By Many bosses hold the same belief:
“He’s still on Probation. If he doesn’t perform, I just won’t Confirm him.”
Some companies even assume that because a Probationer is not Confirmed Staff, Termination is straightforward.
But this 2026 Industrial Court case is yet another reminder to bosses and HR in Malaysia:
Probation is not the company’s “Free Termination Period”.
If the company says an employee failed Probation because of Poor Performance, the company must still be able to show:
- Exactly where did he fall short?
- Did the company tell him?
- Was he given a reasonable opportunity to improve?
- Most importantly: does the company have evidence?
What happened?
Tan Cheng Chuon was employed by Kibing Group (M) Sdn Bhd as Manager, Business Affairs.
One of his key responsibilities was to act as the liaison officer between the company and the local community, handling community matters arising from the company’s sand mining project around Kudat, Sabah.
His Probation was six months and, according to the published case materials, ended on 3 April 2023.
Yet when the Probation ended, the company did not promptly give him a formal performance appraisal result, nor did it clearly tell him: “Your performance is unsatisfactory.” Instead, matters carried on.
The company then asked him to resign
- 3 Apr 2023Six-month Probation ends; the company gives no formal assessment result
- 2 May 2023HR asks the employee to resign; he refuses
- 11 May 2023Date of the Performance Appraisal the company later relied on
- 15 May 2023The employee again refuses to resign
- 16 May 2023The company terminates his employment on grounds of Unsuccessful Probation / Poor Performance
The employee then took the case to the Industrial Court.
The biggest problem: when was the Performance Appraisal done?
This is one of the points in the case HR should pay closest attention to. The employee’s six-month Probation had already ended on 3 April 2023, yet the performance appraisal the company relied on was dated 11 May 2023.
In other words: the company only prepared the appraisal after the Probation had ended.
More importantly, according to the published case materials, the employee saw this appraisal for the first time only on the day he was dismissed. That immediately raises a very practical question:
If the employee never saw the company’s assessment of his performance, how was he supposed to know where he was falling short? And if he didn’t know, how could he improve?
The company alleged Poor Performance
The company raised a number of performance allegations. But after examining each allegation and the evidence of the company’s witnesses, the Industrial Court found that the poor-performance allegations were not supported by credible evidence.
The company also faced another very awkward problem: it had continued to pay the employee his Full Monthly Performance Incentive.
That raises a very direct question: if the company believed the employee’s performance was so poor that he could not pass Probation, why was it paying him a Full Performance Incentive at the same time?
Of course, paying an incentive does not by itself prove that an employee is performing well. But against the factual background of this case, it became one of the key inconsistencies when the Court assessed how credible the company’s poor-performance grounds were.
No warning, no chance to improve
The published case materials also show that the company did not provide adequate:
- Formal Warning
- Documented Performance Feedback
- Meaningful Opportunity to Improve
In other words, the company ultimately told the employee “your performance is poor, so you cannot pass Probation”, but before that it had not built up enough documentation to show that he had been clearly told of his shortcomings and given a reasonable opportunity to improve.
What did the Industrial Court decide?
Having examined the poor-performance allegations raised by the company, the Industrial Court found they were not supported by credible evidence and ultimately held:
Dismissal was without just cause or excuse. The employee was awarded RM173,400 in Back Wages.
JP Asia HR & Employment Law Analysis
The most important lesson of this case is not that “Probationers cannot be dismissed”. Of course they can.
The very purpose of Probation is to let the company assess whether the employee is Suitable for the Position. If the employee genuinely cannot meet the requirements of the role, the company can of course decide, based on the actual circumstances, whether to confirm his employment.
The real issue is this: the company must be able to prove why he is not suitable.
Lesson 1 | A boss “feeling he isn’t right” is not enough for Probation
Many SME Probation Reviews go like this: the boss tells HR “this person isn’t working out”. HR asks “in what way?” The boss replies: “He just doesn’t seem proactive enough”, “His work isn’t what I want”, or “He’s not meeting my expectations”.
