Can I suspend or terminate an employee for poor performance without implementing PIP or conducting an inquiry?

No. Termination or suspension pending inquiry should only be used when serious, ongoing, and documented poor performance is involved. It must follow due process, including completing the PIP, issuing a Show Cause Letter and receiving an unsatisfactory response, before leading to a Domestic Inquiry.

What is a Show Cause Letter, and why is it important?

A Show Cause Letter is a formal request for an employee to explain why disciplinary action should not be taken against them. It’s important to ensure procedural fairness, which helps protect the employer from future legal claims.

When should an employer issue a Show Cause Letter for poor performance?

It should be issued after repeated underperformance despite prior support, such as coaching, performance reviews, or warnings, and when improvement remains unsatisfactory.

What should be included in a Show Cause Letter?

It must clearly state the performance concerns, provide examples of poor performance, reference previous support or warnings, and request a written explanation from the employee within a set timeframe.

Is issuing a Show Cause Letter legally required in Malaysia?

While not always legally required, it is considered best practice under industrial harmony guidelines. It demonstrates fairness and strengthens the employer’s case if the matter is challenged in the Industrial Court.

How much time should an employee be given to reply?

Typically, 24 to 72 hours is reasonable, depending on the nature and complexity of the issue. The timeframe must be fair and allow the employee to respond meaningfully.

Can an employee be terminated immediately for poor performance?

No. Termination for poor performance must follow a proper process, including documented warnings, improvement opportunities, and the chance to respond to concerns via a Show Cause Letter or Domestic Inquiry.

What happens if the employee does not reply to the Show Cause Letter?

If no reply is received within the given timeframe, the employer may proceed with disciplinary action based on the available evidence, including a Domestic Inquiry or termination.

Under Malaysian law, is poor performance considered “just cause” for termination?

Yes, but only if the employer can show that reasonable steps were taken to support the employee and that the underperformance persisted. The employer must also follow due process.

Can the employee bring a legal claim after receiving a Show Cause Letter?

The letter itself doesn’t trigger legal claims, but if the employee is eventually dismissed without proper process, they may file an unfair dismissal claim under the Industrial Relations Act 1967.

What documents should be kept when issuing a Show Cause Letter?

Employers should keep a copy of the letter, delivery confirmation (e.g. signed acknowledgement or email log), all related performance records, and the employee’s written response for legal defence if needed.

Is suspension considered a form of punishment?

No. Under Malaysian employment practices, suspension pending inquiry is a neutral step. It is not disciplinary punishment but a protective measure to ensure fairness and prevent interference in the investigation.

Do I need to pay the employee during the suspension?

Yes. The employee must be suspended with full pay during the inquiry period. This maintains fairness and avoids claims of constructive dismissal or procedural unfairness.

What is the purpose of suspending the employee before the Domestic Inquiry?

Suspension helps to preserve workplace harmony, prevent tampering with evidence, avoid influence over witnesses, and allow the inquiry panel to conduct a fair and unbiased review.

When can poor performance justify suspension and inquiry?

Only after repeated underperformance has been documented, coaching and performance reviews have been conducted, the full PIP has been completed without improvement, and verbal and written warnings have been issued.

What should be included in the suspension letter?

The suspension letter must state that the employee is suspended with pay, the reason for the suspension (pending inquiry), the timeframe or expected duration, and that it is not a punishment but a procedural requirement.

Is a Domestic Inquiry legally required in all poor performance cases?

Not always, but it is highly recommended, especially if termination is being considered. Industrial Courts often view a lack of inquiry as a breach of natural justice, which can render dismissals procedurally unfair.

How long can I suspend an employee pending an inquiry?

There’s no fixed legal limit, but the suspension should only be for a reasonable and necessary period. Employers should ensure the Domestic Inquiry is conducted without unnecessary delay.

Can the employee challenge the suspension or inquiry process?

Yes. If the process appears biased, unreasonable, or inconsistent with natural justice, the employee may file a complaint or pursue a claim for unfair dismissal under the Industrial Relations Act 1967.

What happens if I skip the PIP, suspension and inquiry process altogether?

You risk facing an unfair dismissal claim, which could result in compensation orders, reinstatement, or reputational damage. Following proper procedure significantly strengthens your legal position.

Employment | L Y Lu & Co

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Employment

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How to Conduct a Domestic Inquiry for Employee Misconduct in Malaysia

Handling Employee Misconduct: Your First Step Is a Fair Investigation

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