Imagine this: you have been working in a company for several years, and suddenly you are told that your performance is not up to standard. Without much discussion, you are handed a termination letter. For the employer, this may seem like a reasonable step—why keep an employee who is “underperforming”? But for the employee, the experience feels unfair and devastating. The question then arises: what does Malaysian employment law actually say about termination for poor performance?

In Malaysia, the law requires that every termination must be supported by “just cause and excuse.” Poor performance can, in principle, amount to a valid reason. However, the courts have consistently held that it is not enough for an employer to simply label an employee as “not good enough.” The employer must be able to prove the allegation and show that a fair process has been followed before arriving at the decision to terminate.

A fair process usually begins with clear communication. Employees must know what is expected of them, whether through job descriptions, performance targets, or key performance indicators. Vague or inconsistent instructions will not hold up if a dispute reaches the Industrial Court. Employers must also provide proper feedback and warnings when performance falls short. A single incident of poor output is seldom enough to justify termination; the law expects employers to give employees time and guidance to improve.

This is where performance reviews or improvement plans come into play. A responsible employer will document counseling sessions, set timelines for improvement, and give employees a genuine chance to correct their weaknesses. Only after such opportunities have been exhausted would termination be considered fair. Importantly, the employee should also be given a chance to respond or explain their side of the story. This is part of the principle of natural justice, which lies at the heart of employment law.

Unfortunately, many employers stumble at this stage. Some act too quickly, terminating without prior warnings or without documenting the performance issues. Others rely on subjective judgments—such as saying an employee is “lazy” or “not committed”—without concrete evidence. These missteps often lead to costly unfair dismissal claims, where the employer may be ordered to pay significant compensation.

From the perspective of employees, it is equally important to know your rights. If you are terminated for poor performance, you should ask yourself whether your employer gave you clear expectations, whether you received proper warnings, and whether you were given a fair chance to improve. If the answer to these questions is “no,” you may have grounds to challenge the dismissal and seek redress.

Termination for poor performance remains one of the most common issues in Malaysian employment disputes. The lesson is clear: employers must ensure that termination decisions are backed by evidence and fairness, while employees must understand that they cannot be dismissed arbitrarily. At its core, employment law is about striking a balance between performance expectations and the dignity of workers.

As an employment lawyer, I have seen how disputes over performance can leave lasting scars on both sides. For employers, it is a reminder to act carefully and fairly. For employees, it is a reassurance that the law provides protection when dismissal is unjust. Ultimately, good communication and fair processes are the best safeguards for both parties, ensuring that the workplace remains not only productive but also just.

✍️ Written by Lawyer Khoo, Partner at Ng, Zainurul, Seke & Khoo