Can Employers Terminate A Probationary Employee?

Employers or managers alike would know that a bad hire is both worrying and regretful. During this probationary period, leaders can assess their prospective employees' work ethics, skills, and cultural fit in the company. Similarly, the probationary employees will also determine whether they want to stay in the company after the period ends.

Although there isn't any legal statement or requirement for the length of a probation period in Malaysia, a common period lasts between 3 to 6 months - depending on the agreement between the employer and the employee.

Nevertheless, companies should know that probationers have the same rights as full-time staff under Malaysian employment law. The law does protect a probationer's rights to a certain extent.

Below, we explore some factors employers should consider when terminating a probationary employee's contract of service.

Employers cannot terminate a probationary employee without "just cause and excuse".

The term "just cause and excuse" may be confusing for most. To put it in simple terms, it practically means that employers must contain strong justification and reasons to terminate an employee before the probation period ends.

In any case, it is often the employer's permissive right to decide whether to extend the individual's probation period - subject to the terms of the employee contract. Nevertheless, should there be an absence of such terms, the employer shouldn't make the length of the period 'irrationally' long.

In addition, it is also highly recommended that employers often offer the required training and tools for probationary employees to help them do the tasks they're expected to perform in the organization. This may include:

• Providing the employee with clear expectations, duties, and responsibilities required of their role
• Offering regular feedback on their work performance and suitability
• Asking the employee whether they have any concerns early on
• Have frequent open one-on-one conversations with the employee

Nonetheless, Malaysian law has stated that it is prohibitive for employers to terminate a probationary employee without a 'just cause and excuse'. Even if a termination period is stated, in this context, such rights are provided under Section 20 of the Industrial Relations Act 1967, which forbids employers from dismissing a probationary employee at their pleasure and will, or for a questionable purpose, for instance, age discrimination or unjust labour practices.

What if the company dismisses its probationer without 'just cause and excuse'?

If that is the case, the probationary employee may have the right to request compensation to a maximum of 12 months back salaries as calculated according to their current wage.

On the other hand, if the employee is under a fixed-term contract, their back wages would only be restricted to the unexpired employment contract term.

Can employers dismiss probationers for poor performance? 

Yes, provided that the reasons behind your decision are fair, genuine, and unbiased. That said, employers must act appropriately and accordingly, for example, by outlining a concise termination procedure and proving that they have given clear communication with the employee on the reasons behind the decision. It is also essential that this action has taken place before the probation period ends.

So if you and your team have decided rightfully to terminate the probationer for poor performance, then do ensure that you've adhered to the guidelines below:

• You have warned the employee about their poor performance
• You have provided the employee with enough time and opportunity to meet the expectations
• You can prove that despite the organization's comprehensive training and support, the probationer still failed to keep up with their performance

How to terminate a probationary employee for misconduct?

If termination is the last choice, ensure that your company's internal termination procedure/due inquiry process is. This is to prevent any potential unreasonable dismissal claims.

The law does recognize that employers have the right to dismiss the service of a probationary employee for proven misconduct. Therefore, you must perform a formal 'due inquiry' to ascertain the 'guilt' of the employee before proceeding with the termination.

The employer should always issue a Show Cause Letter to the employee claimed to be responsible for workplace misconduct. However, do note that not every misconduct should undertake such harsh punishment as there are always other unique factors present. In addition, employers must provide enough time for the said employee to respond to the accusations.

In other scenarios where the company has found that the employee has committed gross misconduct - such as bullying other colleagues or theft in the office - there may be enough reasons to justify immediate termination without performing a domestic inquiry. Nevertheless, it is recommended that you consult legal counsel if you decide to skip the proper 'due inquiry' process.

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