Performance Improvement Plan Template: What NZ Employers Must Include

When an employee isn’t meeting expectations, it can put real pressure on a small business. Deadlines slip, quality drops, customers complain, and other team members end up carrying the load.

A Performance Improvement Plan (PIP) can be a practical way to address performance issues early, set clear expectations, and give your employee a fair chance to improve. But it’s also a process that needs to be handled carefully. If you use a performance improvement plan template without tailoring it (or you treat the PIP like a “paper trail” to justify an exit), you can quickly end up with an expensive dispute.

In this guide, we’ll break down what to include in a performance improvement plan template, how to run the process in a legally safer way in New Zealand, and how to avoid the most common mistakes employers make.

What Is A Performance Improvement Plan (PIP) And When Should You Use One?

A Performance Improvement Plan (often called a “PIP”) is a written plan that:

• sets out the performance concerns you’ve identified
• explains what “good performance” looks like going forward
• gives the employee a reasonable opportunity to improve (with support from you)
• documents timeframes, check-ins, and outcomes

In practice, a PIP is part of a fair performance management process. It shouldn’t be used as a shortcut to termination, and it shouldn’t come out of nowhere.

Common Situations Where A PIP Makes Sense

A performance improvement plan template is usually most useful where the issue is about capability or performance, such as:

• repeated mistakes or poor quality work
• not meeting targets or KPIs (where those targets are reasonable and clearly communicated)
• slow output or difficulty managing workload
• lack of required skills for the role (especially where training could help)
• ongoing customer complaints tied to work performance

When A PIP Might Not Be The Right Tool

A PIP isn’t always the best fit. For example:

• Misconduct (like theft, bullying, serious safety breaches) usually requires a disciplinary process, not a PIP.
• Medical issues affecting performance may need a different approach (including exploring reasonable support or adjustments).
• Unclear job expectations may mean your first step is clarifying the role and documenting expectations, rather than starting a formal plan.

It’s also important to keep performance management and disciplinary action conceptually separate. A PIP is typically used for capability or performance issues. If the real issue is conduct (or repeated failures to follow lawful and reasonable instructions), a disciplinary process may be more appropriate.

As a starting point, it helps if your Employment Contract and workplace policies already set expectations around duties, performance standards, conduct, and process. If they don’t, a PIP can still be used, but you’ll want to be especially careful about how you frame expectations.

What To Include In A Performance Improvement Plan Template (Employer Checklist)

If you’re looking for a performance improvement plan template to use in your business, think of it as a structured checklist rather than a one-size-fits-all document. The template should be tailored to the employee’s role, the issues you’ve observed, and the support you can realistically provide.

Here are the key sections most NZ employers should include.

1. Employee Details And Role Information

• employee name and position
• manager/supervisor name
• work location (if relevant)
• date the PIP starts and expected end date

This sounds basic, but it helps avoid confusion later (particularly if the business has multiple sites or managers).

2. Clear Summary Of Performance Concerns (With Examples)

This is one of the most important parts of your performance improvement plan template. You should explain what the issues are in plain language and back them up with specific examples.

Good examples are factual and measurable, such as:

• “On 5 occasions in the last month, customer orders were dispatched with incorrect items.”
• “Weekly reports were not submitted by the agreed deadline on X, Y and Z dates.”

Avoid vague statements like “bad attitude” or “not a team player” unless you can explain exactly what behaviour you mean and why it’s a performance issue (and not a personality clash).

3. The Required Improvement Standard (What “Good” Looks Like)

Your PIP should state what you expect going forward. This is where many templates fall short: they list problems but don’t define success.

Where possible, use “SMART” expectations (specific, measurable, achievable, relevant, time-bound). For example:

• “Reduce dispatch errors to no more than 1 per fortnight for the next 6 weeks.”
• “Submit weekly report by 10am every Monday for the next 8 weeks.”

If you’re introducing new KPIs or targets as part of the PIP, make sure they’re reasonable for the role and consistent with how the business operates.

4. Support, Training, And Resources You’ll Provide

A legally safer PIP is not just “do better or else”. It should document the support you’ll provide to help the employee succeed.

