PIP or Paper Trail? Five Signs an Improvement Plan Was Designed to Fail

Performance Improvement Plans have a branding problem. To HR, a PIP is a structured, good-faith mechanism to help a struggling employee get back on track. To many employees, the moment a PIP lands on their desk, it reads as the opening move of a termination already decided.

Both readings can be correct, and it depends entirely on how the plan was run. Malaysian Industrial Court awards make this distinction sharply: employers who ran a genuine improvement process have had dismissals upheld after extended, well-documented PIPs, while employers whose process looked good on paper but collapsed under scrutiny have paid seven-figure awards for it.

A PIP is only as credible as the process behind it, and that process leaves fingerprints. This article sets out the legal baseline Malaysian employers are measured against, five signs that a PIP was built to fail rather than to help, and a short credibility test you can run against any PIP before you rely on it.

The Legal Baseline: The Ireka Test

The starting point for any performance-related dismissal in Malaysia is Ireka Construction Berhad v Chantiravathan a/l Subramaniam James [1995] 2 ILR 11. The Industrial Court set out what has become the standard three-tier test for a performance dismissal to be defensible:  

1. Employee was warned about unsatisfactory performance

2. Employee was given sufficient opportunity to improve

3. Despite that warning and opportunity, the employee still failed to improve
   

This traces back further, to IE Project Sdn Bhd v Tan Lee Seng [1987] 1 ILR 165, which the Industrial Court has continued to quote and apply: an employer should be slow to dismiss for unsatisfactory performance without first telling the employee specifically how they are falling short, warning them that dismissal is a possible consequence, and giving a genuine opportunity to improve. 

Crucially, the burden of proof sits with the employer. It is not enough to assert that performance was poor, the employer must produce convincing evidence, and the PIP file is usually that evidence.

Satisfying the letter of the Ireka test isn't the same as satisfying its spirit. A company can technically issue a warning, technically set a deadline, and technically hold a review, and still fail, because the process underneath was hollow. This is where "paper trail" PIPs get exposed. Five signs tend to give them away.

The Five Signs 

Sign 1: Unrealistic or Compressed Timeframes

A PIP with a two-to-four-week runway for a genuine skills or role gap is a red flag, not because short PIPs are automatically unlawful, but because the Industrial Court asks whether the time given was realistically enough for a competent person, in that role, with the support provided, to close the gap.

In Syed Mohd Azinuddin bin Syed Azmi v Petroliam Nasional Berhad (Award No. 667 of 2026), the Industrial Court upheld a dismissal after the company ran two PIPs with extensive mentoring and coaching spanning nearly two years, and specifically found that the runway of approximately 23 months since the first PIP began was generous, even accounting for the claimant's argument that the pandemic and Movement Control Order made the targets unreasonable. 

On the other hand, in the MDEC case (Thomas Kuruvilla v Malaysia Digital Economy Corporation), the Industrial Court found that the claimant was not given enough time to accomplish his assigned tasks, was not accorded sufficient opportunity to improve, and was not given adequate guidance and assistance during his PIPs, resulting in an award of roughly RM810,628. 

As we can see, one of the common mistakes is that timeframe is copy-pasted from a standard template regardless of the role's seniority or the genuine size of the gap, i.e. three months for a junior process error and three months for a strategic leadership deficiency, with no thought given to which is realistic.

Sign 2: Absent or Token Support

A PIP that sets targets and then goes quiet is not a fair opportunity to improve - it's a countdown. The Ireka test's second limb requires sufficient opportunity, and Malaysian awards treat documented, competent support as central evidence of that.

The Maxis case is instructive on how this fails. In Tung Yoke Leng v Maxis Broadband Sdn Bhd (Award No. 94 of 2025), Tung Yoke Leng was seconded into an audit role she had no prior experience in, was placed on a PIP and given support staff who the Court later found were inexperienced - she ended up coaching and guiding them herself, on top of meeting her own targets. The company had stated the coaching process would be documented, but when the matter reached the Industrial Court, it could not produce evidence of the coaching and guidance it claimed to have given. The dismissal was found without just cause or excuse, with a total award of RM1,036,640.

Compare that with the PETRONAS award, where the Court noted approvingly that the company had deployed additional Technical Professionals and Commissioning Engineers to assist the claimant, and the claimant himself conceded under cross-examination that he had been given sufficient support.

