7 Questions on the Laws governing 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. 

1: What is the definition of a Probationer?

• 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 is a “probationer”. 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.
• A probationary period as stated in the employment contract shall be regarded as a contract of an agreed period or duration of trial of a term certain

2: What are the rights of a probationer and how does it differ from the rights of an employee?

• 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).
• The rationale of such position came from the fact that the definition of ‘Workman’ in Section 2 of the Industrial Relations Act 1967 includes probationers, thus the dismissal of a probationer may be open to a claim for reinstatement under Section 20 of the IRA 1967 as well as to claim back wages for up to 12 months. It follows, therefore that a probationer cannot be dismissed without just cause or excuse during the probationary period or its extension or continuation, whichever the case may be.
• – 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.
• When it comes to dismissals or getting fired, probation staff and permanent staff enjoy the same rights during their employment. In the case of Mak Teck Mun v Ginova Marketing Sdn Bhd, a man named Mak was hired by Ginova Sdn Bhd on probation. 
• Unfortunately, he was terminated by his company before his probation ended and he sued the company in court.  At the end of the case, Mak won and the court awarded him money for the salary he was supposed to get if he wasn’t fired in holding that

“… appointment on probation for six months gives the employer no right [to] terminate the service of an employee before six months had expired except on the ground of misconduct or other sufficient reasons in which case even the services of permanent employee could be terminated. At the end of the six months’ period the employer can either confirm him or terminate his service, because his service is found unsatisfactory.”

• The court also said that the company could only fire the probationer if they didn’t feel like making him a permanent staff AFTER his probation period.

3: When does a probationer cease to be a probationer? 

• 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. Employees assume they have been “automatically” confirmed since their probation period was completed without any comments from the employer and this is actually a misconception. 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.
• It is well established legal principle that a probationer holds no lien on the post; which means he has no right of tenure to his job beyond the agreed contractual probationary period. Hence, it is trite law as stated in the case of K.C. Mathews v Kumpulan Guthrie Sdn Bhd [1981] 2 MLJ 320 that ‘If no action is taken by the employer either by way of confirmation or by way of termination, the employee continues to be in service as a probationer.’, which was also followed in Wong Choon Moey v Practimax Sdn Bhd, [2013] 2 ILJ 501.

4: How does an employer assess a probationer? What can an employer do if a probationer is found to be unsuitable?

• The employer has full rights to assess a probationer’s character, suitability and capacity as an employee during the probationary period and 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 as given by (Samsuddin Mat Amin v. Austral Enterprises Berhad [Award No. 47 of 1974]): – 

1. Inefficiency;
2. Incompetence;
3. Ineptitude. 

• The court in deciding whether a probationer has been dismissed with good cause and excuse will consider: –

1. There is the intrinsic distinction between the employees under probation and confirmed permanent employees. For instance, on the expiry of the probationary period of the employees, even if the works of the employees is satisfactory, it does not confer any right on them to be confirmed.
2. The employer, if reasonably satisfied that the employee is not suitable for the job he may be removed. 
3. Whether or not the probationer is suitable for the job, it is not just based upon the performance of the employee but also on his conduct, behaviour, aptitude, and attitude in relation to the job for which he is employed.

5: What is the test applied in law to determine if a probationer could be a confirmed employee?

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” as enunciated in Indra Devi Rajoo v. Everhome Furniture MFR (M) Sdn Bhd [2015] 2 LNS 0093

6: What are the steps that should be taken by an employer to terminate a probationer based on poor performance?

• Generally, in order to terminate a probationer’s employment based on poor performance, it is good practice that the employer follows the following steps: –

1. 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.
2. 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.
3. Provide sufficient guidance and advice during probation period.
4. Consider extending the probationary period as an alternative to termination, if the employer believes that there is still potential for the employee to improve.

• As such, if the probationer still fails to improve his/her performance after such steps have been taken by the employer, the Court would more likely to determine that the termination was with just cause and excuse.
• Therefore, in case of inefficiency and unsatisfactory work performance leading to dismissal the court has to be satisfied: –

1. Firstly, as to the manner the worker has failed to perform;
2. Secondly, whether he was pre-warned or notified of his performances;
3. Thirdly, whether in spite of the warnings he still failed to perform; and 
4. Lastly, the Company had acted in good faith and in a reasonable manner in its conduct towards the Claimant.

• As long as the company makes known to the employee his shortcomings, inefficiencies, and instances of unsatisfactory and poor performance in a proper, coherent and cogent manner, thereby ensuring procedural fairness, the court will regard the company as having met the test above.

7: What must a probationary clause consist of?

A good probationary period clause must:

• Provide both parties with enough time for them to evaluate the success of the relationship. Employees whose employment is subject to a probationary period are more likely to feel the pressure to succeed and, thus, are likely to improve their performance.
• Help manage expectations. Both parties should go into the relationship and be aware of the fact that if the relationship is not successful, either party can terminate it on short notice. It also gives both parties the chance to leave the relationship quicker.
• Prevent a situation where poor performance or misconduct is left unmanaged and the employee then obtains unfair dismissal protection. If an employee fails to pass their probationary period, the employer should be able to terminate their employment with a fair reason

7: What would be a reasonable timeframe for a probationary period?

Terms of probationary period

• Employers should ensure the employee is aware of the probationary period, and what standards of conduct and performance are expected of them in order to pass their probationary period.
• The employer should also ensure necessary arrangements are in place to monitor the employee’s performance throughout the probationary period and record the performance review meeting before the end of the probationary period 

Length of probationary period

• Employers who wish to include a probationary period clause in their employment contract should bear in mind that most probationary periods last for 3 to 6 months.
• Anything less than 3 months won’t give enough time for employers to assess the employee and anything longer than 6 months might put too much pressure on the employee.