Getting the process wrong when it comes to employees’ performance can be very expensive, as employers have found out in recent times. A recent case in the Employment Relations Authority ("ERA") found that an employer had unjustifiably dismissed its employee after it claimed the employee was performing poorly. In that case, the employer did not follow the correct process, or allow the employee time to respond. The Employment Relations Authority ordered the employer to pay the employee $18,000.00 for hurt and humiliation and $6,885.83 as compensation for lost wages.

Well-performing employees are vital to the success of an organisation. Sometimes an employee may be underperforming or not achieving the goals which the employer has set for them. These performance issues can have negative impacts on the organisation and on team and customer relationships.

Employers have good faith obligations to help employees resolve these performance issues and help them reach the standards it expects of them.

One way to resolve performance issues in a clear and fair way is to set up a Performance Improvement Plan (“PIP”).  A PIP is a plan between the employer and the employee that sets up a series of goals or standards that an employee must reach in a certain amount of time.

This allows the employee a real opportunity to improve their performance, while making sure they know and understand the expectations. A PIP will usually also include extra training or coaching for the employee to help them reach the required standards.

Once the PIP has come to an end, the employee may have improved their performance and be meeting the standards required. At that point, the employer can advise that there are no longer performance issues.

If the employee has not quite reached the standards, the employer might want to extend the PIP further, to allow for further training or time for the employee to improve.

If the employee has still not improved, the employer may want to make further decisions about the employee’s role, but these decisions also need to be made in good faith, to avoid a personal grievance claim being raised against an employer.

For further information on the steps to set up a PIP, please see our Employers’ Guide to Setting up a Performance Improvement Plan.

Getting the process right is vital to avoid costly claims. Getting the process right is also vital to getting employees on track and performing to the expected standards and ensuring you, as the employer, can stop losing sleep at night and get back to building your business.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.


If you are a New Zealand Super Gold Card Holder (Australian Senior Cards do not qualify) we will give you a 75% discount off our initial 1 hour consultation fee. We will also give you a 17.5% discount off the first matter we handle for you and then 12.5 % off any subsequent matters for you.  These discounts relate to your personal matters only (i.e. not business or organisational matters).