Support exists only as a line in an email ("let me know if you need help") with no scheduled coaching sessions, no named support resource, and no record of what was actually delivered is also another sign of a failed PIP.

Sign 3: No Meaningful Review Notes or Feedback Loop

Review notes are the evidentiary spine of a PIP. Without dated, specific interim reviews, an employer cannot show that progress was genuinely tracked, only that a conclusion was eventually announced. This shows up in a few recognisable patterns: interim reviews that are simply missing from the file; reviews that are backdated, written up after the fact to look contemporaneous; or reviews so generic they carry no real information - a box ticked "still not meeting expectations" with no specifics on what was assessed, against what standard, or what changed since the last review.

This is the same documentation gap that sank the Maxis case: a promise of documented coaching that, when tested in cross-examination, had nothing behind it.

If the final termination letter contains specific criticisms that never appeared in any interim review, meaning the employee is being judged, retrospectively, against standards they were never told about in real time. If a reviewer can't produce a paper trail showing what was discussed and when, the court is left asking whether those conversations happened at all.

Sign 4: Moving Goalposts

KPIs that are vague at the outset, or that shift mid-plan, undercut the very first limb of the Ireka test: an employee cannot be said to have been properly warned if they were never told, in measurable terms, what success looked like.

The Maxis case again provides the clearest illustration: the KPI criteria snowballed from one review to the next, with unresolved items carried forward and piling up, which the employee flagged to the company by email more than once. Targets that compound rather than reset make it structurally impossible for the employee to ever "pass," regardless of effort. Each review adds new criteria without closing out the old ones, so the employee is perpetually one step further from success no matter how much they improve.

Sign 5: Closed-Minded Decision-Making at the Review Stage

This is the sign that most directly separates a genuine process from a documentation exercise: was the outcome ever actually open?

The starkest illustration in Malaysian jurisprudence is the Maxis case. At her fourth review, the company itself found that Tung Yoke Leng had met all her PIP goals, but terminated her anyway. The Industrial Court found she had never been warned before being placed on the PIP, was never cautioned that her service might be terminated, and was never warned of the

consequences of the enhanced PIP that followed. A process that produces a "pass" and ends in dismissal anyway is close to the clearest possible evidence that the outcome was decided before the review took place.

Malaysian courts have named this pattern directly. Where a PIP process was found to be a formality, one Industrial Court award described it as "nothing but a showpiece for collateral purposes," adding that it could not over-emphasise the importance of acting fairly when managing a genuine poor performer.

Common logistics for the exit - termination letter drafted, final pay calculated, replacement already sourced - are visibly in motion before the "final review" meeting has happened, or the employee's explanations and mitigating context (workload, unclear instructions, external constraints) are never addressed anywhere in the record.

The Constructive Dismissal Angle

A bad-faith PIP doesn't only create exposure at the dismissal stage. Where a PIP is used to humiliate, isolate, or pressure an employee into resigning, it can itself constitute constructive dismissal before any termination letter is ever issued.

Employers should recognise both exposure routes. Employees should recognise that a coercive PIP may already be actionable, independent of whatever happens afterward.

The PIP Credibility Test

Here’s a PIP Credibility Test. Run any PIP against these five questions:

Scoring guide:

• 5/5 - A defensible PIP, consistent with the pattern of cases where employers have succeeded.

• 3–4/5 - Vulnerable. Remediate the gaps before relying on this PIP to support a dismissal.

• ≤2/5 - High litigation risk. This PIP is unlikely to satisfy the Ireka test if tested at the Industrial Court.

Practical Takeaways

For employers and HR: Build the PIP file contemporaneously, not retrospectively. Document the support given, not just the targets set. Keep decision-makers genuinely undecided until the final review, and be prepared to honour a "pass" if the employee earns one.

For employees: If placed on a PIP, request the standard you're being measured against in writing, the support commitments being made, and copies of every review note as the process unfolds. A contemporaneous written record protects your position far more than a recollection assembled after the fact.

Conclusion

Courts don't just check whether a PIP existed, they check whether it was real. The five signs above are usually visible in hindsight to anyone who reads the file, including an Industrial Court chairman. The employers who win these cases are the ones who could have predicted, from day one, exactly what the file would show if it were ever tested.