Wood-chip pads represent a low-cost alternative to housing for cattle during the winter. Considering the negative welfare implications associated with housing indoors on concrete, they may also offer welfare benefits to replacement dairy heifers. However, these animals may not be able to withstand winter weather conditions on a grass silage diet. The aim of this experiment was to evaluate behaviour, limb injuries, dirtiness scores, performance and climatic energy demand (CED) of yearling dairy heifers on two levels of nutrition kept outdoors on a wood-chip pad or indoors in cubicles during the winter. Ninety-six 10-month-old heifers were blocked and assigned in groups of eight, to one of the following four treatments in a 2 × 2 factorial design: (a) indoors, silage only; (b) indoors, silage plus concentrate; (c) outdoors, silage only; and (d) outdoors, silage plus concentrate. There were three replicate groups per treatment. All animals were inspected for skin lesions and were weighed and body condition scored (BCS) at the beginning and end of the trial. Instantaneous scan sampling and continuous all-occurrence behaviour sampling were used to collect behaviour data during two 24-h periods. Animals were also dirtiness scored and group feed intakes were recorded during the trial. Significantly more comfort, social and play behaviours were recorded outdoors (P < 0.05) while trips, slips and falls were only recorded indoors (P < 0.001). Groups outdoors had significantly lower limb lesion scores at the end of the experiment (P < 0.05) and fewer groups outdoors were affected by all categories of limb lesions. However, they were consistently dirtier than animals indoors (P < 0.001). Low-nutrition animals had lower feed intakes, smaller BCS changes and lower average daily weight gains than high-nutrition animals (P < 0.01). Heifers outdoors had significantly lower average daily weight gains and BCS changes (P < 0.05) explained by lower feed intakes (P < 0.01). However, outdoor heifers on both the high- and low-nutrition diets and indoor animals on the low-nutrition diet had lower UFL (feed unit for maintenance and lactation (Irish Republic)) intakes (−0.36, −0.35 and −0.22, respectively) than that required to meet the daily live-weight gains they achieved. Heifers indoors on the high-nutrition diet gained 0.98 kg per day but consumed 0.17 UFL more than what would be recommended to achieve a daily weight gain of 1.0 kg. The CED for outdoor heifers was higher than that of indoor heifers (6.18 v. 5.47 MJ/day per m2 body surface area; P < 0.001, s.e.d. 0.044). However, CED did not exceed heat production in any treatment. Although animal performance was reduced outdoors, the wood-chip pad was associated with welfare benefits compared with cubicle housing.