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I Understand

Unveiling Probationary Employment: Insights From a Malaysian Legal Perspective

June 2024

By Kenson Ong Poh Hong

A. Introduction

The probationary period plays a pivotal role in an employment journey as it offers both the employer and the employee the opportunity to assess mutual compatibility before committing to a long-term employment relationship.

The Employment Act 1955 (“EA”) broadly defines an “employee” as “any person who has entered into a contract of service” while the Industrial Relations Act 1967 (“IRA”) defines a “workman” to mean “any person, including an apprentice, employed by an employer under a contract of employment to work for hire or reward and for the purposes of any proceedings in relation to a trade dispute includes any such person who has been dismissed, discharged or retrenched in connection with or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute.”

Although these definitions do not explicitly mention probationers, Court decisions have affirmed that probationary employees fall within the definition of “employee” and “workman” under these statutes.

B. Protection from Unjust Dismissal 

In the landmark case of Khaliah Abbas v Pesaka Capital Corp Sdn Bhd [1997] 3 CLJ 827, the Malaysian Court of Appeal emphasised the entitlement of probationers to the same protection from unjust dismissal as permanent employees. The Court held that:
 
“It is our view that an employee on probation enjoys the same rights as a permanent or confirmed employee and his or her services cannot be terminated without just cause or excuse. The requirement of bona fide is essential in the dismissal of an employee on probation but if the dismissal or termination is found to be a colourable exercise of the power to dismiss or as a result of discrimination or unfair labour practice, the Industrial Court has the jurisdiction to interfere and to set aside such a dismissal.”
 
Therefore, similarly to termination of a confirmed employee, termination of a probationer must equally be for just cause or excuse; examples being serious misconduct warranting dismissal or poor performance.

C. Managing Poor Performance

As regards to poor performing employees, the Industrial Court in Ireka Construction Berhad v Chantiravathan Subramaniam James [1995] 2 ILR 11, has laid down that in order to justify the dismissal of an employee based on the grounds of poor performance, the employer has to prove the following:

  • the employee was warned about his poor performance;
  • the employee was accorded sufficient opportunity to improve;
  • and notwithstanding the above, the employee failed to sufficiently improve his performance.

The principles established in Ireka Construction has been widely applied in cases where employees have been dismissed on the ground of poor performance.

However, the High Court in Hartalega Sdn Bhd v Shamsul Hisham Mohd Aini [2004] 3 CLJ 257 clarified that the rigid standards for confirmed employees as expounded in Ireka Construction should not be applied to probationers, especially with regard to the requirement to give written warnings.

As far as poor performing probationers are concerned, the Industrial Court in Radiant Visions Sdn Bhd v Donald Wayne Dickman [2003] 1 ILR 42 held that “the question for the Industrial Court is: have the employers shown that they took reasonable steps to maintain appraisal of the probationer throughout the period of probation, giving guidance by advice or warning when such was likely to be useful or fair; and that an appropriate officer made an honest effort to determine whether the probationer came up to the required standard…”

Furthermore, in Dorsett Regency Hotel (M) Sdn Bhd v Andrew Jayadass James Ambrose [2003] 2 ILR 740, the Industrial Court emphasised the distinction between employees on probation and permanent employees where the Court recognised that:

“…an employee on probation cannot expect to be accorded with the same status, rights or privileges as a permanent employee. So long as the employer is reasonably satisfied that the employee is not suitable for the job he may be removed…”

The cases above illustrate that as long as fair assessments have been made by an employer throughout the probationer’s probationary period and the employer is of the view that a probationer is not suitable to be retained for permanent employment, the employer retains the discretion to not confirm a probationer at the end of the probationary period.

D. Restriction on Premature Termination

Meanwhile, the High Court in Sulnayah Mohd Isa v Sekolah Kanak-Kanak Pekak Selangor & Anor [1999] 6 CLJ 234, has held that an employee cannot be terminated by the employer during the currency of his probationary period, except where he commits an act of serious misconduct. This case is authority that even if an employee appears to be performing poorly during the probationary period, the employer should allow the employee to complete the entire probationary period before making a final assessment as to whether to confirm the employee and that any premature termination for reasons other than serious misconduct may be deemed unjust.

E. No Automatic Conversion

On the other hand, it is pertinent to note that if a probationer is neither confirmed nor discharged from employment upon completion of probation, case law provides that, all things being equal, the probationer continues in employment as a probationer. There is no automatic conversion of a probationer’s status to a confirmed employee immediately upon the completion of the probationary period.

F. Conclusion

In conclusion, while Malaysian statutes do not expressly define probationary employment, established principles set out in case law shed light on the rights and obligations surrounding probationary employment in the Malaysian legal framework. Similar to confirmed employment, employers must navigate probationary employment with fairness to reduce the risk of claims of unjust dismissal.

 

This material is for general information only and is not intended to provide legal advice. If you have any queries regarding the above, please feel free to contact us at insights@chooi.com.my.