Refusing a Performance Improvement Plan

Author: Donovan Cheah (Partner) (Donovan & Ho)

www.dnh.com.my

Employers who are facing difficulties with poor performing employees may opt to place them on a performance improvement plan (or “PIP”). The PIP is an exercise, taking place over a number of weeks or months, and is usually meant to achieve the following objectives:

          • Making the employee aware of their shortcomings

          • Structuring an action plan to allow them to improve their performance, and

          • Giving them clear and measurable goals to achieve.

In the best outcome, the employee understands where they have been underperforming and uses the PIP as an opportunity to rectify their performance to a suitable standard. In the worst case, the employee fails to measure up despite the PIP and is terminated.

Employees who are subject to a PIP understandably don’t view this as a benevolent gesture by their employer. It is very human response to disagree with allegations that one is underperforming. There are cases where an employee refuses to participate in a PIP, alleging that the employer is biased, vindictive or otherwise telling lies about the employee’s performance.

Can an employee refuse to participate in a performance improvement plan?

In the case of R. Thiyagaraja a/l S.R. Ramiah Chetty v Silterra Malaysia Sdn Bhd (Award No 696 of 2015), the employee was terminated for insubordination for refusing to embark on a PIP. The employee did not deny that he had refused to cooperate with his employer on the PIP, but stated that he did not have any work performance issues and should not have been placed on a PIP.

The Industrial Court found that the employee was duty bound to comply with his employer’s instruction to participate in a performance improvement plan, and it was not up to the employee to defy the instruction on the grounds that he was disputing the results of the performance appraisal carried out by his superior. As such, the Industrial Court found that the employer was entitled to terminate the employee for insubordination.

In the 2016 case of Geraldine Nathan v Siemens Malaysia Sdn Bhd (Award No. 774 of 2016), the employee was dismissed for refusing to acknowledge receipt of the performance improvement plan documentation, even though she was requested to do so by her superior and the Human Resources Manager. The Industrial Court held that the employee’s refusal to acknowledge the PIP amounts to an act of insubordination warranting termination:

“There was no basis for the Claimant to reject the PIP as the management had decided to implement the PIP based on its dissatisfaction with the Claimant’s performance. It is for the employer to evaluate whether the performance of the employee is satisfactory, not the employee.”

The Industrial Court went on to hold that the employee’s refusal to sign and submit the PIP form and her unwillingness to cooperate with her employer on its efforts to improve her performance and attitude was a clear act of insubordination. As such, the employer cannot be expected to retain her.

The above cases demonstrate the Courts’ general view that an employee is not entitled to refuse a lawful instruction of their employer just because they disagree with it. To hold otherwise would make it impossible for any employer to improve the performance of their employees, since all an employee would have to do is to disagree with the findings and refuse to comply with the employer’s instructions. An employee is of course free to disagree with their performance appraisals, but should raise their grievances through the proper channels (for example: complying with their company’s internal grievance policy, or raising their concerns with an independent party such as another manager or the human resources department) instead of refusing to cooperate.