Performance Improvement Plan (PIP)

Performance improvement plan: a definition

A performance improvement plan (خطة تحسين الأداء), abbreviated PIP, is a written document that sets out a specific gap in an employee’s performance, the level the employee is expected to reach, the period within which that level is to be reached, and the support the organisation will provide to help the employee reach it.

What makes a performance improvement plan a plan and not a warning

In practice, the difference between a performance improvement plan and a warning comes down to four elements, and a plan is not sound unless all four are present together:

• A gap defined by a behaviour or an output. It names what the employee does, or what the employee delivers, that falls short. A general description such as “weak commitment” does not meet this element, because it identifies no particular behaviour and no particular output.
• A required level that can be measured. It is stated in a way that lets both the employee and the organisation know how it will be established that the level has been reached.
• A known period. It has a stated length, with review dates set within it and not only at its end.
• A commitment from the organisation. It can take the form of training, a tool, or time from the manager. A plan that makes demands of the employee alone assumes that the whole cause of the gap lies with the employee.

Bringing these elements together in a single document is simpler when you start from our performance improvement plan template, which is ready to fill in.

The use that undermines a performance improvement plan

A performance improvement plan can be used to document a decision that has already been taken. When it is used in that way, the difference between the plan and a genuine opportunity can become visible to the employee in the plan’s details:

• A period that is not long enough. It does not allow time for the required level to be reached.
• A required level that cannot be reached. It is set where the employee has no way of attaining it.
• Support that does not arrive. It is written into the plan but never provided.

When the employee reads the plan in that light, it stops being a means of addressing the gap and becomes a signal that the employee’s departure is near. The effect can then reach beyond the employee concerned. Within the organisation, a performance improvement plan can come to be seen as a sign that someone is about to leave, and the plan loses its meaning for the employees who genuinely need one.

Where a performance improvement plan stands in relation to disciplinary penalties

A performance improvement plan is a management tool for addressing a shortfall in performance. It is not a disciplinary penalty. Disciplinary penalties and the procedures for imposing them follow a separate track, which is set out in the Saudi Labor Law (نظام العمل) and in the establishment’s work regulation (لائحة تنظيم العمل). A neighbouring concept is explained under corrective action.

The provisions of the Labor Law on that track include the following:

• The list of penalties. Article 66 of the Labor Law confines disciplinary penalties to a closed list of six: a warning; a fine; withholding or deferring an increment for no more than one year, where the increment has been established by the employer; deferring a promotion for no more than one year, where the promotion has been established by the employer; suspension from work without pay; and dismissal in the cases the Labor Law provides. A performance improvement plan is not on that list. The first penalty on it is explained under written warning.
• The source of a penalty. Article 67 of the Labor Law bars the employer from imposing any penalty not provided for in the Labor Law or in the work regulation. Article 13 of the Labor Law requires every employer to prepare a work regulation in accordance with the model approved by the Ministry, allows the employer to add conditions that do not conflict with the Labor Law, and requires the employer to post the regulation where those it applies to can see it. How the work regulation is prepared is covered in our guide to the work organisation regulation.
• The procedure before a penalty. Article 71 of the Labor Law bars the imposition of any disciplinary penalty until the employer has notified the worker in writing of what is alleged against them, questioned the worker, investigated and established the worker’s defence, and recorded all of this in a minute placed in the worker’s own file. Those steps are set out under internal investigation.
• The procedure after a penalty. Article 72 of the Labor Law requires the worker to be notified in writing of the decision imposing the penalty; if the worker refuses to take delivery or is absent, the notice is sent by registered letter to the address shown in their file. The worker may then file a written grievance with the competent body at the employer within thirty days, excluding official holidays, from notification. If the grievance is rejected, or is not decided in writing within fifteen days of its submission, the worker may object before the labour courts within thirty days, excluding official holidays, from the rejection or from the expiry of the fifteen days, whichever is earlier.

If an organisation intends to take disciplinary action, the disciplinary track is the one it follows. Having a performance improvement plan in place does not take the place of that track.

What happens when a performance improvement plan’s period ends

The plan ends with a decision that is stated, not with silence. When its period ends, the outcome is one of three:

• The gap has closed. The plan is then closed and set aside.
• The gap has not closed. What follows is then decided under the organisation’s policy and through its statutory track. Where what follows is a disciplinary penalty, that track is the one described in the previous section.
• The cause did not lie with the employee. The review has shown that the gap came from elsewhere, so the tool or the role is addressed instead of the employee.

Letting a performance improvement plan run out with no written close is a worse ending than any of the three.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.