PIPs in Germany
I sit on a works council at a tech company in Germany. One of the things we’ve been working on is killing the Performance Improvement Plan, and we’ve just managed it.
In Germany (as in much of the EU), dismissing someone for underperformance is deliberately hard to do. The employer must issue two formal warnings at least three months apart, reassess the employee’s capacity, and demonstrate that training and support were offered to help them improve. Tech companies, having imported a US and UK corporate culture, tend to find this process intolerable. So rather than follow it, they construct a situation in which the employee effectively fires themselves. The mechanism for this is the PIP.
When put on a PIP, an employee is presented with a list of failings and coerced into taking personal responsibility for them. They sign a document to that effect, “here’s where I’ve been letting you down and here’s what I’ll do to fix it.”. Their assessment cycle shifts from quarterly to weekly, often in meetings where they sit alone opposite both their manager and HR. A clock starts ticking. The PIP typically lasts three months, after which things must have improved—or else.
The thing is, there is no “or else.” Under German law, a PIP has no legal standing. When it expires, the employee simply continues in their role as before. But the employer will conclude the process with a grave expression, announce that it’s time to part ways, slide a Voluntary Termination Agreement across the table, and urge the employee to sign immediately “for the best terms.”
By this point, the psychological pressure has been building for months. The employee has been made to accept all responsibility for the problems, in writing. Their every action has been scrutinised and second-guessed. They believe a paper trail exists that points inexorably toward their dismissal. Most people sign.
In our experience, virtually no PIPs end in improved performance. They end in people choosing to leave because of the ordeal they’ve been put through. The purpose of a system is what it does. A PIP is an employee torture device that saves the company the legal burden of building a proper case for dismissal.
What makes this even more insidious is that leaving voluntarily in Germany means waiving the right to pursue legal action over discrimination or health issues. It also means forfeiting a bunch of unemployment protections, including health insurance continuity and unemployment benefit.
Since the works council was established, we have made it clear to every affected employee that these end-of-PIP termination agreements are entirely optional and drafted in the employer’s favour. They rarely even include meaningful severance. Now, the company can no longer rely on them. If they want to dismiss someone for underperformance, they have to prove it and do it properly.