This guide outlines your rights if you’ve been informed that you must participate in performance improvement procedures (PIPs) and provides strategies for negotiating a fair exit settlement agreement and financial compensation. We explain what it means when you’re asked to engage in PIPs due to unsatisfactory performance. Additionally, we offer tips on leveraging this situation to your advantage during settlement negotiations.
Performance improvement plans are sometimes used by management to encourage employees to resign or to create a situation of “constructive dismissal.” For more information, refer to our guide on constructive dismissal.
Throughout the guide, we provide links to additional resources related to these topics. You can find them highlighted within the text and in our Helpful Guides section at the end. Let’s dive into understanding performance improvement procedures:
What Are Performance Improvement Procedures?
Performance improvement procedures, also known as capability management or PIPs, are commonly initiated when negotiating a settlement agreement. These procedures define how your performance will be managed, monitored, and measured within a specified timeframe. Typically spanning 30 to 90 days, PIPs allow you the opportunity to demonstrate the improvements outlined in the performance improvement plan.
Understanding Performance Improvement Plans (PIPs)
A performance improvement plan (PIP) lies at the core of performance improvement procedures. It is a written document that outlines a set of time-bound work-related objectives or Key Performance Indicators (KPIs).
These goals are specifically designed for you to achieve if your employer believes that your work requires significant improvement. The key characteristics of these goals are as follows:
Realistic Attainability: The goals should be realistically achievable within the specified timeframe.
Prioritization: If applicable, the goals should be prioritized.
Alignment with Qualifications and Job Description: The goals must align with your qualifications, skill sets, and job responsibilities.
Measurability: Each goal should be objectively measurable or quantifiable.
Addressing Identified Shortcomings: The goals are tailored to address specific shortcomings in your current role.
Example of a Performance Improvement Plan
The University of Cambridge provides an excellent example of a performance improvement plan that clearly illustrates the aforementioned goals.
Performance Improvement Plan Example
Employee Rights in Performance Improvement Procedures
As an employee undergoing performance procedures, your rights extend from before the start of the plan to achieving the outlined goals and beyond. Here’s a summary of your rights:
Pre-Plan Rights:
Transparency: Before participating in a PIP, you have the right to know why you were selected for it.
Work-Related Needs: Consider whether a PIP is the best approach to address your work-related needs. Sometimes, employees are unfairly targeted to fail the PIP, leading to their dismissal.
During Plan Creation:
Ideally, you should be involved in creating your PIP, although it’s not mandatory for employers.
Clear explanation of each goal is essential for your understanding.
Navigating Performance Improvement Procedures (PIPs)
Once you’ve entered a Performance Improvement Plan (PIP), you might discover that some of the goals are unattainable within the allocated timeframe or due to circumstances beyond your control.
In such cases, it’s essential to request goal revisions from your employer. If they refuse, it could indicate an unfair procedure.
As the performance procedure nears its end, achieving every single goal becomes crucial. Failure to meet all the objectives may lead to disputes, especially if your employer initiates disciplinary proceedings.
Stay or Leave: A Dilemma If you successfully complete your PIP, you have the right to continue in your current job, which can be a relief. Many employees pass their improvement plans and remain with the company for extended periods.
However, when an employer introduces a PIP, trust often erodes between employer and employee, affecting the future relationship. Consider the following:
Future Prospects: Reflect on whether you envision a future working for your current employer.
Surviving the Process: Imagine the aftermath if you don’t survive the PIP. Will you be content in your role even if you do?
Employer Concerns: If your performance concerns are significant enough for formal procedures, the employer may prefer your departure.
Ultimately, you face a choice: accept the signs and seek a fresh start elsewhere with the best possible financial footing, or stay and fight for your current position
Understanding Your Employer’s Intentions Regarding Performance Procedures
If your employer prefers that you leave rather than undergo Performance Improvement Plan (PIP) procedures, you’ll likely receive this information during a meeting initiated by the HR department to commence the procedures.
During this meeting, they may engage in a ‘without prejudice’ or ‘protected’ conversation with you, offering a settlement agreement even before the performance procedure officially begins.
However, HR departments must exercise caution in such situations. If you are unaware of any pre-existing issues and no performance process has started, the offer might not be legally protected (i.e., the conversation would be ‘on the record’).
In such cases, you gain a stronger negotiating position. You can assert that the outcome of any performance management procedure is predetermined, potentially rendering the dismissal unfair.
That said, most employers handle this correctly. Often, they offer an ‘either/or’ scenario: accept a financial settlement and leave with a reference or face the uncertainty of the performance procedure.
Your employer may engage in a protected conversation, proposing termination instead of proceeding with performance procedures. Remember that you don’t have to respond immediately; you can inform them that you’ll provide a written response shortly. This approach ensures clarity and allows time for consideration or legal advice if needed (your response should be a Without Prejudice letter).
Considering Leaving Instead of Undergoing Performance Procedures
From the moment you learn that you’ve been selected for performance improvement procedures, and at any stage during the process, you might conclude that you’re being treated unfairly and decide it’s time to leave your employment.
In such cases, an ideal scenario emerges—one where both parties seek a resolution. Your employer acknowledges the existing problem and aims to address it one way or another. Simultaneously, you recognize that moving on rather than enduring performance management procedures may be the best course of action.
Now, it’s about finding common ground for a financial settlement agreement. If negotiating an exit settlement is your goal, consider adopting a strategic approach to expedite the improvement process:
Without Prejudice Letter: Send a suitable without prejudice letter proposing a solution: you’ll depart quietly in exchange for a settlement payment.
Benefits of This Approach:
Risk Mitigation: Eliminate the risk of a tribunal claim.
Negotiating Leverage: Use your resignation as a negotiation tool, offering to remove yourself from the organization.
Time Efficiency: Reduce the management time already invested.
Throughout negotiations, emphasize that your employer should pay you the amount they would have spent on wages during the PIP procedure, along with your notice paid in lieu and a reference (which is crucial for your settlement).