This might include:

• refresher training on systems or procedures
• shadowing a senior staff member for a set period
• weekly coaching sessions
• updated written procedures or checklists
• adjusted workload while training occurs

Support matters because performance issues are often caused by gaps in training, unclear instructions, unrealistic workload, or changes in the business that haven’t been properly implemented.

5. Timeframes, Milestones, And Review Meetings

Your performance improvement plan template should set out:

• how long the PIP will run (there’s no single “standard” timeframe - it should be reasonable for the role, the issues, and what improvement is realistically achievable)
• dates for review meetings/check-ins
• what will be assessed at each checkpoint
• how feedback will be given and recorded

It’s usually better to have multiple short reviews than to wait until the end and deliver a final verdict. Regular reviews also give the employee a real chance to adjust and improve.

6. Consequences If Performance Doesn’t Improve (Carefully Worded)

This is the section that can create risk if it’s drafted poorly.

Yes, your PIP should be honest that ongoing underperformance may lead to further steps, including a formal process that could ultimately result in dismissal. But it should not read like termination is predetermined.

Good wording focuses on process and fairness, such as:

• “If sufficient improvement is not achieved, we may consider further performance management steps. This could include formal warnings and/or termination of employment, following a fair process.”

If you want end-to-end certainty around the process and documents (especially where the situation is already tense), it’s worth getting advice early or using a structured package like an Performance Management Process rather than trying to patch together documents as you go.

7. Employee Response And Acknowledgement

Your PIP template should include space for the employee to respond in writing. This supports procedural fairness and helps you understand whether there are underlying issues you need to address.

Include:

• a section for employee comments
• signature blocks (employee and manager)
• a note that signing acknowledges receipt and discussion (not necessarily agreement)

How To Use A PIP Legally In New Zealand (Fair Process And Good Faith)

In New Zealand, employers are expected to act fairly and in good faith in employment relationships. A PIP can support fairness, but only if it’s used properly.

From a legal risk point of view, the biggest issues we see are:

• employers moving too quickly to a PIP without first discussing concerns informally
• templates that are overly generic or unrealistic
• a lack of support/training
• decisions being made before the employee has had a chance to respond
• not giving the employee a reasonable opportunity to seek advice or bring a support person/representative to key meetings (where appropriate)

Give The Employee A Genuine Chance To Improve

That means:

• explaining concerns clearly (with examples)
• giving reasonable time to improve
• providing appropriate support
• reviewing progress genuinely (not just going through the motions)

If an employee raises issues like unclear expectations, lack of training, bullying, workload problems, or health concerns, you generally need to take those points seriously and consider them as part of the process.

Avoid “Cookie-Cutter” PIPs

A performance improvement plan template should be a starting point, not the final product. Overly generic PIPs can create legal and practical problems, like:

• setting KPIs unrelated to the employee’s actual role
• including obligations you can’t enforce or measure
• missing important context (like recent changes to systems, rosters, or reporting lines)

Tailoring doesn’t need to be complicated, but it does need to be thoughtful.

Be Careful With Privacy And Confidentiality

Performance management involves personal information. Make sure you’re handling performance records and notes appropriately, limiting access to those who genuinely need to know, and storing documents securely.

If your business is building out its HR processes, having an Employee Privacy Handbook can help you set consistent internal rules around collection, use, and storage of employee information (especially where you use apps, shared drives, or cloud HR systems).

Step-By-Step: Running A Performance Improvement Plan Process In Practice

Even the best performance improvement plan template won’t protect you if the process is rushed or unclear. Here’s a practical approach many small businesses use.

Step 1: Gather Your Information First

Before you meet with the employee, gather:

• specific examples of performance issues (dates, work product, customer feedback)
• the employee’s position description (if you have one)
• any relevant policies/procedures
• your notes on prior coaching or feedback

Try to stick to facts, not assumptions. This will make the conversation calmer and more constructive.

Step 2: Have An Initial Performance Conversation

For many situations, a PIP shouldn’t be the first time the employee hears there’s a problem.

