What are they and why they are important to get right

What is a Performance Improvement Plan?

A Performance Improvement Plan (PIP) is a document given to an employee outlining deficiencies in their performance and setting out specific goals to address failures and improve any conduct related issues.

Getting Them Right & Why it is Important

The purpose of a PIP is for performance related outcomes to increase and to indicate where this is not possible and other action needs to be taken. This includes demotion, changes to team structure or termination. For this goal to be successfully achieved, it is important that a PIP be properly implemented and prepared.

In terms of preparation, it is best to first carefully consider if a PIP is the most appropriate course of action. In this regard, employers should consider the particular conduct or performance issue and whether it can be substantiated, whether the issue can be fixed with a PIP (or whether an alternative is more appropriate such as changes to objective measures), whether it is circumstantial (such as a personal issue affecting an employee’s performance temporarily) and whether the issue or conduct amounts to serious misconduct and the employer cannot allow the employment relationship to proceed further.

If a PIP is deemed to be appropriate, employers should prepare a draft PIP. This document must clearly set out the expectations of the employee by reference to the achievable metrics and responsibilities of their role, set out in their employment agreement or position description. The PIP should reference specific, identifiable examples of whether the employee’s conduct or performance has failed the employer’s expectations. Ideally, the draft plan would be reviewed by an independent person to avoid any allegations of bias.

What Happens Next?

Once prepared, the employer should meet with the employee, allowing the employee a support person if they choose, and review the PIP. It is critical that the employee understands the contents and purpose of the PIP as well as the consequences of failure to improve (i.e. termination). This should be put the employee in writing and the PIP finalised and executed by the employee.

Whilst a PIP has an end date, employers should regularly review the PIP both independently and with the employee, making adjustments in consultation with the employee along the way (where necessary). Progress meetings towards goals and improvement should be documented and the employee afforded an opportunity to respond to any continued deficiencies.

At the plan’s conclusion, positive improvement should be acknowledged, and the employer should allow the employee to continue employment.

Where performance does not improve or worsens, the employer will need to consider whether an extension of the PIP is appropriate of whether other action, including termination is appropriate. The employer should ensure any such action complies with the Fair Work Act 2009 (Cth).

Well prepared and executed PIPs often lead to improvements in performance. Where they do not and actions such as the termination of a person’s employment needs to occur, an employer who has fairly and clearly followed a process and the failed expectations are clearly set out and supported in the PIP may be better protected from costly adverse action claims and unfair dismissal allegations.

If you require assistance with a Performance Improvement Plan, Adams & Partners Employment Law Team can help you. Contact us on (02) 4721 6200.

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