These may all be genuine management concerns. But if the case reaches the Industrial Court, “the boss felt” will hardly count as complete performance evidence. The company should turn those feelings into:
- Expectation
- Measurement
- Actual Result
- Gap
Lesson 2 | Tell employees the Performance Standard early
- Hiring a Sales Manager with a Monthly Target of RM300,000? Tell him early;
- Hiring an Operations Manager whose Error Rate must stay below 2%? Put it in writing;
- For a Business Affairs Manager: how much stakeholder engagement to complete each month, which community issues to resolve and which project milestones to deliver should also be made clear.
You cannot wait until the last day of Probation to tell the employee: “Actually, your performance over the past six months has been unsatisfactory.”
Lesson 3 | An Appraisal is not a document to show the employee only on Termination day
The real purpose of a Performance Appraisal is not to manufacture evidence for Termination, but to tell the employee where his performance currently stands and to give him a chance to improve.
If the company has written a very poor appraisal but never shown it to the employee, he has no way of knowing his performance gap. That defeats the whole point of performance management.
Lesson 4 | Performance Incentives must be consistent with Performance Management
Suppose the company tells the employee every month that his Performance Incentive is 100%, then six months later suddenly says “Your Performance is very poor, so we are Dismissing you”. The Court will naturally ask: why?
This does not mean a company can never pay some form of incentive while dealing with other performance shortcomings. But the company’s KPI, Performance Rating, Bonus, Commission, Performance Incentive, Appraisal and PIP should ideally not contradict one another.
Lesson 5 | Don’t wait until Probation ends to do the Probation Review
If the employee is on a 6-month Probation, don’t wait until month 6 to hold the first Review. JP Asia recommends setting up:
- Month 1Initial Review
- Month 3Mid-Probation Review
- Month 5Pre-Confirmation Review
- Month 6Confirmation Decision
If problems are already spotted in month 3, record them straight away: What is wrong? What is the Expected Standard? What does the employee need to improve? What support will the company provide? When is the next review?
That way, by month 6, whether the final decision is to Confirm, Extend Probation, or Non-Confirmation / Termination, the company has a complete decision trail.
“Not suitable during Probation” is not a catch-all reason for Termination
Bosses need to pay particular attention to this. A Termination Letter that simply says “Your performance during probation is unsatisfactory.” does not automatically make the termination lawful. If the employee challenges the company, it may ultimately still have to answer:
- In what way was it Unsatisfactory?
- Who carried out the assessment?
- Against what Standard?
- When was the employee told?
- Did the employee get to explain?
- Was there an opportunity to improve?
- What was the final Performance result?
If none of this is documented, a single line saying “Failed Probation” may not protect the company.
JP Asia recommends: Probation Management needs at least these 6 records
- 1. Job Description
- The employee must first know what his duties are.
- 2. KPI / Expectations
- What does meeting the requirements actually mean?
- 3. Probation Review Form
- Don’t rely on the boss’s word alone.
- 4. Written Feedback
- When you spot a shortcoming, put it on record.
- 5. Improvement Plan
- If the employee is underperforming, tell him how to improve and by when.
- 6. Final Assessment
- The final decision to Confirm, Extend or Terminate must link back to all the earlier records.
One thing every boss should remember
Probation is an observation period, not a period without legal protection.
The company is of course entitled to choose the right people. But “I feel he isn’t suitable” and “I can prove he is still not suitable after a fair assessment” are two very different things.
If the company genuinely believes an employee is underperforming, the best protection is not to write a Termination Letter on the last day, but to manage Performance properly from the employee’s very first day.
A reminder from JP Asia
For many companies, the problem is not the absence of a Probation Clause. It is that they have the Clause but no Process; an Employee Handbook but no Probation Review; KPIs but no Performance Records; Warning Letters but no genuine Improvement Opportunity.
JP Asia Capital helps Malaysia SMEs build a law-backed HR Management System that can actually be put into practice:
- Employment Contract
- Job Description
- KPI
- Probation Review
- Performance Appraisal
- PIP
- Disciplinary Process
- Termination
JP Asia’s legal advisory team helps companies build a complete process covering Job Descriptions, KPIs, Probation Reviews, Performance Appraisals and PIPs.
Disclaimer: This article is based on publicly available Industrial Court Award materials and case reports, and is intended solely for educational purposes in business management, HR and Employment Law. It does not constitute legal advice on any specific case. Probation, Poor Performance and Termination cases depend heavily on the actual facts, the Employment Contract, company policies, Performance Records and other evidence, and must be assessed independently on a case-by-case basis.