In an initial meeting, you can:

• explain the gap between expectations and what’s happening
• ask for the employee’s perspective (there may be an explanation you’re unaware of)
• discuss whether training or clarity is missing
• flag that a formal plan may be used if improvement doesn’t occur

Take notes and confirm key points in writing afterwards.

Step 3: Draft The PIP And Provide It In Advance Of The PIP Meeting

Use your performance improvement plan template to create a tailored document for the employee. Where possible, provide the draft before the meeting so they can read it and prepare.

This supports fairness and tends to lead to better engagement.

Step 4: Hold The PIP Meeting (And Let Them Bring A Support Person Or Representative Where Appropriate)

At the meeting:

• walk through each concern and the required standard
• discuss supports and what’s realistic
• invite feedback and adjust the plan where appropriate
• confirm review dates and what will be measured

Depending on the circumstances, it can be fair (and often helpful) to allow the employee to bring a support person or representative. After the meeting, confirm the final PIP in writing and keep a copy on file.

Step 5: Run Regular Check-Ins And Document Progress

During the PIP period, document:

• what improved
• what didn’t improve
• what support was provided
• any further issues raised by the employee

This documentation is useful whether the employee improves (so you can close the plan confidently) or whether you need to consider next steps.

Step 6: Close The PIP With A Clear Outcome

At the end of the timeframe, meet with the employee and confirm one of the typical outcomes:

• Improvement achieved: confirm expectations going forward and that the PIP is concluded
• Partial improvement: you may extend the plan with clear reasons and updated supports
• Insufficient improvement: you may move to a more formal process (warnings and potentially termination), but you still need to do this fairly

If the situation is heading towards dismissal, it’s worth getting advice before you take steps. Many disputes arise not because there was no performance issue, but because the process wasn’t handled in a fair, well-documented way. A structured set of Employee Termination Documents can also help make sure your letters and process are consistent if you do need to proceed further.

Common Mistakes Employers Make With PIPs (And How To Avoid Them)

A performance improvement plan template is easy to download. Using it in a way that actually helps the employee improve (and reduces your legal risk) is the tricky part.

Mistake 1: Using The PIP As A “Pre-Termination” Step

If the employee feels the outcome is already decided, they’re less likely to engage and more likely to challenge the process later.

What to do instead: keep your language and approach focused on improvement, support, and fair assessment.

Mistake 2: Setting Unrealistic Or Unmeasurable Targets

Targets like “be more positive” or “work faster” are hard to measure and can feel subjective.

What to do instead: define measurable outputs (quality, accuracy, deadlines, customer satisfaction metrics) and make sure they relate to the role.

Mistake 3: Not Considering Underlying Issues

Sometimes performance issues are symptoms of something else: poor onboarding, unclear systems, workplace conflict, or personal issues affecting work.

What to do instead: ask questions, invite the employee’s response, and consider whether additional supports or changes are needed (even if the performance expectations still stand).

Mistake 4: Inconsistent Treatment Across Staff

If you manage one employee formally but allow similar underperformance from others without action, you can create morale issues and legal risk.

What to do instead: apply consistent expectations and document why you’re taking steps (for example, because the impact is more serious, or because prior coaching hasn’t worked).

Mistake 5: Letting It Drift Without Documentation

PIPs often fail because managers get busy and skip check-ins. Then the business tries to rely on a plan that wasn’t actually followed.

What to do instead: schedule review meetings upfront and keep brief written notes.

Key Takeaways

• A performance improvement plan template should be tailored to the role and the specific performance concerns, not used as a generic document.
• A good PIP clearly sets out the issues (with examples), the required improvement standard, timeframes, review meetings, and the support you’ll provide.
• In New Zealand, the way you run the process matters just as much as what’s written in the plan, so focus on fairness, good faith, and a genuine opportunity to improve.
• Be careful with wording around consequences: you can flag that employment may be at risk if improvement doesn’t occur, but avoid language that suggests the outcome is predetermined.
• Keep performance documentation secure and limited to those who need access, as PIPs involve sensitive employee information.
• If the situation is escalating, getting advice early (before warnings or termination) can significantly reduce the risk of a costly employment dispute.

If you’d like help tailoring a performance improvement plan template to your business (or managing a performance process in a legally safer way), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.