May 2026

Poor employee performance: How to document it legally before termination

Termination due to poor employee performance is one of the most sensitive matters under Serbian labour law.

From the employer’s perspective, the situation may seem straightforward: the employee’s results are poor or entirely absent. In court, however, a subjective belief that an employee is not the right fit does not constitute evidence. Without precise, chronological and legally sound documentation, a dismissal may lead to a costly and uncertain labour dispute.

This article examines how employers can demonstrate that dismissal was a measure of last resort rather than their first response to poor performance.

What Qualifies as Poor Employee Performance?

If you are dissatisfied with an employee’s work results, the starting point should be their employment contract and the Rulebook on Organisation and Job Classification. What duties and responsibilities do these documents assign to the employee?

For performance to be assessed as unsatisfactory, the employee must have been informed of their obligations in advance. If job descriptions are vague or outdated, or if the employee has been performing tasks that differ from those specified in their contract and the rulebook, relying on a “failure to achieve work results” as grounds for termination may be difficult to justify.

Responsibility for aligning expectations with actual performance lies with the employer.

Recommendation:

Recommendation: Regularly update job descriptions and inform employees of any changes, including, where appropriate, by concluding annexes to their employment contracts. Specific performance standards — such as sales targets, the number of cases processed or project deadlines — should be documented and communicated to the employee.

Poor Employee Performance vs. Employee Misconduct

The Serbian Labor Law makes an important distinction between two grounds for termination:

Failure to achieve work results (lack of ability or knowledge): The employee does not achieve the expected results or lacks the necessary skills or knowledge.
Breach of work duties or discipline: The employee performs their duties negligently or carelessly, or unjustifiably refuses to follow the employer’s instructions.

Why is this important? Because the documentation process differs.

In the first case, when the employee lacks knowledge or ability, this is an objective deficiency that, in principle, is not a matter of will. In such situations, it must be determined whether the employee received adequate training and, if not, why not. If technology or job requirements have changed, was the employee given an opportunity to adapt?

In these circumstances, documentation should demonstrate the steps the employer took to address the problem before dismissal. These may include training, mentoring or reassignment, as appropriate, as well as written instructions and a reasonable period for improvement. Without such documentation, the dismissal may appear to address a problem that was never clearly communicated to the employee.

In the second case, when the employee has the ability but knowingly fails to deliver results, refuses instructions, or violates rules — this is a behavioral issue, not a competency issue.

Here, documentation serves a different purpose: specific incidents, dates, circumstances, and potential witnesses are recorded. It is documented that the employee clearly understood the instruction and still refused or ignored it. It is also documented that the employee was warned in writing and that the behavior did not change.

Confusing these two situations leads to serious mistakes. If a manager mistakes a lack of knowledge or ability for deliberate misconduct, they may follow the wrong dismissal procedure.

How Serbian Courts Evaluate Poor Employee Performance

In judgment Rev2 3792/2022 dated March 20, 2025, the Supreme Court emphasized the distinction between employee incompetence and objective obstacles to achieving expected results:

“Whether the assigned goals (tasks) can objectively be achieved within a specific period must be examined in each individual case. In doing so, it is not sufficient to merely monitor the employer’s financial results, which in the defendant’s case were also defined as specific employee targets and primarily expressed through the number and volume of credit agreements, deposits, and overdraft contracts concluded by each employee, with expected increases from quarter to quarter (regardless of market conditions). This is because financial results also depend on numerous external factors affecting market saturation for the services offered by the defendant bank (economic development and activity in the area where the bank branch is located, the number of potential clients gravitating toward the branch, their economic status, the presence of other banks in the same location, etc.).

An employee’s attitude toward their work is assessed not only based on the volume of completed work, but also on the quality of that work, their relationship toward work obligations and clients, and their overall commitment during the observed period.

It is also necessary to consider the claimant’s decades-long attitude toward work, reflected in the fact that their salary coefficient had been permanently increased several times, that shortly before termination their work was highly rated through a ‘mystery shopper’ method and subsequently rewarded, and that the employer had no complaints regarding the quality of their work even at the time of termination, which is an inseparable part of competence — the second criterion used in evaluating employees.

Nor can the structure of tasks assigned to the claimant and the time required to perform tasks that they alone performed, or performed more frequently than others, be ignored (complaints handling, loan closure, loan insurance, final insurance in the event of a borrower’s death), nor the influence of other factors contributing to expected performance results (e.g., the absence of a unified queueing system in the bank).

