Many employers are familiar with this situation: You invest time, trust, and energy in your team—and in return, you expect commitment and reliable performance. This makes it all the more stressful when colleagues repeatedly have to make up for delays or cover for the same person’s mistakes. Frustration within the team grows, managers come under pressure, and workplace harmony can suffer noticeably.
The issue of “low performance” is not just a matter of metrics or meeting targets. It affects motivation, appreciation, and your responsibility for the entire company.
But how much subpar performance is still acceptable? When does it become a real risk to the company’s success? And at what point can you, as an employer, take disciplinary action under employment law? This is precisely where special care is required. Not every instance of subpar performance justifies termination. Labor courts apply high standards and scrutinize every single step very closely.
In this article, you’ll learn when termination for poor performance is permissible, what requirements under employment law must be met, when a written warning becomes necessary, and how to structure your approach strategically and in compliance with the law.
What Is a “Low Performer” in the Context of Employment Law?
The term “low performer” originates from the HR field. It does not exist in employment law. The only legally relevant question is whether there is significant and persistent underperformance .
Employees are not required to deliver top performance. What is required is performance of an average nature and quality. The benchmark is the individual’s capacity for performance, not the performance of the best person on the team.
Termination for poor performance is only permissible if:
- the performance is significantly below the average of comparable employees and below the employee’s individual potential
- the underperformance persists over a prolonged period,
- business operations or economic interests are significantly impaired.
A short-term drop in performance or isolated mistakes are generally not sufficient grounds.
Termination for Poor Performance: Legal Requirements
If the Unfair Dismissal Protection Act applies, a termination must be socially justified. For you as an employer, this means:
You must specifically demonstrate—and, in the event of a dispute, prove—that the poor performance is significant and ongoing. The burden of proof lies primarily with you.
The courts examine the following in particular:
- What is the average performance of comparable employees?
- How significant is the deviation?
- Since when has the substandard performance been occurring?
- Were there discussions, warnings, or support measures?
- Were less severe measures considered?
Termination can only be effective if there is no reasonable alternative to it.
Consider Less Severe Measures Before Termination
Before issuing a termination, you must regularly assess whether other measures would be sufficient, such as:
- Transfer to a more suitable position
- Training or professional development
- programs Adjustments to work organization
- Goal agreements with a clear definition of performance
If you fail to conduct this review, a termination may be disproportionate.
Termination for personal or behavioral reasons due to poor performance?
The classification of the type of termination is crucial for the legal assessment.
Termination for personal reasons
In this case, the cause lies in a lack of performance. Reasons may include being overwhelmed, health limitations, or a lack of suitability.
In these cases, a written warning is often not required. The decisive factor is whether there is a negative prognosis—that is, whether no improvement is expected. Nevertheless, this type of termination is very difficult to enforce in court because, ultimately, a lack of suitability must be demonstrated and proven, and this will be virtually impossible, especially after a long period of employment. Furthermore, the probationary period is intended for evaluation, so the court will certainly take into account the argument that the probationary period is still in effect, since this period is also intended to identify performance deficiencies.
Termination for Cause
If the substandard performance is due to a lack of motivation or a deliberate effort to perform “below average,” this constitutes a breach of duty. Such a termination, on the other hand, is more likely to be enforceable.
A written warning is typically required in such cases. Without a prior written warning, a dismissal for cause based on poor performance due to a lack of motivation is generally invalid.
Errors in this legal classification are among the most common reasons for losing unfair dismissal lawsuits.
Warning Letter for Substandard Performance: Formulating It in a Legally Sound Manner
In cases of termination for cause due to poor performance, a written warning is generally required.
To ensure it serves its warning purpose, it must:
- specify the specific instance of substandard performance,
- clearly define the time period,
- demonstrate the deviation from the average, even though the employee has the ability to perform (the employee is performing below their potential due to a lack of willingness to perform).
- threaten consequences under employment law in the event of a recurrence.
General statements such as “Your performance is inadequate” are not sufficient.
In practice, terminations often fail because written warnings are too vague or insufficiently documented.
Documentation and Burden of Proof in Terminations Due to Low Performance
Documenting the underperformance is the key to success. Objective metrics are crucial for presenting the case in court.
