5 Things You Should Know About Probationers in Malaysia
When hiring new employees, employers will usually put them on a “probation”. The purpose of the
probationary period is to allow employers to assess whether the new employee is suitable for the role
and whether they will be a good fit for the company. The probationary period is meant to provide
employers with sufficient time to evaluate and review their new employees’ performance before
confirming them as permanent staff. Although going through a probationary period is fairly common,
there are many things about probationers which are frequently misunderstood by employees and
employers alike. Here are 5 important things you should know about probationers in Malaysia.
1. The term ‘probationer’ is not defined in the Employment Act 1955 or in the Industrial
Relations Act 1967.
• There is no statutory definition of what a “probationer” is. However, case law does distinguish
between a confirmed employee and a probationer. Broadly speaking, a probationer is a new
employee who is going through a ‘trial’ period in an employment to prove his/her fitness for
the position which was offered by the employer.
• There is no legal requirement to put an employee on probation before they are hired, although
this is recommended as a best practice. There is also no legal “minimum” or “maximum”
probationary period that needs to be imposed although a probationary period in the range of 3
– 6 months is common.
2. A probationer enjoys the same rights as a confirmed employee. Therefore, a
probationer’s service must not be terminated without just cause or excuse.
• Like a confirmed employee, a probationer has a right to make a representation to the Director-
General for Industrial Relations under Section 20 of the Industrial Relations Act 1967 for unfair
dismissal if they feel they have been unfairly dismissed. The difference between a probationer
and a permanent staff is in the remedy. If the Court finds that his/her service is terminated
without just and cause, the probationer is entitled to compensation in lieu of reinstatement of a
maximum of 12 months’ backwages based on the last drawn salary. (Confirmed staff are
entitled to a maximum of 24 months’ backwages).
• While termination of a probationer must be with “just cause or excuse”, the law recognises that
the standard of proof required of the employer is lower when it comes to probationers. This is
because employers have a general prerogative to choose and organise their workforce however,
they see fit, subject to compliance with labour laws of course.
3. A probationer continues to be a probationer even at the expiration of the probationary
period, if at the end of the period, his/her services had either not been terminated or
confirmed.
• A surprising number of people actually spend years working for the same company without
ever receiving a confirmation letter. These employees assume they have been “automatically”
confirmed since their probation period was completed without any comments from the
employer. This is actually a misconception as the law provides that a probationer remains on
probation until he receives notice that he has been terminated or confirmed. However,
confirmation can be implied by conduct, if the employer treats the probationer as a permanent
staff (For example, giving him the same benefits that would be received by a permanent
staff). The importance of a confirmation letter should therefore not be underestimated.
• It is good practice for employers to monitor their employees’ probationary periods. At the end
of the probationary period, employers should notify the employee whether they have been
confirmed, terminated, or if their probationary period is being extended.
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4. The employer has full rights to assess a probationer’s character, suitability and capacity
as an employee during the probationary period. If the probationer is found to be
unsuitable, the employer can terminate his/her probation in accordance with the terms of
the employment contract.
• Suitability of a probationer is not just based on work performance but also his/her conduct,
behaviour and attitudes in relation to the position he/her is employed. With regard to work
performance, the probationer is assessed in 3 broad aspects: – (1) Inefficiency; (2)
Incompetence and (3) Ineptitude. (Samsuddin Mat Amin v. Austral Enterprises
Berhad [Award No. 47 of 1974])
• In a nutshell, the test is “whether the probationer possesses the right skill, competence,
temperament, aptitude, attitude and suitability which will entitle him to transcend from being
a probationer to that of a confirmed permanent employee.” (Indra Devi Rajoo v. Everhome
Furniture MFR (M) Sdn Bhd [2015] 2 LNS 0093).
5. Generally, in order to terminate a probationer’s employment based on poor
performance, it is good practice that the employer follows the following steps: -
• Warn the probationer about his poor performance in a form of a proper evaluation/appraisal.
Evaluations and appraisals should be documented and signed off by the probationer.
• Give sufficient opportunity to the probationer to improve on his/her work performance such as
communicating specific goals and tasks to be achieved by the probationer in a reasonable
timeframe, setting out areas of improvement, etc.
• Provide sufficient guidance and advice during probation period.
• Consider extending the probationary period as an alternative to termination, if you believe that
there is still potential for the employee to improve.
If the probationer still fails to improve his/her performance after such steps have been taken by the
employer, the Court would be more likely to determine that the termination was with just cause and
excuse.
The Rights of Probationary Employee
What are my rights as a probationary employee?
