Terminating a senior employee for performance reasons is rarely just about the payout. In conversations across the HR community, one recurring theme keeps surfacing: the biggest legal risk in a performance-based exit is not the notice pay or the gratuity calculation, it is the absence of a documented performance improvement plan. Without one, months or years of verbal feedback can amount to very little if the decision is ever challenged.
This tension played out clearly in a recent discussion started by an HR professional dealing with exactly this situation: a senior employee with long-standing performance concerns, multiple verbal conversations over time, but no formal PIP ever initiated. Leadership had decided to proceed with a direct separation anyway, paying salary in lieu of notice. The question she brought to the community was narrower than it first appeared, and the answers she got reshaped it entirely.
Why a Performance Improvement Plan Is More Than a Formality
The first response she received was a caution rather than reassurance. A founder in the community who has hired and let go of employees himself offered a clear rule of thumb:
“PIP is always recommended before a separation to avoid a lawsuit later.” — Kartik
The HR professional had already raised this internally. As she explained:
“I had suggested the same to the leadership, but they’ve decided to proceed with direct separation. We’ve prepared a detailed evidence/report documenting the performance concerns and feedback shared over time to support the decision.” — Lovely
That distinction, between informal documentation gathered after the fact and a formal PIP run in real time, turned out to be central to the rest of the discussion.
The Documentation Gap That Creates Real Risk
An HRBP in the community laid out why this gap matters so much, reframing the entire question away from payouts and toward process:
“The payouts are actually the easier part. The bigger question is whether the process leading to termination is legally and procedurally defensible. Based on what you’ve shared, the primary risk isn’t gratuity or leave encashment — it’s the absence of documented performance management.” — Jignesh
He was specific about why verbal feedback, however well-intentioned, does not hold up the same way as a formal process:
“Verbal feedback is difficult to establish if the termination is challenged. Without documented goals, review records, coaching discussions, or a formal PIP, it becomes harder to demonstrate that the employee was given a fair opportunity to improve.” — Jignesh
This is the practical difference between a company that can defend its decision and one that cannot. A performance improvement plan creates a paper trail of goals set, feedback given, and opportunities extended. An evidence report compiled after the decision has already been made, however thorough, tells a different story to anyone reviewing it later.
The Question Every HR Team Should Ask Before Terminating
Perhaps the most useful contribution to the thread was a single diagnostic question, offered as a gut check before finalising any performance-based exit:
“Before issuing the termination, ask one question: ‘If this matter reaches a labour authority or court tomorrow, what documentary evidence do we have to demonstrate poor performance and reasonable opportunity to improve?’ If the answer is ‘very little,’ it may be worth considering a short, documented performance improvement process — even for a senior employee.” — Jignesh
This reframes the PIP question away from process for its own sake and toward a simple test of defensibility. It also pushes back on a common assumption that senior employees, because of their seniority, need less formal documentation before separation. In many cases, the opposite is true. Senior exits attract more scrutiny, not less.
What Good Documentation Actually Looks Like
The thread closed with a line that reframes the entire performance improvement plan conversation in a way worth sitting with:
“Performance-based exits are rarely won because of the termination letter — they’re won by the quality of documentation created in the months leading up to it.” — Jignesh
For HR teams navigating a similar situation, the practical takeaway is straightforward even if the execution is not always easy. A formal PIP, run with clear goals, regular check-ins, and written records, is not a bureaucratic delay tactic. It is the thing that protects both the organisation and the employee if the exit is ever questioned. Skipping it under time pressure, or because leadership wants to move fast, trades a small amount of short-term friction for a much larger amount of long-term exposure.
None of this means every performance concern needs a lengthy formal process before action can be taken. But it does mean that when the stakes are high, particularly with senior employees, the quality of documentation built in the months before a termination matters far more than anything written in the termination letter itself.
Building a Performance Improvement Plan That Actually Holds Up
For HR teams looking to close this documentation gap before it becomes a problem, a few practical elements came through clearly in the discussion. A defensible performance improvement plan generally includes specific, measurable goals rather than vague expectations, a defined timeline with regular check-ins rather than a single review at the end, written records of every coaching conversation, and a clear statement of what happens if the goals are not met.
The instinct to skip this process for a senior employee is understandable. Senior hires are often assumed to know what is expected of them, and formalising feedback can feel like an unnecessary step when the working relationship has been in place for years. But that assumption is precisely what creates risk. Seniority does not exempt an exit from scrutiny, and in many cases it invites more of it, since senior separations tend to carry higher notice pay, larger severance calculations, and a greater likelihood of being contested.
The broader shift the thread points to is treating performance documentation as an ongoing discipline rather than something assembled retroactively once a decision has already been made. An evidence report compiled after leadership decides to separate an employee will always read differently than a paper trail built in real time, because it inevitably looks selective, even when it is accurate. A formal PIP, run transparently and shared with the employee as it happens, avoids that problem entirely.
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