When an employee is not performing at the required standard, your first instinct may be to issue a warning or move toward dismissal. However, the law requires a fairer approach: support employees to improve first, and dismiss only as a last resort. A performance improvement plan (PIP) is a structured tool for supporting capability improvement. This guide explains how to use one fairly.
Capability versus conduct: understanding the difference
Before implementing any performance management process, distinguish between capability issues and conduct issues. This distinction affects which procedure to follow.
A capability issue is about ability: the employee lacks the skills, knowledge, or competence to do the job properly. Examples include struggling with new software, being unable to meet technical standards, or taking longer than peers to complete tasks.
A conduct issue is about behaviour: the employee has behaved in a way that breaks your policies or employment standards. Examples include being rude to customers, arriving late deliberately, or ignoring safety procedures.
This distinction matters because:
- Capability issues are best managed through performance management, support, and improvement plans
- Conduct issues are best managed through disciplinary procedures
Sometimes a situation appears to be conduct but is actually capability. For example, frequent absences might seem like poor behaviour but could stem from an undiagnosed disability or health condition. Similarly, mistakes might appear to be carelessness (conduct) but reflect lack of training (capability).
If in doubt, treat it as a capability issue and follow a performance management route rather than a disciplinary route. This is safer for both you and the employee, as it focuses on support and improvement rather than punishment.
Start with informal support
Performance issues should normally be handled informally at first. This step is often overlooked, but it is crucial and can prevent more serious escalation.
Have an informal conversation with the employee about the performance concerns. Listen to their perspective; do not simply tell them what they are doing wrong. They may face obstacles you are unaware of—lack of training, unclear instructions, personal circumstances, or a mismatch between their skills and the role.
Discuss what support they need. This might include:
- Training or development in a specific area
- Mentoring or coaching from a senior colleague
- Clearer job description or objectives
- Different tools or resources
- Adjusted workload during a learning phase
- Flexible working to help them manage any personal issues
Agree a time to review progress—typically two to four weeks—and document the conversation. Note what was discussed, what support will be provided, and when you will check in. Send a summary to the employee so there is a shared understanding.
Many performance issues resolve at this stage once the employee understands expectations and has the right support.
When to use a formal performance improvement plan
If informal support does not work, or if the performance issue is serious enough that you cannot wait for informal improvement, move to a formal performance improvement plan.
A PIP is a written document that sets out specific performance concerns, objectives to be met, the support you will provide, timescales, and review dates. It formalizes what was discussed informally and creates a structured pathway to improvement.
You should invite the employee to a formal meeting to discuss and agree the PIP. Do not impose it unilaterally. Give the employee a chance to understand the concerns, ask questions, and contribute ideas about how they will improve.
What to include in a performance improvement plan
A well-designed PIP contains the following elements:
Clear objectives: Define specifically what the employee must improve. Do not say “improve customer service”; say “respond to customer emails within 24 hours, resolve 90% of enquiries first contact, and achieve a customer satisfaction rating of 4+ out of 5.”
Measurable standards: How will you know if they have improved? Include concrete metrics—sales targets, error rates, project completion dates, quality scores, or peer feedback.
Timescale: How long will the PIP run? Typically three to six months, depending on the complexity of the improvement needed. Very short PIPs (two weeks) rarely give sufficient time; very long ones (12+ months) can feel punitive.
Support provided: What resources will you give them? This might include additional training, mentoring from a skilled colleague, coaching, access to new tools, or modified duties. You are not leaving them to sink or swim; you are actively supporting their improvement.
Review dates: Plan regular check-ins—monthly or every four weeks—to discuss progress, address any barriers, and adjust support if needed. Ideally, schedule a formal review meeting at the midpoint and another at the end of the PIP period.
Consequences: Make clear what will happen if objectives are not met. This should be set out in the PIP: if the employee reaches the required standard, the PIP ends and they continue in the role on normal terms. If they do not, the next step might be a final written warning or, in serious cases, dismissal.