Fret not, a probationary employee enjoys the same rights as a confirmed or permanent employee as per
the case of Khaliah bte Abbas v Pesaka Capital Corp Sdn Bhd [1997] 1 MLJ 376. In addition to
enjoying the same rights, the Court of Appeal was of the view that a probationary employee’s services
cannot be terminated without just cause or excuse. What this means is that there is a bona
fide requirement in regards to the dismissal of the employee, even if they are on probation. Therefore,
it is a misconception that probationary employees are less valued or easily dismissed under the eyes of
the law. In Wong Choon Moey v Practimax Sdn Bhd [2013] 2 ILJ 501 the court reiterated that an
employer has no right to terminate a probationer’s services before the probationary period is over except
on grounds of misconduct or other sufficient reason as would be the case in terminating the services of
a permanent workman. There will be more on termination of a probationary employee in our next
article, Rights of Probationary Employees (Part 2).
What about the duration of the probationary period? Can I extend or cut it short?
Under Malaysian law, there are no rules pertaining to the required minimum or maximum period of
probation. Even though employers may impose a required period, this can actually be negotiated
between the parties, even after the contract of employment services has been signed. For this reason, if
you are thinking about extending your probation period because you are unsure you want to continue
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working with the company or if you wish to reduce said period because you are confident that you have
acquired the necessary skills, talk to your boss about it. Maybe an amicable solution can be arrived at.
Once I pass the probationary period, I am automatically a confirmed employee, right?
Even though the contractual period of probation has lapsed, you are not automatically a confirmed
employee. In KC Mathews v Kumpulan Guthrie Sdn Bhd [1981] 2 MLJ 320, the Federal Court viewed
that at the end of the probationary period, an employer has the choice to terminate or confirm the
probationary employee. Where no action is taken to either terminate or confirm, then the employee
continues to be in service as a probationary. Even though this may appear discriminatory towards
probationary, where there is sufficient evidence to show that the employer has conducted himself in
such a manner that after the probationary period, the said employee is treated similarly to a confirmed
employee, the court may deem that there was implied confirmation.
For example, this was seen in the case of Paari A/L Perumal v Abdul majid Hj Nazardin & Ors [2000]
6 MLJ 602. Summarily, the facts were as follows: the employers granted the probationary employee
annual leave which was a benefit which they were only entitled to after being confirmed. Therefore, by
giving the plaintiff the annual leave, it proved that he was a confirmed employee as he was treated as
one.
Does the Covid-19 Bill have any effect on probationers?
The Covid-19 Bill, inter alia, seeks to provide for temporary measures to reduce the impact of the Covid-
19 pandemic, primarily by modifying the provisions relating to statutory limitation periods, as well as
the contractual obligations of parties who are unable to perform the same due to the Covid-19 pandemic.
As of now, the effect of the Covid-19 Bill has limited employment related repercussions. It is hoped
that in the near future further amendments would be introduced to address more employment related
issues, such as obligations and liabilities of the parties in an employment contract.
In terms of whether or not probationers are still entitled to their pay and other employment related
entitlements, the answer is yes. As long as the contract between the employer and probationary
employee is still valid and ongoing, employers are required to make full payment of salary and
generally, to provide other employment related entitlements/benefits during a COVID-19 outbreak in
line with any current government restrictions. Further, employers are not allowed to force employees
to go on unpaid leave and/or utilize their annual leave entitlements. This is in accordance with labour
and industrial law in Malaysia as well as the Guidelines dated March 23, 2020, issued by the Labour
Department of the Ministry of Human Resources, Malaysia.
During a situation like a pandemic, safety should always come first. In the event that your safety and
wellbeing is at risk from being at the workplace, this is a basis of termination as there would be a
contradiction to the objectives of the Occupational Safety & Health Act 1994 in Malaysia, irrespective
if you are a probationary or confirmed employee.
Demonstrably, there is a lot to know about one’s rights as a probationary employee.
Rights of A Probationary Employee with regards to Termination of Employment.
Can a company terminate my employment if I am still under Probation?
As we have previously discussed, the law does not distinguish between a probationary employee and a
permanent employee. As both employees enjoy the same rights under law, probationary employees
cannot be dismissed or terminated without just cause and excuse.
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CASE LAW: SULNAYAH BTE HJ MOHD ISA v SEKOLAH KANAK-KANAK PEKAK
SELANGOR & ANOR [1999] 6 MLJ 249 – HIGH COURT (KUALA LUMPUR)
The case concerned a teacher who was appointed in the respondent’s school with effect from 12 June
1995, who needed to undergo a period of probation between 3 months to 1 year before she could become
a confirmed employee. Approximately 9 months into her probationary period, she received a letter from
the respondent informing her that she was given 1 month to improve her performance. Before the 1-
month period ended, she was dismissed on the ground of her unsatisfactory performance before her
probationary period ended. The Industrial Court ruled that her dismissal was with just cause and excuse.
