How to terminate an employee for unsatisfactory performance in a way that withstands judicial review?

Results or Discipline: Which Reason Will the Company Use?

Dismissal for unsatisfactory work performance is intended for an employee who does the work, but not in the quantity or quality that the company reasonably expects. Typically, this is a salesperson who has long failed to meet their targets, or a manager whose team repeatedly misses deadlines. The law does not examine fault here. The Supreme Court emphasizes that the objective state of affairs is decisive, not whether the employee is failing due to incompetence or indifference.

This reason must be carefully distinguished from a breach of work duties. Late arrivals, ignoring instructions, or inappropriate behavior towards colleagues constitute a breach of duties, and a different ground for dismissal with its own procedure applies to them, typically a written warning about the possibility of dismissal. If a company mixes the two reasons, it risks the court not recognizing the dismissal for either of them. The HR department should therefore determine at the very beginning whether the problem lies in results or in behavior.

At the same time, the law requires that the employee fails to meet the requirements through no fault of the employer. A company that sets a target for a salesperson and simultaneously takes away their key customers cannot rely on unsatisfactory results. Before issuing a warning, it is therefore advisable to verify that the company has created the conditions under which the results can be achieved. If it is a gross breach of duties, immediate termination of employment, which has its own strict rules, may also be considered.

Requirements must be known and verifiable. Courts assess whether the employee knew what was expected of them and whether the requirement was achievable. In one dispute, the employer succeeded partly because the same goals were being met by other regional managers and the employee had been briefed on them at a meeting. The job description, goals, and evaluation method should therefore exist in writing before performance begins to deteriorate.

What a Written Warning Must Contain

A warning to remedy unsatisfactory results is the foundation of the entire dismissal. The law explicitly requires it: dismissal on this ground can only be given to an employee whom the employer has warned in writing to remedy deficiencies in the last 12 months and who has failed to do so within a reasonable period (Section 52(f) of the Czech Labor Code). An oral reprimand at a meeting or minutes of an evaluation interview that the employee did not receive will not satisfy this condition.

The warning must specifically describe how the results are unsatisfactory. A general statement that the employee "fails to meet expectations" is not enough. The warning should state measurable indicators, such as target fulfillment in percentages, the number of undelivered orders, or production error rates, and the period for which the company evaluated them. The employee must be able to recognize from the warning what specifically needs to be improved and how the company will recognize that this has been achieved.

The second mandatory part is the remedy period. The Supreme Court has concluded that the period is an essential element of the warning and its length must correspond to the criticized deficiencies. If the period is missing or unreasonably short, the subsequent dismissal is invalid for this reason alone. It is therefore best to set the period with a specific date to avoid disputes about when it actually ended.

The warning should also include how the company will evaluate the results. If business results are closed on a certain day of the month or quality is measured according to internal statistics, this information belongs in the warning. The employee thus knows how they will be assessed, and the company later has proof that it evaluated according to pre-announced rules. It is advisable to deliver the warning in a way that receipt can be proven, preferably in person against a signature.

How to Set the Remedy Period and Evaluate Results

The law does not define a reasonable period, and courts assess it according to the nature of the work. For a salesperson with a monthly target, a different period will be reasonable than for a developer whose project lasts half a year. The period must give the employee a realistic chance to improve results. If, according to common experience, the goal cannot be met even with full commitment, the court will not consider the period reasonable and the dismissal will not stand.

During the period, it is worthwhile to support the employee and keep records of this. Regular check-in meetings, minutes of what was discussed, and offers of training show that the company wanted a remedy, not just a formal basis for dismissal. Such records will also help in a dispute where the employee usually claims that the employer intentionally set impossible tasks. The court then sees how the cooperation during the remedy period actually took place.

After the period expires, the company evaluates the results exactly according to the criteria in the warning. The dismissal can only criticize those deficiencies mentioned in the warning, and no new ones. In judgment 21 Cdo 3795/2017, the Supreme Court also admitted that, exceptionally, dismissal can be given even before the end of the period. However, it must be obvious that the deficiencies cannot be remedied in the remaining time. In that dispute, two days remained until the end of the period and the employee had only partially fulfilled the assigned tasks.

Dismissal before the end of the period is nevertheless a risky choice. The employer must prove that it was no longer possible to manage the remedy, which is subject to evidence in a dispute. It is safer to wait for the end of the period, evaluate the results, and only then decide. If the employee improves their results, the warning has served its purpose and the company retains a person in whom it has already invested. How long a period to choose and when to evaluate results depends on the nature of the work and how the company measures performance. Therefore, the lawyers of the Prague-based ARROWS law firm set both individually for each employee.

Dismissal: Content, Discussion, and Delivery

The dismissal itself must be in writing and must factually define the reason so that it cannot be confused with another. The employer may not subsequently change the reason (Section 50 of the Czech Labor Code). The dismissal should therefore contain a reference to the warning with its date, a description of the criticized deficiencies, and a statement that the employee failed to remedy them within the set period.

If a trade union operates at the company, the employer must discuss the dismissal with it in advance. In the case of a member of a trade union body, it is necessary to request prior consent. Under Czech legislation, the union is deemed to have given consent if it does not reject it in writing within 15 days of the request. Companies sometimes overlook this step in practice, as unions only exist in some operations, making the dismissal unnecessarily vulnerable.

The notice period begins on the first day of the calendar month following the delivery of the notice and, for this reason, is at least two months under Czech legislation. A written agreement can extend it. The employee is not entitled to statutory severance pay upon dismissal for unsatisfactory results, as the law associates it with organizational reasons. However, the company may decide to pay the employee something voluntarily, typically in exchange for a termination agreement.