Conducting reviews during the PIP
During the PIP period, meet regularly with the employee. Do not wait until the end to discuss progress. Regular reviews serve multiple purposes: they keep the employee informed, they allow you to provide further support if obstacles emerge, and they create a record of progress (or lack of it).
At each review, be honest about performance. If progress is good, acknowledge it and encourage continuation. If progress is poor, discuss what barriers exist and how to overcome them. Ask the employee for their perspective; they may identify issues you have not considered.
Document each review. Note the date, what was discussed, any support provided or adjusted, and the employee’s progress against each objective. This documentation is crucial if the PIP eventually leads to formal action or dismissal; without it, you cannot defend your decision fairly.
Extending or adjusting the PIP
If the employee has made progress but is not yet at the required standard, you might extend the PIP for an additional period (typically one to three months). This should be based on genuine improvement and realistic prospects of full success.
If progress has been poor and there is no realistic prospect of meeting objectives, do not extend the PIP indefinitely. This becomes unfair and punitive. Instead, consider moving to formal action.
You can also adjust the objectives or timescale if circumstances change—for example, if new training has been provided or the support offered was insufficient.
Moving to formal action
If the employee does not meet the objectives by the end of the PIP (or an extension), the typical next step is a formal capability meeting.
At this meeting, present the evidence: the original concerns, the PIP agreed, the support provided, and the reviews showing progress (or lack of it). Give the employee a chance to explain their position. They may present mitigating factors or argue that objectives were unrealistic.
After the meeting, you must decide on the outcome. Options include:
- Dismissal on grounds of capability if the employee has consistently failed to meet reasonable objectives despite support
- A final written warning if there has been some progress but the standard is still not met; combined with a revised PIP
- Continuation if there are extenuating circumstances or if adjusted support would make a difference
If you decide to dismiss, you must follow a fair procedure and be prepared to explain your reasoning clearly. The decision should be based on evidence, not opinion.
Common mistakes to avoid
Jumping straight to formal action: Always try informal support first. An employment tribunal will expect you to have attempted to help the employee improve before dismissing.
Unclear objectives: “Improve attitude” or “be more productive” are too vague. The employee must understand exactly what they need to do.
No documentation: If performance issues escalate, your records are your defence. Write down conversations, reviews, and decisions.
Inadequate support: If you identify a training need but do not provide training, or identify a need for mentoring but the mentor is unavailable, the PIP is unfair. You have not given the employee a genuine opportunity to improve.
Using PIPs as punishment: If an employee has genuinely improved but is still not to the required standard, extending the PIP repeatedly becomes punitive. Have a realistic timescale and decision point.
Ignoring disability or health issues: If an employee has a disability or long-term health condition, reasonable adjustments may be needed. Dismissing someone for poor performance without considering adjustments may constitute discrimination.
The role of Acas guidance
Acas provides detailed guidance on capability procedures. The Acas Code of Practice on disciplinary and grievance procedures, while technically focused on discipline, is referenced by employment tribunals when assessing fairness of any formal action. Key principles include:
- Act fairly and transparently
- Give the employee a chance to state their case
- Investigate facts
- Keep records
- Allow appeals
If you follow Acas guidance and your own fair procedure, you significantly reduce the risk of an unfair dismissal claim if dismissal becomes necessary.
Key points
- Distinguish capability (lack of ability) from conduct (misbehaviour); manage each through the appropriate procedure
- Start with informal support and conversation before using a formal PIP
- A formal PIP should include clear, measurable objectives; realistic timescale (three to six months); specific support; and regular reviews
- Meet regularly during the PIP to discuss progress and adjust support
- Document everything
- Do not extend PIPs indefinitely; have a decision point
- Dismissal for capability must follow a fair procedure and be based on evidence
- Consider whether reasonable adjustments are needed, particularly for disabled employees
- Follow Acas guidance to ensure fairness and reduce legal risk
Related: Find HR support near you