This application was made for an order of certiorari to quash the award by the Industrial Court. Here,
the Court held that the employer has no right to terminate an employee before the expiry of the probation
period. However, the exception to the rule is where the employee has committed an act of misconduct.
The onus is on the employer to prove that the dismissal was on the ground of misconduct of the
employee.
The Court went on to say that misconduct connotes an act of non-disciplinary behaviour and
unsatisfactory performance could not come within the meaning of an act of misconduct.
In light of the above, the Court granted the application to quash the Industrial Court’s award and directed
the Registrar of the Industrial Court to place this matter before another Chairman of the Industrial Court
for a rehearing.
How much notice must be given to me if I am being terminated?
If the employer has proven that there is just cause and excuse for the employee’s termination, the
notice period must follow that of the letter of offer or employment contract or else a claim for unfair
dismissal could arise.
If, however, the letter of offer or employment contract is silent on this point, then the notice period
under Section 12 of the Employment Act 1955 would apply.
S.12 EMPLOYMENT ACT 1955
Notice of termination of contract
12. (1) Either party to a contract of service may at any time give to the other party notice of his
intention to terminate such contract of service.
(2) The length of such notice shall be the same for both employer and employee and shall be
determined by a provision made in writing for such notice in the terms of the contract of
service, or, in the absence of such provision in writing, shall not be less than—
1. four weeks’ notice if the employee has been so employed for less than two years on the date
on which the notice is given;
2. six weeks’ notice if he has been so employed for two years or more but less than five years on
such date;
3. eight weeks’ notice if he has been so employed for five years or more on such date:
Provided that this section shall not be taken to prevent either party from waiving his right to a notice
under this subsection.
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Are there any practices to terminate a probationary employee due to poor performance?
If an employee is deemed to be performing poorly, it would only be proper for the employer to, inter
alia:
1. communicate this to the probationary employee;
2. Providing guidance and/or advice and an opportunity to improve; or
3. extending the probationary period to enable them to achieve the standard of performance
required
before ultimately deciding to terminate the employee’s services.
CASE LAW: SULNAYAH BTE HJ MOHD ISA v SEKOLAH KANAK-KANAK PEKAK
SELANGOR & ANOR [1999] 6 MLJ 249 – HIGH COURT (KUALA LUMPUR)
In the same case above, the judge opined that the employer should consider “giving the necessary
assistance and cooperation” to enable the employee to improve including extending her probationary
period so that she may achieve the standard of the performance required. The fact that the employer
only gave her one (1) month to improve was regarded as insincere and without bona fide.
CASE LAW: MALAYAN BANKING BERHAD v MAHKAMAH PERUSAHAAN MALAYSIA
& ANOR [2016] MLJU 919 – HIGH COURT (PULAU PINANG) – COLLIN LAWRENCE
SEQUERAH JC
The case concerned an individual employed as a Financial Executive on a fixed term contract for a
period of 1 year commencing from 18 Jan 2010, who needed to undergo a period of probation of not
less than 6 months inclusive of 3 months of training and attending courses to enhance her skills as a
Financial Executive. On 30 July 2010, the employee was not confirmed in her position, and she then
filed a representation pursuant to Section 20(1) of the Industrial Relations Act 1967 pursuant to a
Ministerial reference under Section 20(3) of the same act, adjudicating her case. It was held that she
was terminated without just cause and excuse.
In this application to quash the Award in finding a case of unfair dismissal, on the question on whether
the employee was dismissed for just cause and excuse, the Court went on to say that the prerequisite
before terminating an employee on grounds of poor performance is that he/she must be given sufficient
opportunity to improve. Only if despite this, the employee fails to improve, can the employer dismiss
the employee on these grounds.
As such, the Court allowed the application, awarded back wages limited to the unexpired duration of
her fixed term contract (5 months and 2 weeks), and rescaling back wages of 40%.
CASE LAW: WONG CHOON MOEY v PRACTIMAX SDN BHD [2013] 2 ILJ – INDUSTRIAL
COURT (KUALA LUMPUR) — AWARD NO 53 OF 2013 – MARY SHAKILA CH
The case concerned an employee who was employed on a 3-month probation period as a Senior Sales
Manager and was terminated 2.5 months into her job. In the letter of termination, the company claimed
that she was not dismissed, but rather not confirmed in her job due to her unsatisfactory performance.
