What does dismissal due to low productivity entail?

Published on 04/03/2024

What does dismissal due to low productivity entail?

Published on 04/03/2024
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What does dismissal due to low productivity entail?

Dismissal due to low productivity or poor job performance is one of the most common reasons for disciplinary dismissal. This type of dismissal affects both the reputation and performance of both the company and the employee. Below, we explain everything you need to know about it.

What is a dismissal for poor job performance

Dismissal due to low productivity or poor job performance means that the worker loses their job without receiving any compensation.

This model of contract termination falls within the category of disciplinary dismissals, and according to Article 54 of the Workers’ Statute, it occurs at the unilateral will of the employer, based on a serious and culpable breach of contract by the worker.

The reasons leading to this type of dismissal for low productivity must be clearly specified, stemming from serious behavior on the part of the employee that impacts the functioning of the company.

The company has the obligation to communicate the termination of the contract in writing and justify the reasons that motivated the decision of dismissal due to low productivity.

Why dismissal for low productivity occurs

For a dismissal to be due to low productivity or poor job performance, a series of demonstrable requirements must be met by the company:

  • Serious decrease in the employee’s production.
  • The decrease in performance and productivity must be a relevant factor.
  • It cannot be an isolated case; the behavior leading to low productivity must persist for an extended period.

Employee behaviors that may motivate dismissal due to low productivity typically include:

  • Repeated and unjustified absences or tardiness by the worker.
  • Indiscipline, disobedience, or verbal offenses to the employer or colleagues in the workplace.
  • Violation of contractual good faith or abuse of trust in performance.
  • Continued and voluntary decrease in work performance.
  • Habitual drunkenness or substance abuse if it negatively affects work.
  • Or harassment of the employer or colleagues on grounds of race, religion, sex, or disability.

Implications of disciplinary dismissal for low productivity

When one or several of the aforementioned scenarios occur, the employer may choose dismissal as an alternative. To do this correctly, they must observe the formal requirements applicable to such actions, including the aforementioned written notification, which must clearly and precisely state the facts motivating it, as well as the effective date of the dismissal (Article 5 of the Workers’ Statute).

Failure to comply with the formal requirements of dismissal will require issuing a new dismissal that meets the requirements omitted in the previous one. This can be done within 20 days from the date of the first dismissal.

Furthermore, the employer must settle any outstanding payments due until the date of dismissal and provide the worker with the corresponding receipt or settlement.

Deadlines are also important, and, as stated in articles 58 and 60.2 of the Workers’ Statute, dismissal must occur within 60 days following the date on which the company became aware of the labor breach that motivated the decision of dismissal due to low productivity, and in any case within 6 months of its occurrence.

The employee can challenge the dismissal for low productivity

It can be difficult to prove the decrease in the worker’s performance, leading to dismissal. In such cases, the employee may end up suing the company. If so, the judge usually rules in favor of the worker, as it is challenging to demonstrate an employee’s low productivity within their professional history, given that production or sales also depend on other professionals.

If the judge rules in favor of the employee and declares the dismissal unfair, the company would have to pay the corresponding compensation to the affected party, which amounts to 33 days per year worked up to a maximum of 24 monthly payments.

For more information on the different classifications of dismissal, you can consult Article 55 of the Workers’ Statute.

Types of costs to face with dismissal due to low productivity

The costs of dismissal are not limited to severance pay, indemnities, etc. The decision to dismiss due to low productivity entails a series of expenses that many companies overlook in their calculations, namely employee turnover costs.

It is therefore essential to know to what extent employee turnover a company can withstand without being affected, a problem that each organization must evaluate according to its own calculations and interests.

Employee turnover costs could be divided into three groups: primary, secondary, and tertiary costs.

Primary costs

These are costs directly related to the dismissal due to low productivity, which are primarily quantitative. They include:

  • Selection process costs: recruitment, job application processing, publications, medical notice services, etc.
  • Registration and documentation costs: registration and documentation expenses, registration office dependency, bank account, forms, etc.
  • Entry costs: training expenses, supervisor’s time cost, entry cost, etc.
  • Separation costs: cost of advance payments related to vacations, registration and separation costs, indemnities, documentation, separation interview cost, etc.

Secondary costs

These costs, also related to disciplinary dismissal or dismissal due to low productivity, cover intangible aspects and qualitative characteristics, making their evaluation difficult. They refer to the immediate collateral effects of turnover.

  • Immediate turnover effects: effects on production, loss of production and/or lower production, additional time, extra expenses to cover vacant or inefficient production, increase in unit cost, additional time invested in integration and training (training), electricity, lubrication due to low production, fuel, maintenance planning and control, accidents due to production intensity, errors, waste, and quality control.
  • Effects at the start of the new worker: effects on personnel attitudes, image, attitudes, and predispositions; effects on the supervisor’s figure; and effects on customers and suppliers.

Tertiary costs

These costs are more related to the company’s image and its organizational culture. They are only estimable costs, but they affect motivation and the work environment.

  • Negative atmosphere: attitudes and comments, employee demotivation, frustration, among others.
  • Bad company image in the market: loss of investments in the business, alteration of services and market image of the company, damage to the relationship with customers, etc.

How to control and measure employee productivity levels

Relying on technology to obtain objective data is an effective method that not only helps managers and executives identify employee productivity levels but also understands whether it is appropriate or not to make the decision of dismissal due to low productivity or poor job performance, and even increases employee performance and promotes self-management.

Acquiring productivity measurement software, such as EffiWork, allows the company to automatically evaluate employee performance through a series of productivity and efficiency indicators, providing completely objective data based on each employee’s work activity, whether during telecommuting or in the office.

It also allows for analyzing the time spent on tasks, as well as time thieves, showing the use of applications used during the working day. This also helps the employee understand the work dynamics and optimize time management.

Thanks to these types of tools, companies can identify areas for improvement and plan strategies that enhance employee efficiency and performance, thus possibly avoiding dismissal due to low productivity.

Another method for measuring employee productivity and performance levels is the productivity formula.

Now you know everything that implies making the decision to dismiss due to low productivity and how to analyze the performance of each worker. Evaluate if your company is ready for it, or maybe you could adopt other strategies to motivate and boost professional performance.

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