Performance Improvement Plans (PIPs) are often presented as a supportive measure to help struggling employees get back on track. The process of a performance improvement plan would begin with a meeting between employee and manager to discuss a timeline and enact a program for performance improvement for the benefit of employee and employer. However, a growing concern is their potential misuse as a mechanism for “quiet firing.” This Insight explores the duality of PIPs, examining their intended purpose and how they can be manipulated to subtly push employees towards resignation.
Key Takeaway Points:
- There is growing concern around the potential misuse of performance improvement plans which are intended as a lifeline for struggling employees but may also be manipulated by employers.
- Despite their positive intentions, performance improvement plans can be weaponised in a practice known as ‘quiet firing’ whereby creating a hostile work environment encourages employees to leave voluntarily avoiding the complexities of formal termination.
- Employers can ensure that performance improvement plans serve their intended purpose to help employees improve and thrive by adhering to ethical practices and transparent communication.
PIPs: a lifeline for struggling employees or a precursor to dismissal?
In principle, PIPs offer a structured framework for employees to address performance gaps. They typically include clearly defined goals, resources for improvement, and a timeline for achieving those goals. Ideally, this process benefits both the employee, who gains clarity and support, and the employer, who retains a valuable team member. In circumstances where the PIP is based on law performance concerns and is implemented in a reasonable manner, if successful it can assist an employee to improve to the standard required, or if unsuccessful, can demonstrate procedural fairness in defence to any claim for unlawful or unfair dismissal.
However, despite their positive intentions, PIPs can be weaponised in a practice known as “quiet firing.” This involves creating a hostile work environment that encourages employees to leave voluntarily, thus avoiding the complexities of formal termination. A PIP can become a tool in this strategy by setting unrealistic goals, withholding support, or constantly shifting expectations.
PIPs can offer legal protection for employers. Terminating an employee can be legally risky, especially without clear justification. A PIP provides documented evidence of attempts to address performance issues, reducing the likelihood of wrongful termination lawsuits. This legal safety net, coupled with the desire to avoid difficult conversations and potential conflict, makes PIPs an appealing option for some organisations seeking to shed employees quietly.
While the concept of pushing employees out isn’t new, the term “quiet firing” has brought attention to these subtle tactics. PIPs can be a central element in this strategy, with employers using them to create an environment where employees feel overwhelmed, undervalued, and ultimately, compelled to resign. Employees, likewise, are wary that the use of PIPs is an often-deployed method to remove an employee who, for whatever reason, is not favour but who has not necessarily misconducted themselves. For these reasons, employees are often reluctant to engage in a PIP, even if it is conceived to genuinely improve performance.
Ethical workplace practices: the benefits of an honest conversation
In circumstances where a PIP in genuinely intended to improve an employee’s performance with the goal of keeping the employee in the organisation, employers should ensure that:
- Goals and expectations are specific, measurable, achievable and relevant;
- Necessary resources, training, and regular feedback are provided;
- Progress is assessed objectively and consistently and in accordance with goals pre-determined prior to commencing the PIP; and
- The consequences of not meeting goals are discussed up-front, while demonstrating genuine commitment to the employee’s success.
In circumstances where an employer is of the view that an employee is ‘not working out’, for whatever reason, rather than engaging in a convoluted and deceptive use of a PIP by risk-averse managers or conflict avoiding employers, it can often be a simpler and more palatable approach to simply invite the employee in for a ‘without prejudice’ discussion whereby a compensatory package is proposed (usually an ex-gratia payment) in return for their resignation and a release from future claims as an alternative to the implementation of a PIP. Provided it does not involve any coercion of the employee to resign such that the employee could argue they were ‘constructively dismissed’, this approach can assuage the unpleasantness of dismissing an employee and any costs in providing a compensatory package are generally offset by the costs of defending claims for unlawful termination of employment.
PIPs can be valuable for both employee development and organisational performance. By adhering to ethical practices and transparent communication, organisations can ensure that PIPs serve their intended purpose – to help employees improve and thrive – rather than becoming a tool for covert dismissal.
If you would like to discuss the use of performance improvement plans in your business, or would like advice on your workplace obligations generally, please contact our Workplace Relations experts.