The claimant contended that she was terminated without just cause or excuse before the expiry of her
probationary period as it was done with immediate effect and there was no warnings or appraisals done
on her performance.
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The Court made reference to the ratio decidendi of the case of IE Project Sdn Bhd v Tan Lee Seng,
(Award No 56/87) (“IE Project”) and stressed that the dismissal for unsatisfactory work or
incompetency should be preceded by warnings, and that it must be shown that the “work complained
of was performed subsequent to warnings”. The Court further reiterated the opinion of the judge in IE
Project that employers must be slow to dismiss employees who are found to be performing poorly or
unsatisfactory without first warning them of the possibility of dismissal and giving them a chance to
improve. Employers are responsible for finding out why their employees are performing unsatisfactorily
and warning them that their continued unsatisfactory performance will result in their dismissal.
Having said that, the Court allowed the claim and awarded the claimant RM60,000 as backwages.
What can I do if I have been unjustly dismissed during my probation period?
The probationary employee can make a claim for reinstatement and back wages up to 12 months under
S.20 of the Industrial Relations Act 1967.
S.20 INDUSTRIAL RELATIONS ACT 1967
Representations on dismissals
20. (1) Where a workman, irrespective of whether he is a member of a trade union of workmen or
otherwise, considers that he has been dismissed without just cause or excuse by his employer,
he may make representations in writing to the Director General to be reinstated in his former
employment; the representations may be filed at the office of the Director General nearest to
the place of employment from which the workman was dismissed.
(1A) The Director General shall not entertain any representations under subsection (1) unless such
representations are filed within sixty days of the dismissal:
Provided that where a workman is dismissed with notice, he may file a representation at any time during
the period of such notice but not later than sixty days from the expiry thereof.
Conclusion
In summary, the employment laws of Malaysia generally acknowledge probationary employees very
similarly as if the employee is a confirmed or permanent employee. It is obvious from the perusal of
the line of authorities presented above that the Industrial Court, and the High Court of Malaya have
constantly made decisions to defend, protect and uphold the rights of a probationary employee.
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Remedies For Probationers On Fixed Term Contracts
The High Court’s recent decision in Malayan Banking Berhad v Mahkamah Perusahaan Malaysia &
Anor [2016] MLRHU 1 (17 October 2016) clarifies the remedies available to a probationer who is on a
fixed term employment contract, in an unfair dismissal claim.
Briefly, these are the facts:
1. The employee in question was on a fixed term contract of employment for 12 months from 18
January 2010 to 17 January 2011.
2. Her fixed term contract of employment included a 6-month probationary period.
3. On 30 July 2010, the employee was not confirmed (i.e. terminated) and she filed a complaint
of unfair dismissal.
4. The Industrial Court found in favour of the employee and awarded her 12 months backwages,
with a 20% reduction for post-dismissal earnings.
The employer filed an application for judicial review against the Industrial Court’s decision. One of the
grounds raised by the employer was that as the employee was on a fixed term contract, had she not been
terminated on 30 July 2010, her contract would have expired on 17 January 2011 i.e. 5 months and 17
days later. As such, the Industrial Court should not have awarded 12 months of backwages.
The High Court agreed with the employer and quashed the Industrial Court’s decision. The High Court
held that for employees on a fixed term contract (whether a probationer or a confirmed employee), their
entitlement to back wages must be limited to the unexpired term of their fixed term contract:
“Although the [employee] was both on probation as well as on a fixed term contract, this did not alter
or change the nature of the contract from being that of a fixed term contract. Assuming [the employee]
was not terminated and had in fact successfully passed her probationary period, she still would at the
end of the one-year period have to leave the employment of the [employer] in the absence of any
extension of the contract.
Therefore, although the [employee] was also placed on probation, her entitlement to backwages upon
being unfairly dismissed has to be limited to the unexpired term of her fixed term contract. Any other
construction would render the whole intent and purpose of having a fixed term contract meaningless.”
The High Court therefore ordered that the employee be paid backwages for a period of 5 months and 2
weeks (i.e. the balance of the unexpired term of her contract). The backwages were also
rescaled/deducted by 40% to take into account the fact that after her termination, the employee found a
new job and was earning almost 3 times her previous salary.
Commentary
In an unfair dismissal claim:
• Probationers are entitled to a maximum of 12 months’ back wages.
• Confirmed employees are entitled to a maximum of 24 months’ back wages.
• Employees who are on a fixed term contract are entitled to back wages up to the unexpired term
of their fixed term contract.
This case was unique as the employee in question was both a probationer and on a fixed term
contract. The ambiguity arises because some fixed term contracts do not include probationary clauses,
hence in those cases, the first two situations would never arise.
