Termination Due to Poor Work Performance – How to Act Correctly as an Employer

General information on termination due to poor work performance

Poor work performance usually does not constitute objective reasons for termination unless it significantly falls short of the employer's expectations and causes the employer substantial problems. The employer must also have attempted to remedy the poor performance by providing clear instructions and support. Only if performance continues to fall short after such measures can there be objective reasons for termination. Refusal to perform a work task or to perform it according to the employer's instructions can also constitute objective reasons for termination, but the circumstances of the individual case must be considered. Often, it is required that the employee, through repeated refusal to follow orders, has demonstrated a general unwillingness to follow the employer's instructions for it to be considered that there are objective reasons for termination.

This can be compared to what the Confederation of Swedish Enterprise and PTK have agreed upon in their main agreement. In the main agreement, the requirement for how deficient the employee's performance must be has been lowered, as it only requires that it be clear that the employee's performance falls short of what the employer should normally have been able to expect. The employer's demands must not be unreasonable upon objective assessment. According to the main agreement, the starting point in cases of work or order refusal is that there are objective reasons for termination if the employee has been warned that employment is at risk and has been given reasonable time to comply with the employer's instructions. The parties have also agreed that it is not required that the refusal stems from a general unwillingness to follow the employer's instructions.

New cases from the labor court

Below we review two recent cases, from the fall of 2024, that specifically addressed dismissals due to poor performance.

The Telemarketer (AD 2024 No. 75)

The case involves an employee who was employed as a telemarketer at a telemarketing company. The employer was a member of Almega, and thus the main agreement between the Confederation of Swedish Enterprise and PTK was applicable.

The employee's employment contract explicitly stated that his duties consisted of making his budget every month and conducting at least 250 call attempts per workday. However, over approximately a year, the employee did not meet his monthly sales budget even once and made significantly fewer call attempts than the agreed 250 per day, ranging from 90 to 181 calls per day. Despite several verbal warnings, two written warnings, and a meeting between the employer, the employee, and his union that resulted in an action plan where the requirement was lowered to 150 call attempts per workday, the employee failed to meet his budget. In connection with a competition where the winner would get to leave early, the employee made 329 call attempts in one afternoon! That same month, the employee's average number of call attempts per workday was 181.

The Labor Court found that it had not been shown that the employee was incapable of meeting the requirement of 250 call attempts per workday. According to the Labor Court, the employee, despite having been given more than reasonable time after the employer's warnings and support measures, did not follow his employment contract or the employer's instructions regarding call attempts.

In the case, the employee's union argued that the requirement for call attempts was unreasonable and that the lists of potential customers were of poor quality. However, the Labor Court dismissed these objections because the requirement for the number of call attempts was agreed upon. Additionally, the employee, according to the court, had an obligation to follow even a somewhat unreasonable order. Furthermore, it was difficult for the court to see how the quality of the lists could affect the employee's ability to make call attempts.

Given the above, the Labor Court assessed that the employer had objective reasons for the termination.

The Warehouse Worker (AD 2024 No. 78)

An employee was employed as a warehouse worker in a picking department. The starting point was that each employee in the department should pick about 80 items per hour over an eight-hour work shift. The employees used a scanner that, among other things, recorded active work time and picked items. When the scanner had not registered a picked item for about 10 minutes, a so-called non-track time ("NTT") began to be recorded. Accepted NTT was one hour per workday.

Since the employee's work performance was far too low in relation to the employer's goals, the employer created an action plan to help him perform better. However, the employee refused to accept the action plan and follow it, and therefore received several written warnings from the company. Eventually, the employer decided to terminate the employee's employment due to personal reasons.

The employee and his union claimed that the termination was a violation of the employee's right to association because he was an active member of the union's local section, and also pointed out that the employee had worked as well as most other employees in the warehouse and that other employees had also received warnings for poor work performance.

The Labor Court found that the employee's NTT was remarkably high. Over a period of about 6 months, his average active time was only 4.5 hours per work shift, i.e., just over half the working time. The employee could not provide an acceptable explanation for why the passive time was so extensive. The company's data also showed that the employee's NTT during the notice period had increased to first an average of 6 hours and finally almost 8 hours. Therefore, the employee had seriously, repeatedly, neglected his most fundamental and obvious obligation under the employment contract, to work. The Labor Court also noted that the company had taken several measures before the termination to address the employee's underperformance. No support for the employee's claim that the company had terminated his employment due to his involvement in the union's local section was found by the court either. According to the Labor Court, there were thus objective reasons for the termination.

Lindahl's comment on the two cases

In both cases, the employer had established clearly measurable criteria that the employees failed to meet, and this with significant margins. These involve substantial underperformance and clear refusal to work from the employees' side that occurred over a long period and after several warnings that performance must improve and supportive measures from the employer. We therefore assess that the outcome would have been the same in the cases even if the older regulation in LAS regarding objective grounds had been applicable or, concerning the telemarketer case, if there had been no applicable main agreement with specified provisions on personal reasons. Thus, we believe that the cases do not provide much clarity on whether or how the legal situation has changed. It is also difficult to comment on how poor performance should be assessed in other situations when the employee's underperformance does not involve productivity to the same extent. However, the cases show that it is still important for an employer to take less intrusive measures to try to achieve improvement before a termination is executed.

Three tips for employers

1. Clear communication and follow-up – Carefully consider what demands and expectations should be placed on your employees and how these should be clarified. It is important that the employer is clear about what expectations exist and provides clear instructions on how the work should be performed. In some cases, especially concerning tasks that are measurable, it may be appropriate to specify the demands/expectations directly in employment contracts or a policy. Also, don't forget to follow up on the employee's performance and ensure that the employee receives the support they need.
   

2. Documentation – Employers have an extensive burden of proof to show that there are objective reasons for termination. If there is insufficient evidence, there is a risk that the termination will be declared invalid or that the employer will be liable for damages to the employee. Therefore, it is important that the employer continuously documents the employee's underperformance and the measures the employer has taken to rectify these, and that the employee has been informed that employment is at risk if performance does not improve. When the employee's tasks are not quantifiable, the employer should think carefully about how expectations and performance can be clarified and documented. Remember that the documentation does not need to be a formal written reminder but can be action plans, email correspondence, or notes from meetings with the employee.
   

3. Seek help in time – Unfortunately, it happens that an employer realizes that it is not a matter of sufficiently serious underperformance or that there is insufficient evidence to prove the underperformance only after the termination has already been carried out and it has been questioned by the employee and/or their union. We therefore recommend that employers seek the help of a legal advisor in good time, i.e., before a possible termination, to ensure that it is possible to prove that there are objective reasons for termination and that the formal requirements in LAS are met.

Would you like to know more about terminations due to personal reasons or discuss how you should handle underperformance from an employee's side? Please contact one of our experts.