid 3 sub d BW explicitly excludes underperformance caused by illness or disability. If your performance issues are related to health problems, your employer cannot use the underperformance ground and must instead follow the illness-related procedures, which include stronger protections for you. If your employer is trying to dismiss you for underperformance while you are ill, seek legal advice immediately.

What happens if the court rejects the dismissal request?

If the subdistrict court rejects your employer's request for dissolution, your employment contract continues. Your employer must continue to pay your salary and provide work. However, the practical situation may remain difficult. In many cases, the parties subsequently negotiate a settlement agreement to end the employment on mutually acceptable terms. Your employer may also file a new request if the procedural deficiencies are addressed.