PIP Template UK | s.98 ERA 1996 Capability Process

A performance improvement plan is a formal, time-bound process that records where an employee is falling short, what "good" looks like, and how long they have to get there. It is not a warning in the disciplinary sense, and it is not a redundancy tool. It sits inside the capability framework, where section 98(3)(a) ERA 1996 defines capability by reference to skill, aptitude, health or any other physical or mental quality. In plain terms, a PIP addresses someone who is trying but underperforming, not someone who is wilfully breaking the rules: that latter situation is misconduct and runs through a different procedure.

People often confuse a PIP with a final written warning, and the distinction matters. A warning is the output of a disciplinary process; a PIP is a management plan that may eventually feed into a capability dismissal if targets are missed. A PIP is not required by statute, but the moment you use one it becomes part of the fairness assessment a tribunal will scrutinise. That is the trap. Employers reach for a PIP thinking it is informal, then treat it carelessly, and the carelessness becomes evidence. The companion to performance management is often a clear contract, so it helps to have a properly drafted full-time UK employment contract aligned to Section 1 ERA 1996 underpinning the role expectations you are now enforcing.

The governing statute is the Employment Rights Act 1996. Underperformance dismissals run through section 98, which sets a two-stage test: first the employer must show a potentially fair reason, here capability under section 98(2)(a); then the tribunal asks whether the employer acted reasonably in treating that reason as sufficient, applying the range of reasonable responses standard under section 98(4). A genuine performance concern is not enough on its own. Procedure carries equal weight, and a sound reason can still produce an unfair dismissal if the process was rushed, opaque or unsupported.

The procedural benchmark is the ACAS Code of Practice on Disciplinary and Grievance Procedures. Failure to follow it does not make a dismissal automatically unfair, but a tribunal must take it into account and can uplift compensation by up to 25% where an employer has unreasonably failed to comply. ACAS guidance is explicit that a fair capability process requires adequate support, meaning training, coaching or workload adjustment, plus a genuinely reasonable improvement period measured against the seniority and complexity of the role. A three-week plan for a complex senior post rarely survives scrutiny.

Two further points shape current practice. The employee has a statutory right to be accompanied at any formal capability meeting by a colleague or trade union representative under section 10 Employment Relations Act 1999. And the Employment Rights Act 2025, which received Royal Assent in December 2025, will reduce the qualifying period for ordinary unfair dismissal from two years to six months, with commencement set for 1 January 2027 and the statutory compensation cap removed at the same point. The practical effect is that performance management during the early months of employment is becoming materially higher-risk, so the discipline of a documented PIP now matters far earlier in the relationship. For the authoritative position on phased dates and qualifying periods, the ACAS guide to the Employment Rights Act 2025 changes is the reference to follow.

The clearest trigger is sustained underperformance against an objective standard: missed targets, recurring quality failures, deadlines slipping past the point where informal conversations have stopped working. By the time you reach for a PIP, you should already have raised the concern verbally and seen no durable change. The plan formalises what was previously a quiet chat, and that formalisation is precisely what gives you a defensible record later.

A second scenario is the new starter or recently promoted employee who is not meeting role expectations. Promotion cases are awkward because the person performed well at the lower grade, so the plan has to define the new standard rather than assume it. A third is the employee returning from a long absence who cannot yet hit pre-absence output: here you tread carefully, because performance shortfalls linked to a disability under the Equality Act 2010 engage the duty to make reasonable adjustments, and a PIP that ignores that duty is itself evidence of discrimination.

Two edge cases legitimately complicate things. Where underperformance shades into ill-health, you may be in capability on medical grounds, which calls for occupational health input before any target-setting. And where a manager is using a PIP to manufacture an exit rather than secure improvement, tribunals see through it: a plan with unachievable targets and a foregone conclusion reads as a sham and supports a constructive dismissal argument. If the relationship is genuinely beyond repair after a fair process, the proper next step is documented through a UK dismissal letter built around the five fair reasons in s.98 ERA 1996.

