Rotwang Law are specialist lawyers for employment law in Berlin. Here they talk you through what you need to know if you're faced with a Performance Improvement Plan at work.
For many expats working in Germany, the local employment landscape can be challenging at the best of times, and even more so when faced with unfamiliar HR tools like the Performance Improvement Plan (PIP). While PIPs are often presented as a supportive measure to help employees improve, they can also signal the beginning of a more serious employment issue.
This article explains what PIPs are, how they function under German law and what you should do if your employer asks you to sign one.
A Performance Improvement Plan is a formal document issued by an employer that outlines specific areas where an employee’s performance is deemed unsatisfactory. It typically includes:
While the stated goal of a PIP is to help the employee improve, in practice it can also serve as a precursor to termination, especially if the employee fails to meet the outlined objectives.
If your employer presents you with a PIP and asks you to sign it, do not sign immediately. In Germany, signing a PIP can have legal consequences, especially if the document includes specific performance targets. Once signed by both parties, a PIP may be interpreted as a binding target agreement (Zielvereinbarung) under German labour law.
This means that if you fail to meet the agreed-upon goals, your employer could use this as evidence of poor performance, potentially justifying a dismissal. Therefore, it is crucial to carefully review the content of the PIP before signing, ideally with an employment law specialist.
If the targets are vague, overly ambitious or impossible to meet within the given timeframe, you should not sign the PIP.
Ambiguity in performance metrics can later be used against you. Ensure that all expectations are measurable and time-bound.
If the employer issues the PIP unilaterally (i.e. without your signature), it does not have immediate binding legal effect. In such cases, the enforceability of the PIP depends on whether the goals were reasonable and whether you were given a fair chance to meet them.
Rotwang Law can assess the legality and viability of your PIP so you are protected.
Under German law, a PIP signed by both employer and employee may be treated as a contractual agreement. This can be used in court to demonstrate that the employee failed to meet agreed-upon standards.
However, if the PIP is not signed by the employee, it is considered a unilateral instruction. In such cases, the employer bears the burden of proving that the expectations were fair and achievable.
This distinction is critical. Signing a PIP without fully understanding or agreeing to its terms can significantly weaken your legal position in the event of a dispute.
Unfortunately, PIPs are often used not just to improve performance but to build a case for dismissal. If an employer wants to terminate an employee for poor performance, they must demonstrate that:
A PIP can serve as documentation for all three points. By issuing a PIP and showing that the employee failed to meet its terms, the employer may argue that the employee is either unwilling or unable to perform their duties adequately.
This is particularly relevant in Germany, where dismissals for performance reasons are subject to strict legal scrutiny. A well-documented PIP can help the employer meet the legal threshold for such a dismissal.
If you are presented with a PIP, it is strongly recommended that you seek legal advice before signing anything. A qualified employment lawyer can:
In many cases, early legal intervention can reduce pressure, prevent unfair treatment, and even lead to a mutually agreeable resolution, such as a revised PIP, a transfer or a severance agreement.
For expats in Germany, a Performance Improvement Plan can be a confusing and stressful experience. While it may be presented as a helpful tool, it often serves as a strategic step towards dismissal. Understanding your rights and the legal implications of signing a PIP is essential.
Never sign a PIP without reviewing it carefully and seeking legal advice. Doing so can protect your job, your reputation, and your future career prospects in Germany.
Rotwang Law are here to help you with any questions you might have about your rights and your employment terms in Germany. Contact them today for expert legal advice.