An employer who believes an employee is underperforming faces a dilemma: how do you address that without crossing a legal line? A recent ruling by the Limburg District Court (ECLI:NL:RBLIM:2026:5188) shows what goes wrong when an employer skips that step altogether and reaches straight for the most severe measure available under Dutch employment law: summary dismissal (ontslag op staande voet). The bill presented for that mistake turned out to be steep.
The facts
The employee, born in 1968, had worked as a demolition worker for a construction company since November 2024. His fixed-term employment contract had just been extended for another year in November 2025. Privately, things were difficult: a permanent knee injury forced him to close his one-person window-cleaning business, leaving him unable to keep up payments on a wheelchair-accessible van leased for his stepdaughter. When he asked his employer for a loan or a wage advance, the request was refused. The van was subsequently auctioned off, leaving him with a residual debt.
On 12 January 2026, the employer summarily dismissed him. The dismissal letter referred to ongoing complaints about his pace of work, time registration, attitude and motivation, and to a lack of improvement despite earlier warnings. The employee disputed all of this and stated that he had never received a formal warning or a concrete improvement plan.
Poor performance does not justify summary dismissal
The subdistrict court made short work of the employer’s defence. An urgent cause within the meaning of Section 7:677 of the Dutch Civil Code requires conduct on the part of the employee that makes it unreasonable to expect the employer to continue the employment relationship. Underperformance does not, in principle, meet that threshold, especially where the allegations in the dismissal letter remain vague and unsubstantiated.
The court stressed that Dutch law requires an employer who wants to dismiss an employee for poor performance to first offer a genuine and realistic opportunity to improve. That means a concrete improvement plan, interim evaluation, and clarity about the consequences if improvement fails to materialise. None of this had been demonstrated here. In fact, the contract had been extended for another year less than two months before the dismissal, which sits uneasily with the picture of a structurally underperforming employee.
The court therefore concluded that the summary dismissal was not lawful.
The bill: three separate awards
Because the employee accepted the termination of his employment rather than seeking its annulment, while the summary dismissal proved unlawful, the subdistrict court awarded him three separate compensation amounts at once.
First, the fixed statutory damages under Section 7:672(11) of the Dutch Civil Code: the wages over the notice period that would have applied to a regular termination. In this case, partly due to a collective labour agreement provision on terminations taking effect at the end of a calendar week, that amounted to just over four thousand euros gross.
Second, the statutory transition payment. An urgent cause is not automatically the same as seriously culpable conduct on the part of the employee, and since no urgent cause was found to exist, there was no basis to deny the transition payment either.
The heaviest award was the fair compensation (billijke vergoeding) under Section 7:681 of the Dutch Civil Code, which the court set at just over twenty-three thousand euros gross, equal to six months’ salary. In calculating this amount, the court took into account that the employee suddenly had to look for new work without any transition period, that he had since found work but only through a temp agency and therefore on an insecure basis, that he had needed dozens of job applications, and that the employer had deliberately avoided a proper performance-improvement process by resorting instead to an improper summary dismissal. The court also weighed in the employee’s pressing personal financial situation, which he had previously raised with his employer.
What this means for employers
This ruling is a clear warning. Dissatisfaction with an employee’s performance, however justified that dissatisfaction may be, is not a licence for summary dismissal. An employer who wants to dismiss an employee for poor performance must first follow the regular route: concrete, written feedback, an improvement plan with clear goals and timelines, and interim evaluation. Only once that process has run its course without result does terminating the employment relationship become an option, and even then only through the proper legal channel, not through the most extreme remedy of summary dismissal.
An employer who deliberately bypasses this route risks not only having the dismissal set aside, but also having it qualified as seriously culpable conduct. The resulting fair compensation can far exceed the cost of a properly conducted improvement process. Diligence, in other words, pays off quite literally.
Frequently asked questions
What counts as an urgent cause for summary dismissal?
An urgent cause is an act, characteristic or form of conduct by the employee that is so serious that the employer cannot reasonably be expected to continue the employment relationship. Examples include theft, fraud or serious aggression. All the circumstances of the case are taken into account, including the nature and duration of the employment and the employee’s personal circumstances.
Can poor performance ever justify summary dismissal?
No, poor performance by itself does not constitute an urgent cause. Dutch law requires a separate procedure for dismissal on performance grounds, under which the employee must first be given a genuine opportunity to improve. An employer who skips that route and proceeds straight to summary dismissal runs a significant risk that a court will annul the dismissal or, as in this case, that the employee accepts the termination but is still awarded compensation.
What should an employer do if an employee is underperforming?
The employer should identify the underperformance concretely and in writing, discuss it with the employee, and offer an improvement plan with clear, achievable goals and a reasonable timeframe. That process should be evaluated at interim stages, and the employee should be made aware of the consequences if improvement does not follow. Only once this process has been completed without result does ending the employment relationship become a realistic option.
What is the difference between the transition payment and fair compensation?
The transition payment is a statutory, formula-based payment that is in principle due whenever the employer initiates termination of the employment, unless the employee has acted in a seriously culpable manner. Fair compensation is an additional payment a court can award when the employer itself has acted in a seriously culpable manner, for example by issuing an unlawful summary dismissal. Its amount is determined on a case-by-case basis and takes into account, among other things, the employee’s loss of income.
Can an employee accept the dismissal and still receive compensation?
Yes. An employee can choose not to seek annulment of the dismissal, but instead accept the end of the employment relationship and ask the court to award the fixed statutory damages, the transition payment and, where applicable, fair compensation. That is exactly what happened in this case.
In conclusion
This case illustrates how important it is for employers to follow the correct procedure when dealing with underperformance, and how costly it can be when that procedure is neglected. If you are an employer dealing with an underperforming employee, or an employee facing a summary dismissal, please feel free to contact Law & More for advice tailored to your specific situation.
