When an employee consistently fails to meet expectations, employers may naturally conclude that poor performance is the problem. However, Industrial Court decisions have consistently emphasised that employers must establish not only the existence of poor performance, but also that the employee was given a fair opportunity to improve before any adverse action is taken.

In many cases, the Court's scrutiny extends beyond the employee's shortcomings and focuses on how the employer managed the performance concerns. Therefore, the question HR should therefore ask is not merely "Did the employee perform poorly?" but also "Did we manage the performance issue properly?"

What Amounts to Poor Performance?

Poor performance generally refers to an employee's inability or failure to meet the standards, expectations, objectives or requirements of his or her role despite being given the necessary support, guidance and opportunity to perform.

Unlike misconduct, which involves a deliberate breach of workplace rules or standards, poor performance concerns an employee's capability, competence, skill level or output.

Examples of poor performance may include:

• Consistently failing to achieve agreed performance targets or key performance indicators (KPIs);

• Repeated inability to meet reasonable deadlines;

• Producing work of an unsatisfactory quality despite guidance and training;

• Failure to achieve sales targets over a sustained period;

• Inability to perform the core functions of the position;

• Persistent errors affecting productivity, efficiency or business operations;

• Lack of improvement despite coaching, mentoring or performance reviews.

However, employers should be cautious not to assume that a single mistake, isolated error or short period of underperformance automatically amounts to poor performance. The assessment must be objective, evidence-based and measured over a reasonable period.

Poor Performance Is Not Misconduct

One of the most important distinctions HR practitioners must understand is that poor performance is generally not misconduct.

Misconduct involves wilful, deliberate or negligent behaviour that breaches workplace rules, policies or obligations. Examples include insubordination, dishonesty, absenteeism, harassment or theft.

Poor performance, on the other hand, usually arises from an employee's inability rather than unwillingness to perform.

Where misconduct is alleged, employers may initiate disciplinary proceedings and, where appropriate, conduct a domestic inquiry before imposing disciplinary sanctions.

Where poor performance is involved, the emphasis should instead be on performance management. Employers are expected to identify deficiencies, communicate expectations clearly, provide coaching and support, and allow the employee sufficient opportunity to improve before considering termination.

The Industrial Court has repeatedly stressed that termination for poor performance should generally be the last resort rather than the first response.

Performance issues can stem from poor management, unclear expectations, or genuine underperformance. This webinar explores how HR professionals and leaders can distinguish between the two and implement effective Performance Improvement Plans (PIPs).

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Case Study 1: When a Performance Improvement Plan Becomes a Mere Formality

Charles Selvam Andrew Francis v. Kebabangan Petroleum Operating Company Sdn Bhd (Award No. 256 of 2021)

The decision in Charles Selvam Andrew Francis serves as a reminder that a Performance Improvement Plan (PIP) must be genuine, properly managed and implemented in good faith.

The Facts

The claimant had a positive employment history with the company. His contributions had previously been recognised through a special recognition award which commended his capabilities, dedication and excellent contribution to the company.

Despite this positive track record, his performance rating was subsequently downgraded from satisfactory to unsatisfactory without his knowledge.

Following the downgrade, the claimant was placed on a three-month PIP. However, the objectives and targets within the PIP were vague and lacked clarity. Although the company stated that progress reviews would be conducted every two weeks, only two review meetings were held throughout the entire three-month period.

The claimant objected to both the implementation of the PIP and its subsequent extension for another three months. These objections went unanswered by the company.

Eventually, the claimant's employment was terminated on the basis of alleged redundancy.

The Court's Findings

The Industrial Court rejected the company's justification.

The Court found that the claimant's position was not genuinely redundant and that the evidence did not support the company's assertions regarding his alleged inability to perform.

More importantly, the Court found that the claimant's performance rating had been downgraded without any genuine basis.

The Court was highly critical of how the PIP was administered. Despite requiring bi-weekly reviews, the company failed to conduct the reviews as promised and was unable to provide any satisfactory explanation for the lack of engagement with the claimant throughout the process.

The Court described the PIP as having been "unfairly imposed" and "improperly managed". It went further by stating that the PIP appeared to be "nothing but a showpiece for collateral purposes".

The Court also found that the extension of the PIP had been undertaken in bad faith and that the claimant had effectively been "strung along with an ulterior motive".

Ultimately, the Court concluded that the claimant's alleged performance shortcomings were merely an afterthought used to justify his selection for termination.

The dismissal was therefore held to be without just cause or excuse, resulting in an award exceeding RM470,000.

Lessons for HR

This case demonstrates that a PIP cannot be treated as a procedural box-ticking exercise.

A defensible PIP should:

• Clearly identify the employee's performance deficiencies;

• Set measurable and achievable targets;

• Establish realistic timelines for improvement;

• Include regular and documented review sessions;

• Provide meaningful coaching and support;

• Be implemented honestly and consistently; and

• Be genuinely intended to help the employee succeed.

A poorly administered PIP may ultimately undermine the employer's case rather than strengthen it.

Case Study 2: When Employers Move Too Quickly

Rohimi Yusoff v. Alfa Meli Marketing Sdn Bhd & Anor [2001] 6 CLJ 177

The decision in Rohimi Yusoff highlights another common mistake made by employers: concluding too quickly that an employee has failed.

The Facts The claimant was employed as a Marketing Manager.

His employment was terminated after a relatively short period on the basis that he had failed to generate business for the company, which was said to be the primary purpose of his appointment.

The Industrial Court initially accepted the employer's justification and dismissed the claimant's claim.

The matter subsequently came before the High Court.

The Court's Findings

The High Court took a different view.

The Court observed that the claimant had only been employed for approximately ten weeks before his dismissal.

Importantly, the claimant had not been issued any warning regarding his performance and had not been given a reasonable opportunity to improve.

The Court considered it premature for the employer to conclude that the claimant had failed to generate business within such a short period.

The decision reaffirmed the principle that employees should be given sufficient time and opportunity to demonstrate improvement before termination is considered.

As the Court emphasised, an employer should accord sufficient time and opportunity for the employee to improve, failing which the employer may be in breach of the requirements of procedural fairness and due process.

Lessons for HR

This case highlights that performance management is a process, not an event.

Before concluding that an employee is incapable of performing, employers should consider:

• Whether sufficient time has been given for the employee to adapt to the role;

• Whether performance expectations were clearly communicated;

• Whether any warning was issued;

• Whether support and guidance were provided; and

• Whether the employee was given a realistic opportunity to improve.

Premature decisions often create significant legal risk.

Conclusion

The law does not require employers to retain genuinely poor performers indefinitely. However, it does require employers to act fairly, reasonably and transparently when managing performance concerns.

For HR practitioners, the key takeaway is simple. Before asking whether an employee is a poor performer, first ask whether the organisation has properly managed the employee's performance.

A well-documented, objective and genuinely supportive performance management process not only improves employee outcomes but also provides employers with the strongest defence should termination become necessary.