How to run a Performance Improvement Plan (PIP)

A Performance Improvement Plan (PIP) is a structured plan to help an employee improve sustained underperformance. Done well, it gives the employee a genuine chance to improve and gives the employer a defensible record if dismissal becomes necessary. Done badly, it is a tribunal liability.

Before starting a PIP

• Document the performance concerns clearly. Vague concerns ("attitude", "not pulling weight") will not survive scrutiny.
• Have prior informal discussions with the employee. A PIP should not be the first time the employee hears that performance is a concern.
• Consider underlying issues — health, personal circumstances, workload, training gaps, management quality. PIPs that ignore root causes typically fail.
• Consider whether it's really a misconduct issue (which would go to the disciplinary procedure) vs a capability issue (PIP).

The components of a good PIP

A defensible PIP has:

1. Clear, specific performance concerns — with examples.
2. SMART targets — Specific, Measurable, Achievable, Relevant, Time-bound.
3. Support to be provided — training, mentoring, coaching, reduced workload, equipment, regular check-ins.
4. Review period — typically 4 to 12 weeks, depending on the role and the targets. Should be long enough for genuine improvement to be possible.
5. Regular review meetings — usually weekly or fortnightly.
6. Consequences of failure — clearly stated. Typically: failure may result in a formal capability process, potentially leading to dismissal.
7. Right to be accompanied at any formal review meeting.

The review meetings

• Document each meeting in writing — what was discussed, what progress has been made, what remains outstanding.
• Provide written feedback after each meeting.
• Adjust support if the employee is making progress but needs more help.

At the end of the PIP

• Targets met: confirm in writing. Continue monitoring informally for a defined period.
• Targets partially met: consider an extension if progress is genuine. Document the basis for any decision.
• Targets not met: move to a formal capability process under the ACAS Code.

The formal capability process

If the PIP fails, the employer should follow a procedure that mirrors the ACAS Code:

• Invite to a capability hearing in writing.
• Hold the hearing with the right to be accompanied.
• Decide whether capability dismissal is the right outcome.
• Always offer a right of appeal.

Capability dismissal is one of the five potentially fair reasons for dismissal under the Employment Rights Act 1996.

ERA 2025 implications

From 1 January 2027:

• Unfair dismissal qualifying period drops to 6 months.
• Compensation cap abolished.
• Capability dismissals with an inadequate process expose employers to uncapped compensation.

This makes a properly run PIP — followed where necessary by a properly run capability process — significantly more important. Short-cuts that "worked" before will not survive January 2027.

Disability considerations

If the employee has a disability (or you suspect they might), the PIP must:

• Be adjusted as a reasonable adjustment where appropriate.
• Consider whether the underperformance is linked to the disability.
• Account for any reasonable adjustments not yet made.

A PIP that doesn't take disability into account can be disability discrimination, regardless of the performance issue.

Official source: ACAS — Performance management.