Got a PIP in Hungary? Does It Mean You’re About to Be Fired?
Insights / Employment Law / PIP
A meeting with your manager. Maybe HR is there too. Then you hear the words: Performance Improvement Plan. PIP.
Perhaps you expected it. Perhaps it came completely out of the blue.
But one question will probably come to mind very quickly: Does this mean I'm going to be fired?
And then come the others. What happens if you receive a negative evaluation at the end of the PIP? What if you have already received one? Why were you put on a PIP in the first place? What happens at the next meeting?
Meanwhile, you continue working as usual.
You talk to colleagues. Maybe someone has seen this before. You discuss it with your family or friends. And you probably search online to find out what happened to other employees in similar situations.
You will find plenty of answers – and many of them will contradict each other.
Some people will tell you that a PIP is a genuine opportunity to improve your performance. Others will say that once you are put on a PIP, the decision has already been made. Online forums have stories supporting both views.
But if you work in Hungary, there is another important point: your employment relationship is governed by Hungarian employment law.
Three PIP cases in just a few weeks
Over the past few weeks, our office has received three separate enquiries involving Performance Improvement Plans.
For us, that is unusual.
In our own employment law practice, we encounter PIPs relatively rarely. When we do, they tend to involve employees working in Hungary for multinational companies and, in our experience, often companies with a US background or an American-style corporate culture.
This is, of course, our own experience from the cases that reach our office, not a statement about the Hungarian labour market as a whole.
But three separate cases within such a short period raised an interesting question:
What does a PIP actually mean when your employment relationship is in Hungary?
A PIP is a performance improvement tool
The name itself tells us its intended purpose: Performance Improvement Plan.
The employer identifies a problem with an employee's performance, sets out the improvement it expects, and then monitors and evaluates performance over a certain period.
There is nothing inherently unusual about this in a Hungarian employment relationship.
Employee performance is measured and evaluated in Hungary too. Companies use performance targets, KPIs, regular performance reviews and many other forms of performance management.
A PIP is one such tool: a structured process intended to address performance that the employer considers unsatisfactory and to assess whether improvement takes place.
From an employment law perspective, the interesting question is therefore not what the process is called.
It is what happens during the PIP – and, more importantly, what happens afterwards.
What if the PIP evaluation is negative?
This is usually where the uncertainty becomes much more serious.
If, at the end of the PIP, the employer concludes that the expected improvement has not taken place, it is easy to think: So now I'm going to be fired.
But that is not an automatic consequence.
The conclusion of the PIP and its outcome are part of the employer's performance management process. Terminating an employment relationship, however, is an employment law matter.
A negative PIP evaluation is therefore not, in itself, a dismissal.
It is possible, however, that after the evaluation the employer may want to discuss the future of the employment relationship. The PIP may be extended, there may be a further evaluation, a mutual termination agreement may be discussed, or the employer may decide to terminate the employment relationship.
At that point, the issue is no longer simply how the employer evaluated your performance, but also what consequences the employer intends to draw from that evaluation.
So what is a PIP for?
I would not treat a PIP as either an automatic "pre-dismissal document" or meaningless HR administration.
It is a tool.
Where there is a genuine performance issue, a properly structured process can identify the problem, set out the improvement expected and later assess whether that improvement has taken place.
But two apparently similar PIPs may exist within very different employment relationships, with very different histories and circumstances.
This means that the same sentence – "I received a negative PIP evaluation" – may have a very different significance for two different employees.
What happens next?
The PIP may end and the employment relationship may simply continue. The process may be extended, or there may be a further evaluation.
Or the conversation may move towards the future of the employment relationship itself.
This is where the country in which you work becomes particularly important.
The same multinational company may use a similar PIP process in Budapest, London and New York. But if your employment relationship is in Hungary, it is governed by Hungarian employment law.
So if your question is no longer "What is a PIP?", but "What does my PIP mean, and what could happen next?", the answer depends on your particular employment situation and Hungarian employment law.
A PIP does not automatically mean that you are going to lose your job. But after a negative evaluation, it is understandable that you may want to know where you stand and what the next steps could mean for your employment.
If you are at that point, it may be worth discussing your own situation. A short legal review can often tell you more than another ten online stories about what happened to someone else after a similar PIP.
This article provides general information only. The legal assessment of an individual employment situation always depends on the specific circumstances of the case.