Whether a PIP is a legitimate tool or a trap, what constructive dismissal actually means, and the real court cases that define where the line is.
Part 1 of this series covered the basics: your employer cannot fire you during probation for no reason, you are entitled to EPF, SOCSO, annual leave, sick leave, and public holidays from day one, and you have 60 days to file for unfair dismissal if something goes wrong.
If you have not read Part 1, read that first.
Part 2 is for when things get more complicated. When your employer starts putting things in writing. When a Performance Improvement Plan lands on your desk. When the environment becomes so unbearable you are thinking about resigning. When you are not sure if what is happening to you has a legal name.
Here is what you need to know.
What A Performance Improvement Plan (PIP) actually is
A Performance Improvement Plan is a formal HR document that outlines specific performance deficiencies, sets measurable targets for improvement, establishes a timeline (typically 30 to 90 days), and documents the support the employer will provide.
According to Employment Act 1955, a PIP serves two purposes simultaneously. For the employer, it is the paper trail that justifies a subsequent dismissal for poor performance if the employee fails to improve. For the employee, it is theoretically an opportunity to fix the problem before termination.
The Industrial Court has consistently held that employers must give employees a fair chance to improve before dismissing for poor performance.
Recent court decisions show that the court expects employers to implement a PIP ranging from 3 to 6 months before terminating for underperformance. This applies to both probationary and confirmed employees.
What Makes A PIP Legitimate vs A Trap
| A legitimate PIP has: | A PIP used as a trap has: |
|---|---|
| Specific, measurable targets (not “improve your attitude”) | Vague or impossible goals designed to fail |
| A realistic timeline of 30 to 90 days | An unrealistically short timeline |
| Support offered: coaching, training, resources | No support. Just monitoring. |
| Prior performance feedback or warnings that informed the PIP | Placed on PIP with no prior warning or performance review |
| Genuine intent to see the employee improve | Predetermined outcome of termination from the start |
The 2025 Industrial Court ruling on PIP misuse
In a 2025 Industrial Court decision (Award No. 856 of 2025), a company placed an employee on a PIP with no prior performance reviews or warnings after nearly two decades of service. The Court found the PIP was not designed to help the employee improve but was used as a tool to push them out. Combined with targeted supervision and public humiliation by management, the Court found constructive dismissal. The employer’s conduct, including the improperly placed PIP, made the workplace so intolerable that resignation was the only reasonable response. This case established clearly that a PIP placed without prior warnings or performance feedback is legally risky for the employer and potentially the foundation of a constructive dismissal claim for the employee.
What a show cause letter is and what to do when you receive one
A Show Cause Letter is a formal document from your employer asking you to explain, in writing, why a specific action or behaviour occurred. It is a procedural safeguard, not a dismissal notice.
Receiving one does not mean you are being fired. It means your employer is building a documented record before making a decision.
Show Cause Letters are used for both misconduct situations and performance situations. For misconduct, they precede a Domestic Inquiry. For performance, they often accompany or follow a PIP.
The standard response window is 24 to 72 hours in writing, though more complex situations may warrant requesting more time.
What to do when you receive a Show Cause Letter
Read it carefully and identify exactly what incident or behaviour is being questioned. Respond in writing within the deadline, factually and professionally. Do not ignore it. A non-response is treated as an admission by most employers and strengthens their case. If you believe the allegation is false or unfair, say so in your response with specific facts and any supporting evidence. Keep a copy of everything, your response, the original letter, any email correspondence, and delivery confirmation. If the matter is serious, consult a lawyer before responding.
What not to do when you receive a Show Cause Letter
Do not resign immediately upon receiving one. A resignation triggered by a Show Cause Letter, unless the letter itself is part of a pattern of intolerable treatment, does not automatically give you constructive dismissal rights. Do not respond emotionally or accusatorially. Keep the tone factual. Do not share it publicly on social media. This can become a separate misconduct issue.
Misconduct vs Poor Performance: Why the distinction matters
Malaysian employment law treats misconduct and poor performance as two different categories of termination, each with a different process and a different burden of proof on the employer.
Getting the distinction wrong is how employees miss valid claims and how employers lose court cases.
| Misconduct | Poor performance | |
|---|---|---|
| What it covers | Dishonesty, theft, insubordination, gross negligence, serious policy violations | Failure to meet KPIs, skill gaps, low output, consistently below-standard work |
| Required process | Show Cause Letter, Domestic Inquiry, findings, outcome | Warnings, PIP (3 to 6 months), opportunity to improve, termination if unchanged |
| Severance on termination | None for serious misconduct after due inquiry | Severance may apply depending on length of service |
| Can it be used during probation? | Yes, but inquiry process still required | Yes, but fair warnings and opportunity to improve still required |
The most important practical point: if your employer is terminating you for poor performance but framing it as misconduct, or vice versa, the process they are required to follow changes.
An employer who terminates for performance without running a proper PIP process, or who runs a misconduct process for what is really a performance issue, is on shaky legal ground at the Industrial Court.