Finally, employer instructions aimed at improving work performance must contain specific guidance on how the employee should perform their duties within the period set for improvement in order for their performance to be considered satisfactory. In this specific case, instead of providing concrete guidance on how the stated goals could be achieved within a short timeframe, the employer’s instructions essentially repeated desired goals (‘achieving assigned targets related to profit realization, product sales, and other goals,’ ‘continuous improvement of all activities,’ etc.) and described expected competency characteristics (‘maintaining professional and flexible client relations,’ providing ‘prompt and efficient services,’ ‘active offering, active referral, active participation,’ etc.), even though the employee evaluation concerned numerical performance indicators rather than competencies.”

How to Document Poor Employee Performance

Before initiating a formal procedure concerning unsatisfactory performance, employers should take several steps.

First, clearly communicate to the employee in writing what the specific expectations are: what tasks need to be completed, what performance standards apply, and what the deadlines are.

Second, allow them a reasonable period to meet those standards or adapt to new requirements.

Third, provide feedback during that period — not only at the end when the decision has already been made.

Documentation of unsatisfactory employee performance should begin before any formal notice is issued.

Written Communication – Email as Evidence

Verbal conversations and warnings are not strong evidence in court. Every time you notice an employee’s failure, send an email that:

Specifies the task that was not completed
Reminds them of the missed deadline
Offers assistance or clarification if there is an issue with understanding the task

Meeting Minutes

If you hold a meeting regarding an employee’s performance, make sure to prepare brief minutes. State what was criticized, how the employee responded, and what further steps were agreed upon. Send these minutes to the employee after the meeting.

Performance Improvement Plan (PIP)

Although a Performance Improvement Plan (PIP) is not expressly required under Serbian law, using one can help demonstrate that the employer acted in good faith. The document should specify:

What exactly needs improvement
Within what timeframe (e.g., 30 or 60 days)
What resources or training will be provided to the employee, especially who will mentor them during the process

Termination for Poor Employee Performance: Legal Requirements

Under Article 179(1)(1) of the Serbian Labour Law, an employer may terminate an employment contract if an employee fails to achieve the required work results or lacks the necessary knowledge and abilities to perform their duties.

However, before terminating employment on these grounds, the employer must comply with the procedure prescribed by Article 180a of the Labour Law.

The employer must provide the employee with a written notice identifying the deficiencies in their work, giving specific instructions on how to improve performance and allowing a reasonable period for improvement.

If the employee fails to improve their performance within the specified period, the employer may proceed with termination, subject to compliance with the applicable statutory requirements.

Frequently Asked Questions About Poor Employee Performance

Are Slack or Viber messages considered evidence in court?
Such messages may be relevant as evidence, depending on their authenticity and the circumstances of the case. However, official email is generally a more reliable and professional way to document employment-related concerns. Important notices and objections should therefore also be communicated through appropriate formal channels.

What if the employee refuses to receive the warning?
If the employee refuses to accept personal delivery at the employer’s premises, an official record should be prepared, preferably in the presence of witnesses. The employer should then follow the applicable statutory rules on service of the document, including any requirements concerning delivery by post and, where legally permitted, publication on the employer’s notice board.

Can an employee be terminated for poor performance while on sick leave?

An employee’s sick leave does not, in itself, prevent the employer from initiating or conducting a lawful termination procedure. However, temporary incapacity for work due to illness cannot constitute a valid ground for dismissal.

The employer must establish an independent lawful ground for termination, comply with the applicable procedural requirements and ensure that the employee’s statutory rights are respected.

How long can the process of documenting unsatisfactory performance last?

The Labour Law does not prescribe a fixed duration for documenting poor performance or for the improvement period under Article 180a. However, under Article 184, an employer may terminate employment on these grounds within six months from becoming aware of the relevant facts, and no later than one year from the occurrence of those facts.

Conclusion

Dismissal for poor performance must be based on documented facts, not an employer’s subjective dissatisfaction.

Employers who document performance concerns promptly and lawfully are better placed to defend disputes that may last months or years and potentially result in substantial compensation awards. In litigation, the employer must be prepared to substantiate the reasons for dismissal and demonstrate compliance with the applicable statutory procedure.

In such situations, timely consultation with a lawyer experienced in employment law in Serbia is advisable to ensure that the termination procedure is conducted in accordance with applicable legislation and to minimise the risk of subsequent employment disputes.

Author: Damir Petrović, Attorney-at-Law