Tuesday, February 9, 2010

IR Case Study - Not The Number of Warning Letters Issued That Counts

February 8, 2010

IR Case Study

The Industrial Court Case Between the Employer of a Hotel and its Division Manager. (Industrial Court Award No. 989/08)


The claimant had been in the hotel's employment for 15 years until she was terminated in her capacity as one of the Division Manager (DM) on the basis of her alleged poor performance. The claimant's problems with the hotel started when the new General Manager (GM) was appointed on 1 April 2000.

The GM of the hotel observed that the claimant's performance was not up to the mark within the first week of his tenure of service. He then held discussions with the claimant on her alleged shortcomings. Subsequently, he also testified that he assisted, guided and encouraged her on the standards expected out of her in her capacity as a Division Manager. In addition, he also issued two memos to the claimant covering various areas of weaknesses. When she failed to show improvement, he issued her with three further letters pertaining to her unsatisfactory performance - with the final letter mentioning that severe action would be taken if she continued to not improve.

Nevertheless, the claimant challenged that she replied to all the GM's memos and letters wherein she explained all the reasons surrounding the allegations of non-performance raised.

Ultimately, the claimant was dismissed on 21 April, 2001, one year after the new GM's appointment. She then claimed unfair dismissal. The core consideration before the Court was to determine whether the company had been fair it its approach to dismissing the claimant. This is in fact the IR Court is being held.

The IR Court held in favour of the Claimant, finding that the attitude exhibited by the hotel’s GM towards the claimant was one that border-lined on nit-picking. The court further found that the GM’s behaviour towards her showed that he was more intent on demoralising and running her down instead of getting her to improve. In basing its decision that the company had unfairly treated her, the court cited the following:

“I question the manner COW1 as general manager managed and ran the hotel. By perusing and assessing objectively what he wrote to the claimant, it was plain to me that instead of motivating and finding comprehensive ways to work and meet common objectives through efficient teamwork, COW1 chose to demoralise and run down the claimant alone. There was no evidence that COW1 held any regular meeting or powwow with all the managers (the management team of which he was the head) to address and resolve operational problems and hitches that would invariably arise from time to
time. Instead he chose to hold the claimant solely responsible and accountable.

There was also evidence that COW1 chose not to give part of the credit to the claimant for the success of the DRB-Hicom CEO conference 2001. Page 12 CLB (claimant's bundle of documents) is a letter dated 27 March 2001 from the Group Director of DRB-Hicom thanking COW1's team for their support and assistance in the preparation and success of the conference. There was obvious guest satisfaction here which underscored the importance of dedicated teamwork. However COW1 chose to nit-pick by his letter to the claimant dated the same on p. 52 COB. From the tone and the nature of his complaints, it was explicit that COW1 did not look at the overall picture of success but instead preferred to go on a path of pedantic fault-finding against the claimant for reasons only best known to himself."

After finding that the claimant had indeed been unfairly dismissed, the court made an interesting decision by finding that the claimant should be reinstated in her old position –despite her being employed in a management capacity. The court cited the following in reference to its decision to reinstate her:

"After taking into account all the relevant considerations and circumstances posed to the court by both parties in their submissions, I opine that there is no adverse reason against reinstating the claimant. The breakdown in relationship was not so much between the claimant and the hotel. The irretrievable breakdown was rather between the claimant and COW1 who is now no longer the general manager of the hotel. I am inclined to agree with the claimant who submitted that her predicament started after COW1 took over as the general manager. Page 1 CLB written by the relief general manager Chris Green just before COW1 took over as general manager bore testimony to this. It has also not been established by the hotel that the claimant was gainfully employed elsewhere after her dismissal. Neither was there any admission by the claimant on this. At the hearing, she declared herself as a housewife by way of designation."


It’s Not About Warning Letters

Some companies are still mired in this ‘cold war’ approach toward managing poor performance. This adversarial approach towards managing a poor performer often leads to:-

a) Managers choosing to stay away from approaching this matter altogether; or
b) Managers thinking that managing performance is all about issuing the requisite number of warning letters.

A new approach must be adopted in companies. Managers need to be taught on how to correctly manage their subordinates where they detect a ‘slip’ in performance.


Assume your organisation has a poor performer whom it ultimately dismisses from service. The employee takes the matter thru the industrial relations process which ultimately ends up in Industrial Court. In court, the ‘burden of proof’ or ‘burden of proving their case first’ always reside with the organisation – so your company will now have to show proof that it was fair in coming to its decision to dismiss the employee. What do you think the courts look for?

Being a court of equity, the Industrial Court is never concerned about the number of warning letters you have issued to the employee – as the case above shows. This to the courts is merely a technicality.

Rather, the Industrial Court is concerned with the ‘substance’ behind your company’s decision to dismiss and these are the 3 questions it will ask:

1) Evidence that performance targets were clearly established and
communicated to the employee;
2) Evidence that your company provided the employee with
guidance/training to achieve these targets; and
3) Evidence that a reasonable time was given for the employee to

Here, we have learned that to manage performance isn’t about issuing the requisite number of warning letters or others correspondences. Rather, it’s about managing proactively while showing fairness to the employee.

Source: 989/08 – Industrial Court of Malaysia

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