• The statement of performance concerns sets out each shortfall against the actual role requirement, with dates and concrete examples rather than vague labels. "Poor communication" is replaced by the specific incidents and the standard expected, because a tribunal cannot test fairness against an objective it cannot see.
• The SMART objectives are drafted to be specific, measurable, achievable and time-bound, each tied to the role the employee was actually engaged to perform. This is where most plans fail: targets that are aspirational, moving or impossible hand the employee a ready-made argument that improvement was never realistically on offer.
• The review timeline and meeting schedule fixes the length of the improvement period and the interim check-in dates, so progress is assessed in stages rather than judged once at the end. The period is calibrated to seniority, with prompts to extend it for complex roles where a short window would look unreasonable.
• The support and resources section records the training, mentoring, equipment or workload adjustment the employer will provide. An absence of any support is one of the most common procedural gaps that turns a capability dismissal unfair, so this clause is deliberately prominent.
• The right to be accompanied wording confirms the employee may bring a colleague or union representative to formal meetings under section 10 Employment Relations Act 1999, and the outcome and escalation clause sets out what happens if objectives are met, partially met or missed, including the route to a formal capability hearing.

This template is drafted for England and Wales, where the Employment Rights Act 1996 and the ACAS Code apply directly and capability dismissals are litigated in the Employment Tribunal. The substantive law on unfair dismissal and the procedural expectations described above operate identically across both nations, so a plan compliant in Cardiff is compliant in Manchester.

Scotland shares the same primary employment statutes, since unfair dismissal and capability law are reserved to Westminster rather than devolved to Holyrood. The ERA 1996, the Equality Act 2010 and the ACAS Code apply in full. The practical difference is forum and procedure: Scottish claims run through the Employment Tribunals (Scotland), and any related civil litigation follows Scots law and terminology, so references to court process should not be lifted unaltered from English precedents.

Northern Ireland is the genuine departure. Employment law there is devolved, and the Employment Rights Act 1996 does not apply; the equivalent is the Employment Rights (Northern Ireland) Order 1996. Crucially, Northern Ireland retains the statutory dismissal and disciplinary procedures, and the qualifying period and tribunal system differ, with claims heard by the Industrial Tribunal rather than the Employment Tribunal. An employer operating in Belfast should not assume an England and Wales PIP is transferable without local review. For employers managing staff across borders, it is worth checking whether a separate Section 1 statement of written particulars reflects the correct jurisdiction before the performance process begins.

You start by entering the employee's details, role title and the date the plan begins, which anchors the review period that the document then calculates around. From there you describe each performance concern in the dedicated fields, and the structure prompts you to attach a concrete example and the standard expected rather than leaving a general complaint to stand on its own. The plan then guides you through drafting objectives, nudging you toward measurable wording and away from the aspirational phrasing that weakens a capability case.

Next you set the improvement period and the interim review dates, with built-in guidance on calibrating length to the seniority of the role. You record the support being offered in the same pass, so the finished plan reads as a genuine attempt to help rather than a paper exercise. The final stage covers the meeting record and outcome wording, letting you capture what was discussed and agreed, and producing a clean version for signature. You then export to Word if you expect to amend it through the review cycle, or to PDF for a fixed record. If the process ultimately points toward redundancy rather than capability, the parallel route is set out in our UK redundancy notice letter aligned to ERA 1996.

The most damaging error is treating the PIP as a formality on the way to a predetermined exit. Tribunals are alert to plans with targets nobody could hit, review meetings that are box-ticking, and managers who have plainly decided the outcome before the period has run. A plan like that does not protect you: it becomes the central exhibit in the employee's claim, and it can convert a recoverable situation into a constructive dismissal argument. Equally common is the timescale that is too short for the role, where a complex senior function is given a fortnight to transform, which reads as unreasonable on its face. Closely related is the failure to offer any real support, since ACAS guidance treats adequate resources as a baseline expectation, and a plan that demands improvement while withholding the means to achieve it fails the reasonableness test.

The other recurring trap is ignoring the discrimination overlay. Where underperformance might be linked to a disability, pregnancy or a protected characteristic under the Equality Act 2010, pressing ahead without adjustments or medical input invites a discrimination claim that runs alongside, and is more expensive than, the unfair dismissal point. Employers also forget the right to be accompanied at formal meetings, and they keep poor contemporaneous notes, then try to reconstruct the process months later. If it is not written down at the time, a tribunal will often treat it as not having happened. Finally, do not skip the appeal stage if the process escalates to dismissal, because the absence of an appeal is a classic procedural defect.