Delivery is where otherwise well-prepared dismissals most frequently fail. The dismissal must be delivered into the employee's own hands, preferentially by hand at the workplace. It can only be sent by mail if delivery at the workplace is not possible (Section 334a of the Czech Labor Code). If the employee refuses to accept it at the workplace, the dismissal is considered delivered at the moment of refusal. A witness and a written record of the handover are decisive here.

When Dismissal Cannot Be Given and What Risks Arise from Invalidity

The law protects employees during a so-called protection period, for example, during temporary incapacity for work, pregnancy, or parental leave. Dismissal for unsatisfactory results cannot be given during this time, and the law provides no exception for it. If the company delivers the notice before the start of the protection period, the notice period is extended by the protection period, unless the employee states that they do not insist on the extension.

An employee can challenge an invalid dismissal in court within two months. The period runs from the day when the employment relationship was to end by the dismissal (Section 72 of the Czech Labor Code). For the company, this means that uncertainty persists even after the employee's departure. If the employee notifies the employer in writing that they insist on continued employment and the court determines that the dismissal is invalid, the employment relationship continues.

The financial consequence is the most painful for the company. An employee who has announced that they insist on employment is entitled to salary compensation in the amount of average earnings until the company allows them to work or until the employment relationship validly ends. Upon the employer's proposal, the court may reasonably reduce the compensation for the period exceeding six months, for example, if the employee worked elsewhere in the meantime. A dispute lasting several years can thus cost more than an annual salary.

Defects in the warning cannot be corrected after the dismissal has been delivered. Whether the dismissal stands is determined by the quality of the warning and the evidence of the evaluation of results, which is why the lawyers of the Prague-based ARROWS law firm assess these documents before the dismissal is delivered. Although a new warning can be issued, it means a new period and additional months during which the employee remains with the company.

Agreement as a Reasonable Alternative to Dismissal

Dismissal for unsatisfactory results is a long process, and its outcome in court is never certain. Therefore, many companies, at the moment when a remedy is clearly unrealistic, offer the employee an agreement on the termination of the employment relationship. The agreement must be in writing, and the employment relationship ends on the agreed day. Neither the notice period nor the prohibition of dismissal during a protection period applies to it.

An agreement works best when the company has a proper warning and documented results in hand. The employee then sees that dismissal is real, and the agreement is a cleaner path for them: they leave on a date they negotiate themselves and without a dispute. The company usually offers financial compensation beyond the scope of the law, release from work, or a reference. It is good to write these conditions into a single document and also resolve the return of company property in it.

During negotiations, it is worthwhile to remove emotions from the discussion and speak about facts, i.e., results, the period, and its evaluation. An employee caught off guard by the company without documentation usually rejects the agreement and turns to an attorney. The departure of a key person with know-how or customer contacts is also addressed in the article on how to handle the departure of a senior manager. There, the risks are different and non-compete clauses play a larger role.

If the problem appears during the probationary period, the situation is significantly simpler. During the probationary period, both the employer and the employee can terminate the employment relationship for any reason or without giving a reason, and neither a warning nor a remedy period is needed. Therefore, it is worthwhile to monitor the performance of new employees from day one. What to watch out for is analyzed in the article on how to terminate employment during the probationary period without the risk of a lawsuit.

Mistakes That Cause the Employer to Lose a Dispute

The most common mistake is a warning that does not describe specific deficiencies. Formulations such as "your work does not meet requirements" do not allow the court to assess whether the employee complied with the warning. A dismissal based on such a warning will not stand, even if the results were objectively poor. The company must then start over, i.e., issue a new warning and wait for another period, while paying a salary to a person they no longer count on.

The second mistake is a period that is missing or does not correspond to the nature of the work. A one-week period to improve quarterly business results is a typical example of unreasonableness. Equally risky is a period defined only by the words "reasonable time" without a date. The employer thus leaves it to the court to determine the period retroactively and exposes themselves to the claim that the dismissal came before the period expired.

The third mistake is mixing results with discipline. The company adds late arrivals, inappropriate emails, or non-cooperation with colleagues to the dismissal for unsatisfactory results because it wants to appear more convincing. The court must then distinguish between what is a result of work and what is a breach of duties. Yet, the law requires a different procedure for a breach of duties. The dismissal can thus fall apart precisely on the part that was supposed to strengthen the case.

The fourth mistake is incomplete delivery. A dismissal sent by mail to an employee who is normally at the workplace, or handed over without a witness and record, opens a dispute about whether and when it was delivered. The start of the notice period and the deadline for a lawsuit depend on the date of delivery. The lawyers of the Prague-based ARROWS law firm assess which risk prevails in a specific situation based on how the company keeps HR documentation and who hands over the dismissal.

Risks of Dismissal for Unsatisfactory Results

Final Summary

The article showed that dismissal for unsatisfactory work performance stands on three steps: a written warning with specific deficiencies, a reasonable period for remedy, and a dismissal that criticizes exactly what the warning stated. If one of the steps is missing, the court will annul the dismissal regardless of how poor the results actually were. Proper delivery and consideration of the protection period must also be added to this.

For company management, it is essential that the dismissal is not prepared on the day patience runs out. It is prepared months in advance by the company having written goals, measuring them, and demonstrably communicating the results to the employee. A company that postpones this process ultimately either keeps the employee longer than it wants or issues a dismissal that it loses in court and for which it pays salary compensation.

A valid dismissal is not the only reasonable goal. A properly conducted procedure often leads to the employee improving their results or agreeing to a settlement because they see that the company has its case prepared. In both cases, the company saves time and dispute costs, and the team leader can return to managing work instead of gathering evidence.

The lawyers of the Prague-based ARROWS law firm prepare warnings, dismissals, and employment termination agreements for companies, set up internal performance evaluations, and represent employers in disputes over the invalidity of dismissals. Write to us at consultation@arws.cz or look at our labor law service.