An employer who believes an employee is underperforming (not functioning properly), may aim to terminate the employment contract. This is often done via a Mutual Termination Agreement (MTA). This can be a sensitive situation for employees: you want to protect your reputation while also ensuring you don’t unjustly end up without income.

In this article we explain how a MTA works in case of underperformance, what your rights are and how to avoid endangering your unemployment benefits.

What is Underperformance?

Underperformance means that the employer believes the employee is not functioning properly. This can be related to:

• Not meeting objectives.

• Insufficient quality of work.

• Issues with attitude or behavior.

• Not fitting within the team or the organization.

Importantly, the employer needs to provide ample proof of this and give the employee the chance to improve.

Dismissal due to Underperformance: Normal Procedure

Normally, dismissal due to underperformance can only be carried out via the district court. The employer then has to prove that:

• You are underperforming.

• You have been confronted about this.

• You were given a fair chance to improve.

• There is no fitting position available.

Due to the difficulty in proving these points, employers often prefer a Mutual Termination Agreement.

Risks of a MTA in case of Underperformance

• Endangering Unemployment Benefits: If the MTA states that you are being dismissed due to underperformance, the Employment Insurance Agency (UWV) might refuse to pay out unemployment benefits.

• Damage to Reputation: A negative reason for dismissal might influence future employers.

• Insufficient Compensation: Employers often offer only the statutory severance pay.

What to Pay Attention to?

1. Formulating the Reason for Termination

   • Ensure the reason is neutral, like “difference of opinion” or “mutually agreed upon”.

2. Compensation

   • Check whether you are receiving at least the statutory severance pay.

   • Negotiate for extras (additional months of salary, educational budget, exemption from work).

3. Notice Period

   • Check if the statutory notice period has been applied correctly with respect to your right to unemployment benefits.

4. Non-Compete Clause

   • Check if this limits you in finding a new job.

Real Life Examples

• Example 1: An employee was offered a MTA stating “underperformance” as the reason for dismissal. The UWV refused to pay out unemployment benefits. After adjusting the MTA to “difference of opinion”, he still received the unemployment benefits.

• Example 2: An employee was offered only the statutory severance pay. After negotiations, he received three additional monthly salaries.

• Example 3: An employee too quickly accepted a negative reason for dismissal in the MTA, which hindered him in job applications. Later, this had to be corrected with legal assistance.

Checklist: MTA in case of Underperformance

• 📄 Check the reason for dismissal – it should be neutral.

• 💶 Calculate whether the statutory severance pay is correct.

• 📅 Mind the correct notice period.

• 🔒 Look at agreements that might limit you.

• ⚖️ Have your MTA checked by a labor law attorney.

Common Mistakes

• Signing too quickly under pressure.

• Accepting a negative reason for dismissal.

• Not asking for additional compensation on top of the statutory severance pay.

• Not having a legal check performed, thereby endangering unemployment benefits.

Frequently Asked Questions (FAQ)

1. Can I receive unemployment benefits if my MTA states underperformance?
No, this can cause problems. Always ensure the reason is neutral.

2. Am I required to sign a MTA in case of underperformance?
No, this is voluntary. If you refuse, the employer has to go to court.

3. Am I entitled to the statutory severance pay in case of underperformance?
Yes, unless you have acted in serious default.

4. Can I negotiate for more than the statutory severance pay?
Yes, there is often room for extras.

5. Is my employer required to reimburse my attorney’s costs?
That is customary and should be stated in the MTA.

Why Arslan Attorneys?

• Specialized in dismissal and underperformance

• Fighting negative reasons for dismissal damaging your unemployment benefits or reputation

• Negotiating for higher compensations and better conditions

• The costs are often charged to the employer

Conclusion

A Mutual Termination Agreement in case of underperformance can be risky. Ensure the reason is neutral and that you receive fair compensation. Always seek legal advice before signing, to avoid losing any rights or money.