Most performance issues can be addressed through early conversations, clear expectations, and good coaching. In fact, that’s where we always encourage businesses to start.
Sometimes, though, performance concerns persist despite support and informal feedback. When that happens, employers may consider a more structured approach. This is where a Performance Improvement Plan, often referred to as a PIP, can be useful.
What a PIP is (and what it isn’t)
A Performance Improvement Plan is not a disciplinary shortcut, and it is not a guarantee of legal protection. In a New Zealand employment context, a PIP is simply one tool that can be used to support an employee to meet the required standard of performance.
A PIP is generally appropriate where:
• performance expectations are clear
• the issue relates to capability rather than misconduct
• the employee appears able to improve with support
It is not appropriate for serious misconduct, which must be managed through a disciplinary process.
A helpful way to think about this is:
• performance processes are about whether someone can meet expectations
• disciplinary processes are about whether someone will
That distinction matters, but it does not remove the need for fairness in either case.
Using a PIP fairly in New Zealand
Under New Zealand employment law, employers must act in good faith and follow a fair process. A PIP on its own does not meet that obligation. How it is introduced, managed, and followed through is what matters.
A fair PIP process usually involves:
• clearly explaining the performance concerns and how they have been identified
• confirming what the expected standard looks like
• giving the employee a genuine opportunity to respond
• identifying what support, training, or guidance will be provided
• allowing reasonable time for improvement
• meeting regularly to review progress and adjust support if needed
Importantly, a PIP should never be imposed as a surprise or treated as a formality. It should be a genuine attempt to help the employee succeed.
Documentation and communication
Good documentation supports fairness, but paperwork alone will not save a poor process.
Employers should keep clear records of:
• what concerns were raised
• what support was offered
• what feedback was given
• what the employee said in response
Employees should be given copies of key documents and have the opportunity to comment or ask questions. This transparency is a core part of acting in good faith.
What if performance does not improve?
Sometimes, despite a fair and supportive process, performance does not reach the required standard. In those situations, further steps may need to be considered.
There is no fixed formula in New Zealand employment law for how many warnings or steps are required before dismissal. Each situation must be assessed on its own facts, including:
• the seriousness of the performance issues
• the role and expectations
• the support provided
• the time allowed for improvement
• the employee’s responses
Any decision to move toward disciplinary action or termination must still be made carefully, with proper consultation and an open mind.
Why getting this wrong is risky
Performance management is one of the most common areas where employers end up facing personal grievance claims. Rushing the process, being inconsistent, or treating a PIP as a box-ticking exercise can quickly undermine an otherwise valid concern.
Handled well, a PIP can:
• lift performance
• preserve employment relationships
• demonstrate fairness and good faith
Handled poorly, it can escalate conflict and expose the business to significant legal and reputational risk.
A final word
Performance conversations are often emotionally charged, for both managers and employees. If you’re unsure whether a PIP is the right step, or how to manage performance concerns fairly and lawfully, it’s worth getting advice before things escalate.
Support at the right time can prevent long-term issues and help you manage underperformance in a way that is clear, respectful, and legally sound.
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