A common practice in the Malaysia labour market is the practice of probation, where a new employee upon joining is put under a probation period typically lasting three to six months.
A common practice in the Malaysia labour market is the practice of probation, where a new employee upon joining is put under a probation period typically lasting three to six months. At the end of their probation period, the employee’s relevant manager will review their performance and decide whether or not to confirm them as a full employee.
As common and popular as this practice of probation is, this practice is not provided for under the Employment Act 1955 nor the Industrial Relations Act 1967. The incoming Employment (Amendment) Act 2022 is also silent about the practice of probations, and only case law offers some insight as to the difference between a probationer and an employee. This understandably leaves many employers feeling as if they are in a legal limbo when it comes to their employees under probation.
There is no legal requirement to ‘trial’ a potential employee through a probation period before being hired as an employee, rather probations are done as a form of best practice. A typical probation clause in an employment contract is as follows: -
The appointment will be effective from [date], subject to six (6) months’ probation and at the end of the probation period, the employee’s performance will be evaluated, provided that the employer may extend the probation at its discretion. During the probation period, either party may terminate the contract terminate contract of service by giving X weeks/months notice or by paying to the other party X weeks/months wages in lieu of notice
Common Question
Q: If the employer does not confirm the employee after the stipulated period of probation has passed, what is the status of an employee? Is there automatic confirmation?
A: The status of the employee is that he is neither confirmed nor discharged from his employment as a probationer and is allowed to remain as a probationer. That being said, there is no “automatic” confirmation upon the expiry of a set probation period. Rather, employers may even extend the probation period if they have not come up with a decision as to whether retain the probationer as an employee.
However, if the probation period has passed and the probationer continues to come into work, and by conduct of the employer that the probationer is treated as if they were a confirmed employee, the courts may recognize that the probationer was confirmed as an employee as a result of the employer’s conduct.
The case of Paari a/l Perumal v Abdul Majid Nazarudin [2000] demonstrates this.
In Paari a/l Perumal, the employee was employed as a clerk and in the contract of employment it was stated that his probation was for 3 months. The employer did not write an official letter of confirmation to the employee. In his contract of employment, it was stated that the employee would be entitled to annual leave IF he was confirmed. Despite not being given an official confirmation letter, the employee was allowed to go on annual leave.
The court held that due to the employer’s conduct in granting annual leave to the employee (which was only for confirmed employees), the employee was treated as if they were a confirmed employee.
Q: Can an employer use the probation clause to justify non-confirmation?
A: The short answer is no. Statistically speaking, although there are very few cases in which probationers sue the employers for non-confirmation, employers retain the right to not confirm an employee. Typically, the reason for non-confirmation post-probation is due to performance.
Section 20 of the Industrial Relations Act 1967 states that where a workman considers that he was dismissed without just cause or excuse, he may bring a legal action against his former employer to be reinstated in his former employment. This extends to probationers as well because it is recognised that probationers have the same rights as confirmed employees with respect to termination withut just cause or excuse. The employer bears the burden of proving that performance was the reason for non-confirmation in the event the probationer files a claim before the Industrial Court.
Therefore, if an employer does not wish to confirm an employee who is on probation, the employer must have just cause or excuse for doing so. If the employer wishes to solely rely on the probation clause, there is a very high probability that the court will rule dismissal to be without just cause or excuse. Mere reliance on the clause is not sufficient. However, in an industrial court matter involving probationers, the back wages are limited to 12 months.
In Summary
The terms and expectations of a probationer ought to be communicated to the probationer prior to the probation period, as to when the probationer may expect to know whether or not they are confirmed, and if more time is required to make a decision this too ought to be communicated to probationers and their probation period accordingly extended.
Probationers enjoy the same rights as a confirmed employee with respect to dismissal without just cause or excuse. Therefore, the same due care and considerations that apply prior to dismissing an employee similarly apply to probationers.
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 askdonny@dwc.com.my.
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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