How to Use a Performance Improvement Plan (PIP) the Right Way
A Performance Improvement Plan (PIP) doesn’t have to signal the beginning of the end. While many employees associate PIPs with termination, a well-designed and properly implemented PIP can be an opportunity for improvement, communication, and fairness in the workplace.
For employers across Ontario, a Performance Improvement Plan can serve as a legally sound tool to address underperformance, assess readiness for promotion, and support employee development, provided it’s implemented fairly and in good faith.
In this article, we explain how to use a PIP effectively, what to avoid, and what Ontario courts are saying about the legal risks of misusing one.
What Is a Performance Improvement Plan (PIP)?
A Performance Improvement Plan is a structured document that outlines:
- Specific performance issues
- Measurable performance goals and standards
- Clear timelines for improvement
- Available support and resources
- Consequences for failing to meet expectations
When used correctly, a PIP provides clarity and accountability for both the employer and employee. However, when used as a pretext for dismissal, courts in Ontario have shown they will not tolerate misuse.
What Makes a PIP Effective and Legally Sound
1. Set Clear, Specific, and Measurable Expectations
Vague standards like “improve attitude” or “increase initiative” can lead to confusion and potential legal exposure.
Instead, use objective, measurable performance standards such as:
- Respond to client emails within 24 hours
- Submit weekly reports by Friday at 4 p.m.
- Complete 10 outbound calls per day
If you cannot measure it, it shouldn’t be part of the PIP.
2. Establish Reasonable and Achievable Goals
Unrealistic or overly aggressive goals may render a PIP legally indefensible.
In Lyon v. Her Majesty the Queen, 2017 FC 739, the court emphasized that performance expectations must be reasonable and communicated clearly. A plan that sets an employee up to fail can be viewed as evidence of bad faith.
3. Include a Defined Timeline and Regular Check-Ins
Most PIPs last 30 to 120 days, depending on the complexity of the role.
A too-short timeline can seem unfair; a too-long one may feel punitive.
Schedule check-ins every 20–30 days to:
- Review progress
- Offer feedback and support
- Document outcomes
- Identify whether performance issues stem from the employee or internal processes
These meetings also show that the employer acted in good faith.
4. Communicate Consequences Transparently
Employees should clearly understand the consequences of failing to meet the PIP objectives. Examples include:
- Continued employment may be at risk
- Eligibility for promotion may be suspended
- Disciplinary action may follow
Transparency fosters trust and helps minimize disputes about fairness in the future.
As Christopher Achkar, employment lawyer and founder of Achkar Law, explains:
“Employers shouldn’t think of a PIP as a checklist to justify dismissal, Instead, it should be treated as a collaborative performance framework. Courts are now scrutinizing the intent and fairness behind these documents, and punishing employers who misuse them.“
Legal Risks: What Ontario Employers Need to Know
Misusing or poorly managing a PIP can expose employers to constructive dismissal or human rights claims.
Key Ontario Case Law
- Pohl v. Hudson’s Bay Company, 2022 ONSC 3008. The court rejected the employer’s attempt to justify termination through a flawed PIP, citing a lack of documentation and fairness. Damages were awarded to the employee.
- Persaud v. Telus Communications Inc., 2021 ONSC 2839. A poorly communicated and overly critical PIP contributed to a toxic work environment, supporting the employee’s constructive dismissal claim.
- Hamilton-Wentworth District School Board v. Fair, 2016 ONCA 421. The Ontario Court of Appeal reaffirmed that employers must accommodate employees with disabilities, including in performance management processes like PIPs.
Human Rights and Accommodation Considerations
Employers have a duty under the Ontario Human Rights Code to ensure a PIP does not indirectly discriminate against employees.
For instance, if an employee’s medical condition affects performance, employers must consider accommodation before imposing performance measures.
Failing to do so could amount to a human rights violation.
When in doubt, seek legal advice before proceeding with a PIP involving a protected ground such as disability, age, or family status.
Best Practices for Using a PIP in Ontario Workplaces
To ensure your Performance Improvement Plan is fair, effective, and legally compliant:
Communicate clearly and respectfully: deliver the PIP in person or via video meeting.
- Document everything, including meetings, feedback, and any changes to the plan.
- Refer to internal policies, such as your Code of Conduct or Attendance Policy, to maintain consistency.
- Invite employee feedback; this promotes transparency and collaboration.
- Consult legal counsel before implementing or enforcing a PIP that may lead to termination.
- Typically 30–120 days, depending on the role. Going beyond 120 days may be seen as excessive unless justified.
- Possibly, but only if the PIP was reasonable and lawful. Refusal to engage may be insubordination —seek legal advice before proceeding.
- Use your Code of Conduct or Harassment Policy as a benchmark. Don’t use subjective terms like “unprofessional” without context or examples.
- Not always, but progressive discipline is often recommended. Courts like to see a record of fair warning and support before termination.
- Yes. If the business needs shift or the original metrics don’t reflect the employee’s role accurately, you can revise the plan — just document it and communicate the changes.
Key Takeaways
- A Performance Improvement Plan should be clear, fair, and supportive not punitive.
- Courts in Ontario have held that unfair or pretextual PIPs can amount to bad faith or constructive dismissal.
- Employers must consider human rights and accommodation obligations when designing and applying a PIP.
- Proper documentation, transparency, and regular feedback are essential to protect both parties.
How Achkar Law Can Help
At Achkar Law, our team of employment lawyers in Ontario helps employers and employees navigate Performance Improvement Plans fairly and effectively. Whether you need to implement, respond to, or challenge a PIP, we provide strategic, legally compliant guidance.
We can help you:
- Draft or review PIPs to ensure compliance with Ontario law
- Identify legal risks and minimize exposure to wrongful or constructive dismissal claims
- Advice on accommodations and human rights obligations
Final Thoughts
A Performance Improvement Plan can either be a tool for growth or a liability waiting to happen. Handled correctly, it demonstrates leadership, fairness, and good faith. Handled poorly, it can expose your organization to unnecessary risk. Before you take the next step, ensure your approach aligns with Ontario’s legal standards and your organization’s values. Consulting an experienced employment lawyer can make all the difference.
Contact Achkar Law
If your organization is dealing with a performance issue or a PIP-related dispute, our lawyers can help you make informed, defensible decisions.
Call toll-free: 1-800-771-7882 | Email: [email protected]
Watch the Webinar
For more insights from our employment lawyers on using Performance Improvement Plans (PIPs) fairly and effectively, watch: How to Write a PIP That’s Fair, Legal, and Actually Works
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©
Workplace Law Topics: Employment Law, Employment Policies, Employment Disputes, Workplace Compliance, Employee Termination, Workplace Investigation.