APAC: Dismissal For Poor Performance

Herbert Smith Freehills is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with our Formal Law Alliance partner, Prolegis LLC. APAC: DISMISSAL FOR POOR PERFORMANCE This month we consider some common questions when considering the dismissal of poor performing employees. Following on from last month's look at North Asia, we now turn to the position in Australia and certain South East Asian jurisdictions. IS POOR PERFORMANCE RECOGNISED AS A GROUND FOR UNILATERAL TERMINATION OF EMPLOYMENT? IS THERE A PROCESS THAT MUST BE FOLLOWED PRIOR TO DISMISSING AN EMPLOYEE FOR POOR PERFORMANCE? IS THERE ANY SEVERANCE PAYMENT THAT MUST BE MADE FOR TERMINATION FOR POOR PERFORMANCE? AUSTRALIA Yes, poor performance is a ground for termination of employment, provided a fair process is followed whereby the employee is given a proper opportunity to improve. Termination for poor performance should only be a final resort when all other avenues have been exhausted. There is no mandated process, however, the process must be fair and properly allow for the employee’s improvement. Steps are likely to include giving a warning to the employee about their unsatisfactory performance, discussing a solution or plan for improvement with the employee and giving the employee an appropriate amount of time to improve. Assistance to the employee such as training and mentoring may also be required. Employees may be entitled to certain payments upon termination based on their period of service and any accrued leave. There also may be certain severance pay requirements outlined in the employee’s employment contract. INDONESIA Yes, under Indonesian manpower law, poor performance is a ground for termination of employment. However, the termination process for this process is complex. Yes. For example, the manpower law requires the employer to serve the employee at least three warning letters (each of which has validity for 6 months). Yes, employees will be entitled to a severance package that comprises of a severance payment; a service payment and a compensation payment which will be calculated by reference to factors such as their length of service. SINGAPORE Yes. For employees covered by the Employment Act, the termination must meet the ground of 'just cause or excuse'. Poor performance will generally meet this ground if the poor performance can be substantiated and it can be shown that the employee was given an opportunity to improve. There is no mandated process that must be followed prior to dismissing an employee for poor performance however; the tripartite guidelines issued by the Ministry of Manpower recommend steps such as permitting the employee to respond to any concerns before any decision is made with regard to termination. No. 2 IS POOR PERFORMANCE RECOGNISED AS A GROUND FOR UNILATERAL TERMINATION OF EMPLOYMENT? IS THERE A PROCESS THAT MUST BE FOLLOWED PRIOR TO DISMISSING AN EMPLOYEE FOR POOR PERFORMANCE? IS THERE ANY SEVERANCE PAYMENT THAT MUST BE MADE FOR TERMINATION FOR POOR PERFORMANCE? THAILAND Yes, an employer may terminate the employment of an employee (whose employment is continuous) provided it has "reasonable grounds" to do so. Termination of employment for poor performance may constitute "reasonable grounds" provided the process prior to termination is fair and the employer complies with other statutory requirements such as those relating to notice and severance payments. Accordingly, if, before termination, an employer gives an employee a chance to improve, tries to find a more suitable job for an employee and/or sets up PIP for an employee, it may support their case that the termination is fair. However, this issue still rests solely on the Court's discretion. Yes, in general, employees will be entitled to severance pay based on their period of service. If you would like further information on this topic, please contact Fatim Jumabhoy at fatim.jumabhoy@hsf.com. Fatim Jumabhoy Partner Herbert Smith Freehills LLP +65 6868 9822 fatim.jumabhoy@hsf.com