Performance Improvement Plan (PIP)
A performance improvement plan documents the steps taken to support an employee before termination — a critical protection against unfair dismissal claims.
What is a Performance Improvement Plan (PIP)?
A performance improvement plan (PIP) is a structured document that identifies specific performance deficiencies, sets clear improvement goals, defines the support the employer will provide, establishes a review timeline, and records the consequences if performance does not improve.
In Australia, the Fair Work Act requires that before terminating an employee for performance reasons, the employer must have given the employee a valid reason for dismissal (the performance issue), notified the employee of that reason, given them an opportunity to respond, and allowed them to have a support person present. A PIP creates the documented record of these steps.
PIPs are not just a step toward termination — they are a genuine opportunity to improve performance. Many employees respond well to clearly documented expectations and structured support. The PIP process protects the employer if termination is ultimately necessary, but its primary purpose is performance improvement.
When do you need a Performance Improvement Plan (PIP)?
- ✓When an employee's performance has consistently fallen below the standard required for the role
- ✓After informal coaching and verbal warnings have not resulted in sustained improvement
- ✓Before considering whether termination for performance reasons is appropriate
- ✓When documenting a performance management process to protect against unfair dismissal claims
Key provisions to include
Performance Deficiencies
Specific, objective description of the performance issues — what standard is required and what is actually occurring.
Improvement Goals
Clear, measurable objectives the employee must achieve during the PIP period.
Support Measures
What the employer will provide to assist the employee — training, coaching, resources, adjusted workload.
Review Timeline
Duration of the PIP period (typically 4–12 weeks) and scheduled check-in dates.
Monitoring & Assessment
How performance will be assessed during the PIP period.
Consequences
What happens at the end of the PIP period if performance has and has not improved.
Acknowledgement
Employee signature confirming they have received, read, and understood the PIP.
Common mistakes to avoid
Setting vague or unmeasurable goals — the employee must be able to understand precisely what they need to do differently
Not giving the employee an opportunity to respond to the PIP before it is finalised
Making the PIP period too short to demonstrate genuine performance improvement
Using the PIP as a paper exercise when the termination decision has already been made — courts and the FWC can identify pretextual PIPs
Frequently asked questions
Is a PIP legally required before terminating an employee in Australia?
Not by name, but the Fair Work Act requires that before terminating for performance reasons, the employer must have given the employee a valid reason (the performance issue), notified them of the reason, given them an opportunity to respond, and allowed a support person. A PIP creates the documented record of these procedural fairness steps.
How long should a performance improvement plan last?
Typically 4 to 12 weeks. The duration should be long enough to give the employee a genuine opportunity to demonstrate improvement, but not so long that underperformance is tolerated indefinitely. Complex roles or multi-dimensional performance issues may warrant longer PIP periods.
Can I terminate an employee during a PIP if performance does not improve?
Yes, if the process has been followed fairly. The employee must have been given a clear explanation of the required standards, a genuine opportunity to improve, adequate support, and a reasonable time to demonstrate improvement. If the PIP has been conducted properly and performance has not improved, termination for a valid reason (performance) is defensible.
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