A structured performance analysis over several months is recommended. In doing so, you should:
- record specific performance metrics,
- define comparison groups,
- document average values,
- record performance reviews in writing,
- and document development measures.
A typical real-world case illustrates how important this preparation is: If an employee consistently performs significantly below the average of comparable colleagues over an extended period and shows no improvement despite training and clear guidance, a termination may be valid. If, on the other hand, the deviation is only slightly above average or reliable comparative data is lacking, courts often declare the termination invalid.
These differences determine success or failure in an unfair dismissal lawsuit.
Read more about issuing written warnings to employees in this article.
Claims Challenging A Dismissal and Litigation Risks for Employers
If employees file a claim for protection against termination, the labor court conducts a comprehensive review of the social justification.
If you cannot provide detailed evidence of the substandard performance, there is a significant risk that:
- the termination will be declared invalid,
- the employee will be reinstated,
- or a court-mediated settlement with severance pay is reached.
In many cases, the parties agree on an amount of severance pay to avoid the litigation risk. Careful preparation significantly reduces this risk.
Common Mistakes in Termination Cases Due to Poor Performance
In legal practice, similar mistakes crop up time and again:
- no objective performance evaluation / failure to recognize that individual performance capacity is the key
- factor. Lack of benchmarks
- No warning letter or an erroneous one
- Premature termination without first exhausting less severe measures
- Insufficient documentation of discussions
Courts apply strict standards. A termination may not be based on subjective dissatisfaction but must be grounded in objective and verifiable facts.
A Strategic Approach to Low Performers in the Company
If you are faced with persistent underperformance, a structured, multi-step approach is recommended:
- Performance
- analysis and documentation Clarifying employee discussion
- Setting specific goals with a deadline
- Warning letter, if necessary
- Exploration of alternative job assignments
- Only then should a decision regarding termination
Be made This approach not only strengthens your legal position; it also creates transparency within the company and demonstrates that you are acting fairly and transparently.
Conclusion: Preparing a Termination for Poor Performance in a Legally Sound Manner
Termination due to poor performance is legally possible but challenging. As an employer, you must demonstrate significant and persistent deviations from performance standards and exhaust less severe measures.
Key points at a glance:
- Poor performance must be clear and persistent
- Objective benchmarks are essential, but individual performance is also a key factor
- A written warning is typically required for termination based on conduct
- Documentation is key to the success of the legal proceedings
- Strategic preparation reduces your litigation and cost risks
FAQs: Termination Due to Low Performance
When does legally relevant poor performance exist?
Legally relevant underperformance exists when work performance remains significantly below the average of comparable employees in the company over an extended period of time. Isolated mistakes or temporary fluctuations in performance are not sufficient grounds for a valid termination. The key factor is that the underperformance must be objectively measurable and lead to noticeable operational disruptions.
Is a written warning always required in cases of low performance?
In the case of a termination for cause due to poor performance, a written warning is generally mandatory. It is intended to give employees the opportunity to correct their behavior and improve their performance. However, if the cause lies in a lack of ability to perform—for example, due to health reasons—a written warning may not be necessary. Nevertheless, careful documentation is required even in these cases.
Is subjective dissatisfaction sufficient grounds for termination?
No. Termination due to low performance requires an objective and verifiable performance evaluation. Employers must be able to provide concrete figures, comparative data, and verifiable documentation. Subjective impressions or general dissatisfaction do not meet the requirements of labor courts.
How high is the risk of a wrongful termination lawsuit?
Experience shows that the risk of a wrongful termination lawsuit is high in cases of termination due to poor performance. Many employees seek judicial review of such a termination. Without reliable performance data and careful preparation, employers face a significant litigation risk. Such proceedings often end with a court-mediated settlement and an amount of severance pay.
How can Marten & Graner assist you?
The law firm Marten & Graner provides comprehensive advice to employers on all issues related to terminations due to poor performance and low performance. We review your specific situation, assess your litigation risk, and develop a legally sound strategy for your company. Upon request, we represent you in out-of-court negotiations and before the labor court.
This allows you to gain clarity, minimize risks, and make well-informed decisions.
