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employment

Is your boss setting you up to fail? How to challenge an unfair PIP

Key Takeaway

In New Zealand, employers must act in good faith when managing employee performance, including through Performance Improvement Plans (PIPs). Employees can challenge an unfair PIP by raising a personal grievance for unjustifiable disadvantage, requiring employers to demonstrate both procedural fairness and substantive justification for their actions, adhering to standards set by the Employment Relations Act 2000.

Challenging an Unfair Performance Improvement Plan in New Zealand Employment Law

Performance Improvement Plans (PIPs) are formal documents used by employers to address concerns about an employee's performance. While legitimate PIPs aim to support employee development, some employees may feel they are being set up to fail. New Zealand employment law provides mechanisms for employees to challenge such actions.

Employer's Obligations in Performance Management

Employers in New Zealand have significant obligations when managing employee performance, primarily rooted in the duty of good faith.

Good Faith

All parties to an employment relationship must deal with each other in good faith [Source: Employment Relations Act 2000, s 4]. This obligation includes:

  • Providing Information: Employers must provide employees with access to information relevant to the continuation of their employment, including information about performance concerns [Source: Employment Relations Act 2000, s 4(1A)(c)].
  • Opportunity to Comment: Employees must be given a reasonable opportunity to comment on information about them before a decision is made that affects their employment [Source: Employment Relations Act 2000, s 4(1A)(c)].
  • Genuine Consideration: The employer must genuinely consider any explanations or responses provided by the employee.
  • Support Person: Employees have the right to have a support person or representative present at any meeting where decisions are being made or could be made about their employment [Source: Employment Relations Act 2000, s 4(1A)(d)].

Justifiable Actions

Any action taken by an employer that negatively affects an employee's employment, including implementing a PIP or dismissal, must be justifiable. The Employment Relations Authority (ERA) or Employment Court assesses whether an employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the action occurred [Source: Employment Relations Act 2000, s 103A]. This test requires both:

  • Procedural Fairness: The process followed by the employer must be fair. This includes proper investigation of concerns, providing clear communication, offering support, and allowing the employee a fair opportunity to respond and improve.
  • Substantive Justification: There must be a genuine and valid reason for the employer's concerns and the actions taken. For a PIP, this means the performance issues must be real, the goals of the PIP must be reasonable and achievable, and adequate resources and time must be provided for the employee to meet those goals.

Employee's Rights and How to Challenge an Unfair PIP

If an employee believes a PIP is unfair, they can raise a personal grievance.

Personal Grievance

A personal grievance is a complaint an employee can raise against their employer for certain types of actions, including unjustifiable disadvantage or unjustifiable dismissal [Source: Employment Relations Act 2000, s 103(1)].

  • Unjustifiable Disadvantage: Being placed on an unfair PIP, or a PIP implemented through an unfair process, can constitute an unjustifiable disadvantage. This occurs when an employer's actions, or how they acted, were not what a fair and reasonable employer could have done in all the circumstances, and the actions detrimentally affect the employee's employment [Source: Employment Relations Act 2000, s 103(1)(b), s 103A].
  • Unjustifiable Dismissal: If an unfair PIP ultimately leads to dismissal, the employee may claim unjustifiable dismissal. This means the dismissal was not what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred [Source: Employment Relations Act 2000, s 103(1)(a), s 103A].

Raising a Personal Grievance

An employee generally has 90 days from the date the action occurred or came to their notice to raise a personal grievance with their employer [Source: Employment Relations Act 2000, s 114]. The process typically involves:

  1. Direct Communication: Initially discussing the concerns directly with the employer or their representative.
  2. Mediation: If direct discussions fail, either party can seek assistance from the Ministry of Business, Innovation and Employment (MBIE) mediation services to help resolve the dispute [Source: Employment Relations Act 2000, Part 9].
  3. Employment Relations Authority (ERA): If mediation is unsuccessful, an application can be made to the ERA for a legally binding decision [Source: Employment Relations Act 2000, Part 10].

Discrimination

If a PIP or performance management process is influenced by discriminatory factors based on prohibited grounds (such as sex, age, disability, or race), this may also be a breach of the Human Rights Act 1993, and could form part of a personal grievance claim for unjustifiable disadvantage [Source: Human Rights Act 1993, s 21, s 22].

When to Seek Independent Legal Advice

It is recommended that individuals facing performance management issues or considering challenging a PIP seek independent legal advice. Community Law Centres offer free legal assistance, and further guidance can be obtained from official government bodies such as Employment New Zealand, particularly for understanding specific rights and obligations.

Key Resources