Performance Improvement Plan (PIP): Meaning & Steps
PIP work is the process of setting out, in writing, where an employee's performance falls short and what support and time they get to improve. A performance improvement plan (PIP) is not required by the Fair Work Act, but it helps an employer show a fair process before any dismissal for poor performance.
How PIP work works
Good PIP work follows a simple, documented sequence.
- The manager meets the employee, explains the performance gap with specific examples and offers a support person for the meeting.
- The plan sets clear and measurable goals that match the role, the award or contract and the training the employee has received.
- The employer lists the support it will provide, such as training, supervision, a buddy or adjusted tools.
- Review dates are agreed in writing, and each review records progress, feedback and the employee's response.
- The outcome is recorded honestly, whether it is success, an extension, redeployment or a move to a formal process.
Examples of PIP work
These examples show where a plan fits better than a warning.
- A site labourer repeatedly misses quality checks on formwork, and the supervisor sets a plan with refresher training and weekly checks.
- A warehouse picker falls behind accuracy targets after a system change, and the plan adds system training and a review of the targets.
- A cleaning crew member leaves rooms below the agreed standard, and the plan includes a checklist walk-through with the team leader.
- An office administrator misses deadlines, and the plan reviews workload, sets priorities and confirms what support is available.
- A new casual struggles with induction content, and the plan repeats the induction before any performance concern is escalated.
PIP work rules and key numbers
| Item | What the rule is | Why it matters |
|---|---|---|
| Legal requirement for a PIP | None in the Fair Work Act; it is good practice | Employers still need a valid reason and a fair process |
| Unfair dismissal time limit | 21 days from the dismissal taking effect | Late applications are rarely accepted |
| Minimum employment period | 6 months, or 12 months for a small business employer with fewer than 15 employees | Decides whether the employee can claim |
| Small Business Fair Dismissal Code | Applies to small business employers | Sets a fair process checklist for smaller businesses |
| Serious misconduct | Notice is not required | A PIP is not the right tool for serious misconduct |
Most private-sector employees are in the national system, while NSW state public sector staff are covered by the state system.
Related terms
- Workplace misconduct: behaviour that breaches policy, the contract or the law, which is handled separately from performance.
- Written warnings: a formal record of a concern and the improvement required.
- Disciplinary meetings: a meeting where the employee hears the concern and responds with a support person.
- Insubordination: deliberately refusing a lawful and reasonable instruction.
- Unfair dismissal: a dismissal that is harsh, unjust or unreasonable, which the Fair Work Commission can review.
PIP work FAQ
Is PIP work legally required before dismissal?
No law requires a PIP, but an employer must have a valid reason and follow a fair process. A documented plan helps show that the employee was told about the problem, given support and had a real chance to improve before any decision.
Can you refuse to sign a PIP?
You can ask questions, seek a support person and add your own comments before signing. Signing usually shows you received the plan, not that you agree with it. Keep a copy and raise concerns in writing.
Does PIP work mean you are going to be sacked?
Not necessarily. A plan can lead to improved performance, extra training or redeployment. If it ends in dismissal, you have 21 days to lodge an unfair dismissal application with the Fair Work Commission, if you meet the minimum employment period.
This is general information, not legal, tax or financial advice, so check the Fair Work Ombudsman on 13 13 94 or an employment lawyer for your situation. Read our guide to workplace misconduct, or see our host employer labour hire page if you need supervised, inducted staff.