1. A Performance Improvement Plan (“PIP”) is a structured intervention strategy utilised by employers to address poor performance of employees. It involves setting out performance-related concerns, performance objectives, and providing a framework within which the employees are expected to show improvement in their performance. The PIP incorporates ongoing constructive feedback, mentoring, and performance tracking, serving as an official record of the employer’s efforts to facilitate and improve the employees’ performance. In cases where the employees fail to meet the target set out, the PIP may also provide the consequence in the event of the employees’ failure which may include termination of the employees’ employment.

2. The case of Cliford Lawrence Patrick v MIMS Medica Sdn Bhd [2023] 2 ILR 398 involves matters arising from the issuance of a PIP resulting in an unfair dismissal claim by the employee against the employer.

A. Case Facts

3. Cliford Lawrence Patrick (“herein after referred to as the “Claimant”) was the Regional Vice-President for Listings of MIMS Medica Sdn Bhd (herein after referred to as the “Company”) and had served the company for 19 years before he was dismissed on 10.6.2019.

4. The Claimant was promoted as Regional Vice President of Listing (“RVPL”) between the 2017 and 2019, whereby his salary had increased by almost half during this period.

5. However, the Company was later acquired by two other companies and the newly appointed CEO of the Company introduced several policy changes that was different from the Company’s previous practice and worked directly against the Claimant.

6. Due to the Claimant’s inability to meet the sales target, the Company alleged that the Claimant was underperforming and placed the Claimant under a PIP. It bears emphasis that the Company had also offered the Claimant a mutual separation scheme as an alternative to the PIP. This was however rejected by the Claimant.

7. Later and during the course of the PIP, the Company proceeded to issue out a warning letter to the Claimant on his poor performance during his employment. Subsequent thereto, the Company proceeded to terminate the Claimant’s employment.

8. The Claimant proceeded to bring a claim of unfair dismissal against the Company before the Industrial Court.

B. The Industrial Court Decision

9. The Court found that there was inadequate evidence of the Claimant’s poor performance as alleged by the Company. In this regard, the Court highlighted that the Claimant had in fact been promoted 5 times during his tenure with the Company. The Court found this to be evidence of the Claimant’s good performance during his employment with the Company.

10. It was also a point of consideration of the Court that during the 19-year period of the Claimant’s employment, the Claimant had no poor record of poor performance or disciplinary actions taken by the Company against the Claimant.

11. The Court in its decision further took into account the change in the Company’s management and the actions of the Company’s new CEO which had caused the Claimant difficulty in carrying out his duties and responsibilities as an RVPL. Particularly, the Claimant had raised issues of his workload to the Company. However, despite so, there was no appropriate action taken by the Company towards the issues raised by the Claimant.

12. The Court further found that the Company’s CEO had acted in bad faith in issuing the PIP as the CEO had informed the Claimant that if he did not accept a mutual separation scheme, he would be placed under a PIP.

13. The Court in considering the PIP specifically found that the Claimant’s PIP’s review was negative without any clear guidance, assessment or review from the Company. In particular, the Court found that each PIP review had no feedback and comments for improvement of the Claimant’s performance.

14. The Court also noted that the Company’s poor performance cannot be attributed to the Claimant as the Company had been in performing poorly overall. Despite so, other less performing employees were not placed on a PIP but the Claimant was.

15. Premised on the above, the Court allowed the Claimant’s claim and held that the Claimant’s dismissal was without just cause or excuse.

C. Key Takeaways

16. Cliford Lawrence Patrick’s case illustrates the Court’s assessment of PIP and the subsequent action following the issuance of the PIP. It is important to note although an employer is entitled to place its employees under a PIP, the employer must ensure that there is sufficient evidence of poor performance on the part of employee warranting the issuance of a PIP.

17. An employer must at all times ensure that if an employee is placed under a PIP, it is for the purpose assisting the employee to improve his or her performance and that it is not done with a view of terminating the employees’ employment.

18. Further, documentation of the employees’ conducts prior, during and after the issuance of the PIP is vital to keep track of the any improvements of the employees’ performance and to ensure the employers have a metric to assess and determine any improvements of the employees’ performance.

About the author

Syed Ashiq
Senior Associate
Dispute Resolution
Harold & Lam Partnership
[email protected]