Every employer when engaging any employee places their trust and confidence that employees hired are competent enough to be able to perform their duties as required in their respective job description. It is not only a fair expectation when employers remunerate employees for their employment.

Lord Denning MR in Alidair Ltd v. Taylor[1978] ICR 445 at page 451:

“Whenever a man is dismissed for incapacity or incompetence it is sufficient that the employer honestly believes on reasonable grounds that the man is incapable and incompetent.“

However this cannot be misconstrued that employers can simply exercise their right to terminate employee that they find are under-performing or performing below their expectation. Industrial jurisprudence dictates that though employers have the right to terminate any employee for poor performance but must afford the right of review and improvement to the employee

The Company in order to justify termination on grounds of poor performance must prove the following;

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

An employer cannot under any circumstances without complying to the three conditions above unilaterally decides without warning and affording opportunity to the employee exercising the right of termination.

Poor Performance must not be confused with Misconduct and to classify the same within the employee the employee handbook is a grave error. Employers cannot reply only on the reasoning that there were warnings issued but not providing any opportunity for improvement of performance to justify dismissal on grounds of poor performance.

In Rooftech Sdn. Bhd. v. Holiday Inn, Penang “Inefficiency which discloses a course of negative conduct, no doubt is a sufficient ground for termination but there must necessarily be sufficient proof that a procedure has been followed. Ordinarily there must be sufficient written communications to the claimant in order to establish inefficiency or poor performance before the company can rely on it to justify dismissal. The company has failed to do so.”

In Project Sdn. Bhd. v. Tan Lee Seng, the learned chairman held “Dismissal for unsatisfactory work or incompetency should almost invariably have been preceded by warnings. In the event of poor performance being the reason for the dismissal one should always endeavour to show that the work complained of was performed subsequent to warnings”

The Practical steps that have to be undertaken by employers are;

  • First telling the employee with regards to which aspect of his job scope to which he is failing to do his job adequately
  • Warning him/her of the possibility or likelihood of dismissal on this ground
  • Providing the employee an opportunity of improving his performance.

Companies as a manner of implementing best practice must adopt due process when faced with situation of poor performance which includes;

  • Engagement with employee
  • Implementing performance improvement plan (“PIP”)
  • The performance improvement plan (“PIP”) must address the inadequacy of performance by the employee
  • The performance improvement plan should provide a timeline and goals to be achieved to address the inadequacy of performance by the employee
  • There must be reasonable time provided to the employee to improve
  • Evaluation should be conducted periodically within the time provided as part of the performance improvement plan

There is no prohibition against any employer who resorts to termination as a result of employee’s poor performance however there must be strict compliance of the principle of law failing which it will inevitably justify a future claim of unfair dismissal

Premjit Singh is the Managing Partner of Prem & Associates and he can be contacted at 012-5236755 or email to prem@premlaw.com

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