Constructive Dismissal: When you resign but it is actually a dismissal
Constructive dismissal is one of the least understood rights in Malaysian employment law. It occurs when your employer’s actions make the work environment so intolerable that you are effectively forced to resign.
Under the Industrial Relations Act 1967, a resignation that qualifies as constructive dismissal is treated in law as a dismissal, preserving your right to file an unfair dismissal claim even though you technically resigned.
The key legal test: a fundamental breach of your employment contract by your employer that justifies your treating the contract as terminated. This is a high bar. Everyday unpleasantness does not meet it.
The courts look for a pattern of conduct, not isolated incidents.
Situations courts have recognised as constructive dismissal
Unilateral reduction of your salary or benefits without consent. Sudden demotion without valid reason. Deliberately humiliating conduct or harassment by management that is ongoing and ignored when reported. A PIP placed without any prior warnings or performance reviews, combined with impossible targets, designed to push you out rather than help you improve. Transfer to a role or location that fundamentally changes the nature of your employment without consent and without valid operational justification.
Situations that do not typically qualify as constructive dismissal
A manager you do not like. A personality clash with a colleague. Being passed over for promotion. Receiving a PIP that is genuinely based on documented performance issues with realistic targets and genuine support. Receiving a Show Cause Letter for a specific incident. Working conditions that are unpleasant but not a breach of your contract.
Critical: Do not resign immediately if you think you have a constructive dismissal case
If you resign and later claim constructive dismissal, the court will scrutinise whether you resigned promptly after the triggering conduct or whether you continued working for an extended period before resigning. A long delay between the employer’s conduct and your resignation can weaken the argument that the conduct was the reason for your resignation. Seek legal advice before you resign if you believe constructive dismissal applies. You have 60 days from the date you resign to file your representation, the same deadline as for direct dismissal cases.
The landmark cases that defined probationer rights in Malaysia
Malaysian courts have been consistently clear on probationer rights for decades. Here are the cases that established the current legal framework:
Khaliah Abbas v Pesaka Capital Corporation Sdn Bhd (Court of Appeal)
The landmark case. The Court of Appeal established that probationary employees are workers under the Industrial Relations Act 1967 and cannot be terminated without just cause or excuse, regardless of probationary status. This is the foundational precedent that every subsequent probation case in Malaysia builds on.
KC Mathews v Kumpulan Guthrie Sdn Bhd [1981] CLJ (Rep) 62
Established that a probationer remains in probationary status until formally confirmed by the employer. If the probation period expires and the employer takes no action (neither confirming nor terminating), the employee continues as a probationer. However, if the employer’s conduct treats the person as a confirmed employee (salary increment, new title), the court may find implied confirmation.
Azura Norden v SME Development Bank Malaysia (Award No. 94 of 2021)
Confirmed that a properly run PIP with objective, measurable standards, a clear timeline, and genuine support justifies a dismissal when the employee fails to improve. This is the employer-side precedent: if you follow the process correctly, the Industrial Court will uphold the termination.
Syed Mohd Azinuddin v Petroliam Nasional Berhad (Award No. 667 of 2026)
The most recent landmark ruling from June 2026. PETRONAS successfully defended a dismissal for poor performance after two PIPs, repeated warnings, and nearly two years of coaching and mentoring. The Court upheld the dismissal as being with just cause and excuse, establishing that the process, not just the outcome, is what the court examines. The employer won because they documented everything correctly over an extended period.
The Practical Checklist: What to do if things are going wrong during probation
Document everything from the start
Keep copies of your offer letter, employment contract, any emails about your performance, meeting notes, PIP documents, Show Cause Letters, and your responses to all of the above. If your employer later disputes facts, your paper trail is what protects you.
Ask for feedback in writing
If your manager gives you negative verbal feedback, follow up with an email summarising what was discussed. This creates a record and often clarifies misunderstandings early. If you are placed on a PIP, ask for the specific KPIs, the timeline, and the support to be documented in writing.
Request your termination reason in writing
If you receive a termination notice, ask in writing for the specific reason. Employers are not legally required to provide one in the termination letter itself, but requesting it creates a paper trail and sometimes reveals grounds that are legally weak or discriminatory.
Do not resign under pressure
If your employer is pressuring you to resign rather than terminating you, they are likely trying to avoid paying notice and potentially severance, and to avoid the risk of an unfair dismissal claim. You are not obligated to resign. If the pressure itself is severe enough, it may constitute constructive dismissal. Get advice before signing anything.
Know your 60-day window
Whether you were directly dismissed or resigned and believe it was constructive dismissal, you have 60 days from that date to file a representation for unfair dismissal at the Industrial Relations Department (JKPP). After 60 days, the right to claim is extinguished. Do not wait.
A PIP or Show Cause Letter does not automatically mean game over. Stay calm, keep everything in writing, and do not resign out of panic.
Know the process, document everything, and get advice before making your next move. If you were unfairly dismissed or forced to quit, you have 60 days to file a claim for free at the Industrial Relations Department.
