When dismissal may be considered for ‘low performers’

The terms ‘low performer’ and ‘quiet quitting’ are currently appearing more frequently in the news and are repeatedly sparking debate. Both relate to performance limits, but from different perspectives. Whilst a so-called ‘low performer’ is an employee who, objectively speaking, consistently performs below average, a ‘quiet quitter’ does only what they are contractually obliged to do – no more and no less.

The key difference is this: if an employee’s performance is below the average of employees entrusted with comparable tasks, established case law holds that termination of the employment contract may be considered. Thus, a low performer’s substandard performance can justify dismissal. However, it is not uncommon for difficulties to arise regarding the question of what lies at the root of this substandard performance. This is significant because it determines the type of dismissal. If the employee is capable of achieving average performance but is unwilling to make full use of their potential, they have control over their poor performance and dismissal on behavioural grounds may be considered. If, however, they are unable to achieve the performance level of an average employee, dismissal on personal grounds is more likely.

Owing to this challenge, a court may find itself in a position where it can only make a ‘declaratory ruling’ distinguishing between grounds relating to conduct and grounds relating to the employee’s character. This means that the court is, in principle, satisfied that there are grounds for dismissal, but cannot determine with certainty whether these are conduct-related or character-related. Employers are therefore advised to issue a written warning first, even in cases of poor performance which, at first glance, appears to be due to personal reasons.

Easing the burden of proof in unfair dismissal proceedings & the one-third threshold

In unfair dismissal proceedings, employers are frequently faced with the problem that, whilst they are able to demonstrate that an employee is objectively underperforming, they are unable to prove that this underperformance is attributable to the employee’s own fault. Case law has addressed this issue by holding that the employer need only demonstrate that the dismissed employee’s performance is significantly below the average level. The Federal Labour Court (BAG) has established a one-third threshold for quantifiable performance (BAG judgment of 11 December 2003 – 2 AZR 667/02). If, over a prolonged period, an employee achieves no more than two-thirds of the average performance of comparable employees, this may – depending on the circumstances – constitute strong evidence of the social justification for dismissal on grounds of poor performance. The burden of proof is then shifted in such a way that the employee must demonstrate that they have exhausted their capacity for performance despite their below-average work performance.

Poor performance in terms of quality as grounds for dismissal

Poor performance in terms of quality – that is, a persistent pattern of errors or substandard work – may also justify dismissal if it stems from culpable breaches of duty and is not remedied despite clear guidance and support. Unlike in the case of quantitative underperformance, it is not sufficient here to rely solely on an increased error rate; the nature, severity and consequences of the errors, as well as the resulting operational disruptions, are particularly decisive. The Federal Labour Court (BAG) has clarified that a significantly higher error rate over the long term compared with similar employees is merely an indication of a culpable breach of duty, which must be assessed as part of a case-by-case overall evaluation (BAG judgment of 17 January 2008 – 2 AZR 536/06).