Case Background & Strategy

In probationer-dismissal disputes, employers often assume the law tilts heavily against them. It does not — but it does demand discipline. A recent Industrial Court award shows that an employer who appraises objectively, documents honestly and terminates for clearly stated reasons will be in a strong position to defend a poor-performance dismissal, even where the dismissed employee is a senior, highly remunerated executive.

This case insight strips out the names of the parties and presents the principles, the winning arguments and the practical lessons. The reasoning is broadly applicable to any Malaysian employer managing under-performance during probation.

THE RESULT The Court found that the employer proved on a balance of probabilities that the probationer’s unsatisfactory performance and conduct warranted dismissal. The claim of unfair dismissal was dismissed in its entirety.

The case at a glance

The legal framework the Court applied

The dispute was referred under Section 20 of the Industrial Relations Act 1967. The Court’s task was the familiar two-fold inquiry: first, whether the misconduct or poor performance complained of was established; and second, whether what was proven amounted to just cause or excuse for the dismissal.

Three settled principles framed the analysis:

1. The burden sits squarely on the employer

In a dismissal case it is the employer who must produce convincing evidence justifying the decision. The just cause may be misconduct, negligence or poor performance, judged on the facts. An unsupported assertion of “underperformance” will not survive scrutiny — proof is required.

2. The standard is the balance of probabilities

The employer need not prove its case beyond reasonable doubt. The civil standard applies, flexible according to the gravity of the allegation. This is a meaningful advantage for employers who keep proper records.

3. A probationer is protected — but not immune from a fair dismissal

An employee on probation is a “workman” and enjoys the same right to challenge a dismissal under Section 20 as a confirmed employee. The decisive question is bona fides: was the decision genuine and objective, or a colourable exercise of power, discrimination or unfair labour practice? Where the employer’s assessment is honest and reasonable, the Court will not substitute its own view of the employee’s suitability.

How an employee is to be assessed, and the yardstick used to gauge his performance, is best left to the company’s prerogative and judgment, so long as it is not tainted by mala fide intentions. — Industrial Court, on the employer’s right to evaluate suitability

Why the employer won

The award turned on evidence, not eloquence. Four pillars carried the defence.

A documented, acknowledged appraisal

The employer produced a structured probationary performance report scoring the executive across attitude, dependability, leadership, problem-solving and results. The composite score fell deep into the “poor” band, and — critically — the employee had not disputed the scoring at the material time. A contemporaneous, signed appraisal is far harder to attack months later in the witness box.

A genuine opportunity to improve

The executive was placed on a Performance Improvement Plan with stated expectations before any decision to terminate. The Court accepted that ample time and opportunity had been given. A PIP is not a formality — here it was the bridge between dissatisfaction and lawful dismissal.

Seniority cuts both ways

The employee sought to deflect blame onto supervisors and line managers for a customer line stoppage. The Court was unpersuaded. A department head is accountable for outcomes within his area of responsibility — he is expected to anticipate manpower shortages, reallocate resources and lead corrective action. Under cross-examination he accepted that the test function was a crucial, near-final stage before products reached customers, and that failure carried real risk. The higher the role and the pay, the higher the expectation.

Medical leave did not erase the deficiencies

The employee relied heavily on periods of hospitalisation and stress. The Court accepted that the performance issues pre-dated and existed independently of the medical leave, so the leave did not displace the employer’s findings. Genuine ill-health deserves compassion — but it does not automatically convert an unsatisfactory performer into a confirmed one.

Practical lessons for employers

1. Set the bar in writing, early. Agreed KRAs/KPIs in or alongside the letter of offer gave the employer an objective yardstick the employee had accepted.
2. Appraise honestly and get acknowledgment. A signed appraisal the employee did not challenge at the time was decisive evidence.
3. Use the PIP for real. A documented improvement plan with a fair window demonstrated good faith and defeated the “no chance to improve” argument.
4. Write a precise termination letter. Identify the specific failures, incidents and dates relied upon. Vague letters invite the Court to find no cause was made out.
5. Keep the file clean of mala fides. Avoid humiliation, threats or anything suggesting the decision was personal. Bona fides is the battleground in every probationer dismissal.

The bottom line

Probation is not a licence to dismiss at will — but neither is it a trap for careful employers. Where the decision to terminate is genuine, objective and properly documented, the Industrial Court will respect the employer’s prerogative to decide who is fit for confirmation. The employer here won not because the law favoured it, but because its paperwork did.

Authorities considered

• Goon Kwee Phoy v J & P Coats (M) Bhd [1981] 2 MLJ 129 — the Court enquires into the reason advanced by the employer.
• Milan Auto Sdn Bhd v Wong She Yen [1995] 4 CLJ 449 — the two-fold function of the Industrial Court.
• Ireka Construction Bhd v Chantiravathan Subramaniam James [1995] 2 ILR 11 — the burden of proof on the employer.
• Telekom Malaysia Kawasan Utara v Krishnan Kutty Sanguni Nair [2002] 3 CLJ 31 — the balance-of-probabilities standard.
• Khaliah Abbas v Pesaka Capital Corporation Sdn Bhd [1997] 3 CLJ 827 — a probationer’s rights and the bona fides requirement.
• Sitt Tatt Bhd v Ong Chee Meng [2004] 2 ILR 388 — the employer’s prerogative to assess suitability.

Frequently asked questions

Q. Can an employer in Malaysia dismiss a probationer for poor performance?

A. Yes. An employer may dismiss a probationer found unsuitable for confirmation, provided the dismissal is bona fide, made on objective grounds, and not a colourable exercise of power, discrimination or unfair labour practice. If challenged, the employer must still show just cause and excuse at the Industrial Court.

Q. Does a probationer have the same right to challenge a dismissal as a confirmed employee?

A. Yes. A probationer is a “workman” and may challenge a dismissal under Section 20 of the Industrial Relations Act 1967. The burden remains on the employer to prove, on a balance of probabilities, that the dismissal was with just cause and excuse.

Q. What evidence helps an employer defend a poor-performance dismissal?

A. Contemporaneous documentation: a signed letter of offer with probation terms, agreed KRAs/KPIs, a documented and acknowledged appraisal, a Performance Improvement Plan, records of customer or operational escalations, and a termination letter clearly stating the failures relied upon — all corroborated by consistent witness testimony.

Q. Can a senior employee avoid accountability by blaming subordinates?

A. Generally not, where the role carries leadership and supervisory duties. A department head remains accountable for outcomes within his area of responsibility — including anticipating problems, allocating resources and driving corrective action — even where subordinates contributed to the failure.

Q. Does medical leave excuse performance failures during probation?

A. Not automatically. Where the deficiencies existed before and independently of the medical leave, the Court may find that the leave does not displace the employer’s findings on unsatisfactory performance. Genuine ill-health should be handled with care, but it does not convert an unsuitable performer into a confirmed employee.