When a Performance Improvement Plan Isn’t About Performance

A Performance Improvement Plan (PIP) is a really effective tool for managing underperformance - it provides structure, sets clear expectations, and gives an employee a chance to improve.

Alternatively the outcome of a PIP is that the employee exits the business — and that’s OK too. If the person can’t or won’t meet expectations, a PIP is a legitimate and lawful way to bring employment to an end.

But what a PIP should never be is a shortcut to avoiding your responsibilities as an employer.  

I recently advised a senior executive whose performance had been strong, yet he suddenly found himself on a PIP. The issues raised were historic, already dealt with, and didn’t reflect his actual results. At the same time, redundancies were being rolled out in the business. The message was clear: the PIP wasn’t really about performance — it was about avoiding cost.

That is not what a PIP is for.

The right way to use a PIP

When used properly, a PIP is about improvement. It’s based on clear evidence, tied directly to the employee’s KPIs or role description. It sets out what needs to change, how success will be measured, and gives the employee a genuine opportunity to turn things around. Done well, it strengthens accountability and gives the business confidence in its process.

The wrong way to use a PIP

A PIP should never be a smokescreen for redundancy. If a role is no longer required, that’s redundancy, and it must be managed transparently. Using a PIP to disguise it exposes the business to legal challenge and damages culture. Likewise, threatening or coercing an employee into signing a PIP is not just poor practice — it may give rise to adverse action claims under the Fair Work Act.

Why misuse is high-risk

When PIPs are misused, the employer doesn’t win. Instead of saving money, you create exposure to legal costs, general protections claims, and breach of contract allegations. These disputes are expensive, time-consuming, and often more costly than simply following the redundancy process in the first place.

The hidden cost is culture. Staff notice when someone is treated unfairly. Trust erodes, good performers look elsewhere, and your reputation as an employer suffers.

The takeaway for employers

If performance is genuinely the issue, use a PIP fairly and transparently. If the role is redundant, treat it as redundancy and meet your obligations. Blurring the two is never worth the risk.

I’ve helped employees fight opaque and unfair PIPs, and I’ve seen firsthand the fallout for businesses that misuse them. The lesson is clear: use PIPs as the tool they’re meant to be — not as a shortcut.

📌 If you’re not sure whether your performance management or redundancy processes are defensible, let’s talk. A quick review now could save you a costly dispute later.

Feel free to use my customisable Performance Improvement Plan and call or message me for confidential advice on a current issue.

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Your peace of mind — and your team — will thank you.