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This decision by the High Court provides much needed clarity on the legal position, that employees
who are on a fixed term contract can only be awarded back wages up to the balance of the unexpired
term of their contract, regardless of their status as a “confirmed employee” or “probationer”. This award
is still subject to deduction for post dismissal earnings and other relevant factors.
In making this decision, the High Court observed that it is unusual for fixed term contracts to have a
probationary clause; however, this is apparently the practice currently adopted in the banking industry.
Employers may now want to consider including probationary clauses in fixed term employment
contracts since the probationary period will allow the employers to assess the employee’s performance
before committing to the whole fixed term period. With this recent High Court decision, employers can
rest assured that the potential financial exposure in an unfair dismissal case would be limited to the
unexpired term of the contract.
The applicability of this decision is limited to genuine fixed term contracts, so at the same time,
employers should be mindful of the Industrial Court’s general power to “convert” fixed term contracts
into permanent employment contracts in the event they suspect bad faith.
Are Employers Required to Warn Their Probationers In Senior Roles in a Company about Their
Poor Performance Before Dismissing Them?
Under Malaysia employment laws, a probationer enjoys similar rights as a full-time employee. As such,
an Employer is not allowed to dismiss her probationer without “just cause and excuse”. Having said
that, a probationer can be dismissed for poor performance. In simpler terms, a “poor performance” is
when the probationer’s job performance falls below the standard required to carry out their role
effectively.
We have set out below some critical points for Employers to bear in mind as they navigate this complex
issue.
Generally, it’s best practice for Employers to take the following steps before firing their employees for
poor performance as outlined below: -
1. Review the probationer’s poor performance against the required standards, explaining his or
her perceived shortcomings from the management’s perspective;
2. Give sufficient notice preferably in writings to the probationer about his or her poor
performance;
3. Provide sufficient opportunity for the probationer to improve;
4. Show that despite the guidance and opportunity to improve, the probationer still fails
consistently to perform his or her duties to an acceptable standard.
It is also essential in every case of poor performance for the Employer to consider at the outset whether
any training, resources or other forms of support might be required to assist the probationer in achieving
the required standards. This is something that should be discussed with the probationer and, if necessary,
followed up during the performance assessment process.
In view of this, this gives rise to the question as to whether the ‘rules’ above apply to those probationers
holding Senior Positions in a Company.
‘WARNING’ AND ‘AN OPPORTUNITY TO IMPROVE’ MAY NOT BE REQUIRED WHEN
DISMISSING A PROBATIONER ON SENIOR ROLES
In addressing this issue, our Courts seem to suggest that for those employed in senior management may
by the nature of their jobs be fully aware of what is required of them, and fully capable of judging for
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themselves whether they are achieving that requirement. In such circumstances, the need for warning
and an opportunity for improvement is much less apparent as compared to a probationer in junior roles.
Further, our Courts also recognize that warning or an opportunity to improve may not be required in
cases where the inadequacy of the senior probationer’s performance is so extreme that may constitute
an unfair burden on the business. Therefore, in such circumstances, such probationers can be dismissed
without prior warnings.
In the case of Sitt Tatt Berhad v Ong Chee Meng [2004] ILJU 94, the Claimant was employed as a
Senior Manager of Business Development with a salary of RM8,000 per month. The Industrial Court
held that he was employed in a senior management position, and hence, the requirement for warnings
are much less apparent. The Court opined that the Claimant was reasonably expected to know the
demands of his job and the Company’s expectation of him. As such, the dismissal was justifiable.
Similarly, in the case of Chiew Foong Ngor v Tujuan Ehsan Sdn Bhd [2015] 1 ILJ 324, the Claimant
was employed as a Finance Manager in the Company, and she was dismissed during her extended
probationary period due to poor performance. The Court in that case held that she was holding a senior
post and not a young probationer as she had 10 years’ working experience as a finance manager.
Therefore, the Claimant need not be trained and counselled like a young probationer who joined the
workforce for the first time.
EMPLOYERS ARE NEVERTHELESS ADVISED TO ADOPT A FAIR MECHANISM
BEFORE DISMISSING SUCH PROBATIONERS
Notwithstanding the above, while it may not be a legal requirement to give warnings and guidance to
probationers in Senior Roles (i.e. Head of Department, General Manager), it is still prudent for
Employers to communicate the unsatisfactory performance to the said probationer before issuing any
notice of dismissal. This is to protect the Company’s interest, as well as to put on record the
justifications used to demonstrate that any termination done in the future, if any, is with just cause and
excuse, and not tainted by mala fide intentions.
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