Whilst Performance Improvement Plans (PIPs) can provide much needed structure to the improvement of employee performance and the avoidance of grievance, there are various considerations to be borne in mind before implementing a PIP procedure.
What is a Performance Improvement Plan?
A PIP is a formal document issued to an employee with recurring performance issues outlining problems with performance and ways in which performance is to be improved. They can be an excellent tool for opening dialogue with employees provided they clearly articulate the steps to be taken to improve performance and an attainable timeline for achieving said steps.
There is no legal requirement for an employer to implement a PIP for underperforming employees however in the event a claim for unfair/constructive dismissal is brought they can be used to evidence reasonableness of an employer and a genuine intention to resolve issues with performance prior to dismissal.
Implementing PIPs bring multiple benefits to employer and employee alike. Not only do they offer the employee to potentially avoid dismissal but they also allow employers to efficiently survey their employees when considering promotions and other employee opportunities.
Any employer looking to implement a PIP should, as good practice, document the reasoning behind it and any meetings leading up to the decision to implement a PIP. The rationale behind implementing PIPs could be target-based or based on some other quantifiable factor.
An employer should also be aware of the impact of and obligations imposed by a PIP. The UK Employment Appeal Tribunal (UKEAT) in the 2019 case of Qu v Landis & Gyr Ltd questioned “the point in having a performance improvement plan if improvement in performance is ignored by the management” indicating that failure to review the PIP or the employee’s performance under it will not be looked upon favourably by a Tribunal. An employer should therefore seriously consider if it is able to commit the sufficient time and resources to a PIP before implementing one.
The dangers of poor implementation
Employers must be wary when implementing PIPs without using clear criteria to do so, otherwise they may leave themselves open to claims of discrimination or unfair dismissal. Whilst the presence or absence of a PIP will not be conclusive, the UKEAT will take PIPs into account. Lack of criteria or documented rationale may point to unlawful considerations or discriminatory motives and this is something an employer should be aware of when putting an employee on a PIP. As PIPs allow employees to directly compare themselves with one another, employers must be cautious not to implement PIPs across their workforce in a discriminatory manner otherwise they may be treading into Equality Act 2017 territory.
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