You’ve been put on a performance management plan. Are you on the way out?

When roadside patrol mechanic Yep Yap was sacked in 2022, he’d been put on a performance management plan and failed to meet three key performance indicators.

But the Fair Work Commission found the targets set for Yap were unrealistic, unachievable and improper, ultimately forcing his employer, the company Club Assist, to reinstate him with back pay under unfair dismissal laws.

Performance management plans, also known as performance improvement plans (PIPs), have become common as a tool towards dismissing an employee. While meant as a genuine way to improve workers’ performance, they are increasingly being used as a tick-the-box exercise towards getting rid of people and still complying with unfair dismissal laws.

In fact, these laws – introduced more than 40 years ago to protect workers from arbitrary, unfair sackings – are what have made PIPs so popular in Australia, says Joydeep Hor of employment law firm People + Culture Strategies.

“There’s no hard and fast rule that says you have to have someone on a PIP before you can terminate their employment for performance reasons, but in the absence of one, there can be some questions asked,” Hor says.

So, what should you do if you find yourself on a PIP? How do they work? And what do managers need to know?

When publicist Vivian (who did not use her real name because of concern about future employment prospects) was put on a performance management plan at a public relations agency in Sydney this year, it came as a surprise.

She was told not to mention it to colleagues, was given the option to negotiate a settlement instead and was told she had 24 hours to make her decision. The latter, she found out from a lawyer, was not a time frame the firm could hold her to.

Vivian had discussions with the firm’s HR department, her employment lawyer and her manager, and agreed on a set of key performance indicators. For the next few months, her performance was closely monitored.

Hor says PIPs are intended as a way to hold both employees and managers to account.

“The idea is that an employer should be actively working with a so-called ‘underperforming employee’ to help them improve their performance, using a plan which has metrics and timeframes,” he says.

However, the process is often treated as more of a set-and-forget process by managers, who Hor says should be setting expectations early and bringing up concerns informally first.

Vivian says getting put on a performance management plan initially felt like she was getting booted.

“The process felt micro-manager-y with regular reviews, but the KPIs weren’t hard to turn around, and I ended up passing it,” she says. “It was a bit awkward afterwards, but that didn’t last too long.”