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Dismissal for Poor Performance in Malaysian Employment Law

Updated: Apr 2

Employers can dismiss an employee for poor performance, yet dismissal for poor performance is still governed by features of section 20 of the Industrial Relations Act 1967

Dismissal for Poor Performance

Employers can dismiss an employee for poor performance so long as the following features of the Industrial Relations Act 1967 are kept in mind: -

  1. Section 20 of the Industrial Relations Act 1967 gives the right to a former employee who “considers” that s/he was dismissed without just cause or excuse, to bring legal action for unlawful dismissal against his/her former employer. The key word is “considers”, i.e., the former employee can bring legal action as long as he/she subjectively considers him/herself to have been dismissed without just cause or excuse.

  2. Although it is the former employee who sues for unlawful dismissal, it is the employer that must be able to demonstrate to the satisfaction of the Industrial Court that there was just cause or excuse in dismissing. This means having to adduce the necessary evidence/documentation to prove its case.

Dismissal from employment due to poor performance may be successfully established if the employer is able to prove the following: -

  1. That there is sufficient objective evidence of poor performance. Mere reliance on the subjective view of the supervisor/superior/manager is insufficient;

  2. That the employee was warned about the gap between his/her performance and the company’s expectations. In this regard, it is useful to have a detailed job description;

  3. That the employee was provided with sufficient time and opportunity to improve, ideally between 3-6 months before dismissal and with opportunities such as the provision of necessary training, sending the employee for courses, providing one-on-one coaching, etc; and

  4. That despite the time and opportunity afforded to the concerned employee to improve, the level of performance was not brought up to the expected standard.

It is advisable that all steps above are documented with hard evidence, as failure to document the above will make the employer’s case that much more difficult to prove.

Poor Performance vs Misconduct

Additionally, misconduct and poor performance are different from each other. When misconduct is committed, the corrective measure to be taken is punitive, such as summary dismissal, downgrading, or any other punitive forms (including warning, withholding of increment, suspension, etc), whereas for poor performance, the corrective measure taken is aimed towards improving the concerned employee’s level of performance in the hopes that any improvements will be carried into the future.

In that regard, because poor performance is not an intentional wrongdoing/misconduct on the part of the employee, there should always be a sequential, progressive corrective action taken before the ultimate decision to dismiss is undertaken. This includes the following measures: -

  1. Informal discussion

  2. Counselling

  3. Verbal warning

  4. Formal written warning

  5. Punishments lesser than dismissal

  6. Dismissal

The Industrial Court in turn will look for the following: -

Objective evidence

This is absolutely crucial. While the supervisor/superior/manager can be asked to appear as a witness for the company to provide his/her opinion on the poor performance of the employee, the courts have stated that their statements will not have much value unless they are supported by objective evidence. The company must therefore be able to demonstrate and adduce objective evidence of actual incompetency.

Standard of Skill

The standard of skill to be expected of an employee is that the employee is competent to do the job they are employed to do and no more than that.

For example, let us consider the sport of football/soccer. A goalkeeper is expected to do no more than to goalkeep, to remain at the goalpost and to try to prevent the opposing team from scoring goals, and no more than thats. One cannot expect the goalkeeper to play the role of a defender/midfielder/forward, or to score goals for the team. The courts have emphatically stated that

“...the true rule is that the employee must exhibit just that much skill and no more than that he has warranted he had. If he has proclaimed that he is an expert, he must exhibit expertise. If he boasts that he is a genius, his work must be brilliant. But the presumption is against any implied warranty of extraordinary talent.”

Other factors

  • Whether the company has carried out sequential, progressive corrective action (as set out above) before the ultimate decision to dismiss was undertaken;

  • Whether the company has not been inconsistent with its treatment of the concerned employee;

  • Whether the company did not victimize the concerned employee;

  • Whether the company has not set unrealistic targets for the concerned employee;

  • Whether the company acted in good faith at all times;

  • The period for evaluation of performance. If the company states that it will give the employee XXX months, then the full benefit of the XXX months should be given. If the company lacks the patience and say, dismisses the employee after 2 months despite informing the employee that his performance will be monitored for 6 months, the courts may hold the dismissal to be unfair.

  • For probationers, the law relating to poor performance is less stringent. It was held in a case that monthly assessment reviews that are communicated to the employee are sufficient, but it is my opinion that it is still safer to err on the safe side and ensure that it is properly documented. Note that the FULL probation period must be given to the employee. This is after all already agreed in the terms and conditions of employment that the probation period is for XXX months. If there is insufficient documentation to properly justify the termination due to poor performance, the probation period should be extended so that the company ensures that the documentation is in place.

  • Whether dismissal for poor performance was done in accordance with the full notice period as stated in the employment contract. This is unalike serious misconduct where an employee can be summarily dismissed by providing a 24-hour notice.


Employers are reminded to ensure that the above steps are taken before dismissal is carried out. It is advisable that employers, before dismissing for poor performance, take some time to objectively review the strength of available evidence at your disposal should the concerned dismissed employee hypothetically resort to litigation and try identify any gaps in the evidence at your disposal. As an employer, you need to adduce sufficient evidence to the satisfaction of the Industrial Court. Ask yourself if you believe that the evidence is sufficient to prove that the employee is a poor performer. Once you do so, you may already have an inkling of what is likely to be the Industrial Court’s stance on this. Additionally, obtain the services of a specialist in Malaysian employment law to ensure compliance to the laws/procedure and to minimize legal risk(s). That will go some way in determining your next course of action.


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

This article is posted 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.


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