How To Handle Underperforming Employee

Employer options when the employee does not achieve work results



Labor law is a field where we encounter a large number of disputes. The reason for this may lie in the sensitivity of labor relations or in the fact that the Labor Law (“Law“)[1], can often be inaccurate but also misinterpreted.

As work results are one of the most important facts for a valid employment relationship, questions often arise as to what an employer can do when an employee does not achieve work results.

In that direction, it is worth making a brief review of the failure to achieve work results by the employee (“Employee“), as a reason for dismissal, i.e. state which options the employer (“Employer“), has at its disposal.


Failure to achieve work results as a reason for dismissal

The reason for dismissal is a justifiable reason related to the working ability of the employee and his behavior, as a result of which the Employer may terminate the employment contract with the Employee, in accordance with the provisions of the Law.

Normative labor standards are determined by a general act (rulebook or collective agreement), and the Employer himself evaluates the achieved work results.

The Law stipulates as a reason for dismissal the fact that the Employee does not achieve the results of work and gives the Employer the right to take steps to remedy and/or sanction deficiencies in terms of performance of the Employee.


What are the Employer’s options?

According to the Law, in case the Employee does not achieve the results of work, the Employer has the following options:

  1. As a first option, the Employer who finds that the Employee is not achieving results of work and that there is no basis for imposing alternative measures, has the option of terminating the employment contract.


  1. As an alternative to termination of the employment contract, if the Employer considers that there are mitigating circumstances attributable to the Employee including those of a personal nature or that the non-performance is not such that the Employee should terminate the employment (low guilt, low amount damage to the Employer), the Employer has at his disposal the possibility of imposing some of the following measures according to the degree of absence of work results:


  • temporary dismissal without salary compensation, lasting from one to 15 working days;
  • a fine in the amount of up to 20% of the Employee’s basic salary for the month in which the fine was imposed, lasting up to three months, which is executed by suspension of salary, based on the Employer’s decision on the imposed measure and
  • a warning with a notice of dismissal stating that the Employer will terminate the employment contract with the Employee.


What are the obligations of the Employer?

The Employer may terminate the employment contract of the Employee or impose one of the previously mentioned measures only on condition that he has previously given the Employee a written notice stating:

  • shortcomings in the work of the Employee;
  • instructions for remedying deficiencies, i.e. instructions on the results and the manner in which the Employee should achieve them and
  • an appropriate deadline for improving work,


and the Employee does not improve the work within the time allowed.


Limitation period

Pursuant to the Law, the Employer may terminate the employment contract due to non-achievement of work results within six months from the day of learning of non-achievement of work results (subjective deadline), or within one year from the date of non-achievement of work results (objective deadline).



For more info on this or any other legal, tax or business topic, please feel free to write to us at [email protected] at any time OR contact us via telephone number +381113281914 during working days from 08:30 to 16:30


[1] Labor Law (“Official Gazette of RS”, No. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017 – decision US, 113/2017 and 95/2018 – authentic interpretation);

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