General Article on Probation

A typical clause in an employment contract is as follows-

“The appointment will be effective from [date], subject to six (6) months’ probation and at the end of the probation period, the employee’s performance will be evaluated, provided that the employer may extend the probation at its discretion.  During the probation period, either party may terminate the contract terminate contract of service by giving X weeks/months notice or by paying to the other party X weeks/months wages in lieu of notice”

Q: If the employer does not confirm the employee after the period of probation has passed, what is the status of an employee? Is there automatic confirmation?

A: The status of the employee is that he is neither confirmed nor discharged from employment, and is allowed to remain in employment.  There is no “automatic” confirmation.  However, if by the conduct of the employer, the probationer is treated as if he was a confirmed employee, the courts may recognize that the probationer was confirmed as a result of the employer’s conduct.

Example:

Case: Paari a/l Perumal v Abdul Majid Nazarudin (2000)

FACTS: the employee was employed as a clerk and in the contract of employment it was stated that his probation is for 3 months.  The employer did not write an official letter of confirmation to the employee.  In his contract of employment, it was stated that the employee would be entitled to annual leave IF he was confirmed.  Despite not being given an official confirmation letter, the employee was allowed to go on annual leave.

 

HELD:  It was held that due to the employer’s conduct in granting annual leave to the employee (which was only for confirmed employees), the employee is regarded as being confirmed.

Q: Can an employer use this clause to justify non-confirmation?

A: The short answer is NO.  Statistically speaking, although there are very few cases in which probationers sue the employers for non-confirmation, they still have the legal right to do so.  Typically, the reason for non-confirmation is due to performance.  The employer bears the burden of proving that performance was the reason for non-confirmation.

Section 20 of IRA states that where a workman considers that he was dismissed without just cause or excuse, he may bring a legal action against his former employer to be reinstated in his former employment. This extends to probationers as well.

Therefore if an employer does not wish to confirm an employee who is on probation, the employer must have just cause or excuse for doing so.

Unlike other civil cases (where a person who sues must prove his case) or criminal cases (where the prosecution must prove that the accused is guilty of the offence), in industrial law, the employer has the burden of proving that the employee was dismissed with just cause or excuse.

If the employer only wishes to rely on the clause, there is a very high probability that the court will rule dismissal to be without just cause or excuse.  Mere reliance on the clause is NOT sufficient.  However, in an industrial court matter involving probationers, the backwages are limited to 12 months.

 

IN SUMMARY-

1)         Malaysian laws are very pro-employee.  Section 20 applies also to probationers.

2)         Employers should be very careful in employing.  It would be ideal if a proper thorough background check is conducted on an employee in order to determine his/her suitability to the job.

3)         Employer must have just cause or excuse for non-confirmation. Employers MUST have exercised the discretion in not confirming an employee on probation in a bona fide (good faith) manner.  If the reason is for poor performance, then there must be evidence to show, eg letters written to the employee, monthly assessments, warning of poor performance etc.

Legal Disclaimer

We trust that you have gained some information from this article. If you have any specific questions related to this article, please contact us at askdonny@dwc.com.my.

The article posted is for general information purposes only and should not be construed as legal advice. Facts and circumstances differ from case-to-case. Please consult your lawyer for specific legal advice and action to be taken.

This article is brought to you by Justin Lee and is copyrighted accordingly. Justin is an employment law specialist who can advice, draft and train your human resource managers.