Performance Improvement Plan – Prevent Unfair Termination

One of the prudent ways to prevent unfair termination or premature dismissal by employers is to consider the implementation of Performance Improvement Plan (PIP).

What is Performance Improvement Plan (PIP)?

A  Performance Improvement Plan (PIP) is a structured process used by employers to address and improve on employee’s underperformance through clear goals and necessary support.

Legal Standing of PIPs in Singapore

PIP is a common workplace tool in Singapore, though it is not legally required under the employment laws of Singapore or mandated by the Ministry of Manpower of Singapore. While Singapore’s employment laws, primarily the Employment Act 1968, provides a framework for fair treatment and termination procedures, they do not specifically require employers to implement PIPs.

Instead, PIPs are adopted voluntarily by companies as a best practice to ensure transparency, fairness, and due process when managing underperformance.

Why Companies Implement PIPs Voluntarily

The use of PIPs by firms reflects a commitment to providing employees with an opportunity to improve before considering more severe actions, such as termination. The practice of using PIP aligns with the broader principles of fair, responsible and progressive workplaces envisioned by the TAFEP.

By setting clear expectations, providing support, and monitoring progress, PIPs help employers to assist employees in overcoming performance challenges. This can be particularly important in avoiding premature disputes or claims of unfair dismissal, as it shows that the employer has acted in good faith.

Design and Implementation: Key to an Effective PIP

However, the effectiveness of a PIP depends entirely on how it is designed and implemented. A poorly executed PIP may be perceived as a mere formality or a precursor to termination, which can damage employee morale and trust.

To be genuinely useful, a PIP should have clear, measurable objectives and not be a moving target. Ideally, both employer and employee should collaborate in designing the PIP to ensure it is a fair assessment rather than an impossible obstacle course.

If a PIP outlines a clear path for improvement, it can serve as a valuable tool for both the employee and the employer while potentially preventing wrongful dismissal.