A clear Probation Policy gives managers a framework to assess performance objectively, ensures new hires understand what success means from day one, and prevents hiring the wrong people into permanent roles.
Our guide breaks down how Malaysian employment law treats probation, what employers should include in their Probation Policy and how to implement it across their organisation.
Probation under the Employment Act
Under the Employment Act 1955, there is no fixed statutory probation period, which means employers have flexibility to set their own duration, typically three months for entry-level or administrative roles and six months for management, technical, or specialised positions.
The probation period should be clearly stated in the employment contract to be enforceable, and employers should note that:
- probation can be extended if more time is needed to assess suitability
- extensions must be communicated in writing before the original probation period ends
- during probation, notice periods are typically shorter
- all statutory entitlements still apply during probation
Crucially, far from being redundant, this means a Probation Policy works together with the probation clause in the employment contract.
Probation clause vs Probation Policy
Most employment contracts include a short probation clause that rarely explains the review process, and that’s where a contract and policy work together:
The contract sets the legal terms
As an employment contract must cover many other aspects of employment, a probation clause typically states formal rules, namely:
- length of a probation period, and
- the notice required to end employment
However, this does not explain what actually occurs during that period.
The policy explains the operational process
The Probation Policy fills in the gaps by explaining:
- when and how performance reviews happen
- who evaluates the employee
- what performance standards must be met, and
- how confirmation or extension decisions are made
This ensures managers and employees understand the process, reducing confusion and disputes.
Main benefits
A properly structured Probation Policy protects your business in 3 critical ways:
Sets measurable performance standards
Without clear KPIs or assessment criteria, managers evaluate probationers inconsistently, some focus on attitude, others on output, and decisions become subjective rather than evidence-based.
Creates documentation that supports decisions
If you need to extend probation or decide not to confirm, you need written evidence showing:
- performance reviews were conducted
- concerns were raised and feedback was given
- the employee was given opportunities to improve
Without documentation, employers risk grievances, claims of unfair treatment, or disputes over why confirmation was denied.
Prevents automatic confirmation by default
Many companies accidentally confirm underperforming employees because no one formally reviewed their progress before the probation period ended. A clear policy includes review timelines and approval workflows so confirmation decisions are deliberate, not accidental.
Essential terms
These are not exhaustive, and companies may add additional rules based on their operational needs, industry requirements, or internal risk considerations.
Duration and scope
The policy should clearly state:
- standard probation duration (e.g., 3 or 6 months depending on role)
- which roles are subject to probation (new hires, promotions, internal transfers)
- whether probation can be extended and under what circumstances
- maximum extension period allowed (e.g., additional 3 months)
Performance expectations and KPIs
Clear performance standards prevent confusion about what “good performance” means and ensure managers assess employees fairly.
The policy should outline:
- job-specific KPIs or performance indicators
- behavioural expectations (punctuality, teamwork, communication, professionalism)
- technical or skills competency requirements
- adherence to company policies (attendance, confidentiality, code of conduct)
Review and feedback process
Regular reviews ensure employees know how they are performing and give managers opportunities to address issues early.
The policy should specify:
- frequency of reviews (e.g., monthly check-ins, mid-probation formal review, final review)
- who conducts the review (direct manager, HR, or both)
- whether reviews are documented in writing
- how feedback is delivered and recorded
Extension, confirmation, or termination process
This is where many employers get unclear, leading to confusion about what happens at the end of probation.
The policy should clarify:
- who approves confirmation (e.g., manager recommendation + HR approval)
- notice required for extensions or non-confirmation
- whether employees are notified in writing upon confirmation
- termination notice during probation (typically shorter than post-confirmation)
Probation extension conditions
Extensions should not be used arbitrarily, they should follow clear criteria.
The policy should state:
- valid reasons for extension (e.g., inconsistent performance, insufficient time to assess, medical leave affecting evaluation period)
- maximum extension period
- requirement to notify employee in writing before original probation ends
- performance improvement expectations during extension
Industry-specific performance indicators
Here are common KPIs and performance indicators by sector:
| Industry | Key Performance Indicators During Probation |
| Professional Services (Accounting, Consulting) | File management accuracy, client communication quality, adherence to deadlines, attention to detail in deliverables |
| Sales & Business Development | Lead generation activity, client follow-up consistency, product knowledge, meeting attendance and professionalism |
| Manufacturing & Production | Safety compliance, production output, quality control, adherence to standard operating procedures |
| F&B & Hospitality | Customer service standards, hygiene compliance, shift punctuality, teamwork. |
| Tech & IT | Code quality, project milestone completion, debugging efficiency, collaboration with team members |
| Healthcare | Patient interaction quality, adherence to medical protocols, documentation accuracy |
| Logistics & Operations | Delivery timeliness, inventory accuracy, vehicle/equipment handling, safety incident records |
How to implement a Probation Policy
Step 1: Document the policy clearly
Make sure the Probation Policy is accessible to all managers and employees. You can:
- circulate it via email with an acknowledgment form
- include it in the Employee Handbook so all HR policies sit together
- provide it during onboarding so new hires understand expectations from day one
Step 2: Train managers and supervisors
Managers are responsible for conducting reviews, providing feedback, and recommending confirmation or extension decisions. Brief them on:
- how to set measurable KPIs for probationers
- how to document performance concerns properly
- when and how to conduct probation reviews
- what to do if performance is borderline or unsatisfactory
Step 3: Set up review reminders and workflows
Probation confirmations often get missed simply because no one remembered to conduct the final review. Create internal reminders:
- set calendar alerts for Month 1, Month 3, and final review
- create a checklist for managers to complete before probation ends
- require HR sign-off before confirmation letters are issued
Step 4: Use standardised review forms
Consistent documentation ensures every probationer is assessed fairly and performance records are reliable. Your review form should capture:
- KPIs or performance targets set at the start
- progress updates and feedback given during probation
- areas of strength and areas needing improvement
- manager’s recommendation (confirm, extend, or terminate)
Step 5: Review policy periodically
Update your Probation Policy when:
- you hire for new roles with different performance expectations
- feedback shows managers are unclear about the review process
- internal workflows change
Common mistakes
Even with a policy in place, employers sometimes make avoidable mistakes that weaken the probation process:
No documentation during probation
If you never conduct formal reviews or document concerns, you have no evidence to support an extension or non-confirmation decision.
Solution: Use structured review forms and document feedback in writing, even for informal check-ins.
Extending probation without clear reasons
Extensions should not be used as a “wait and see” approach without clear performance improvement expectations.
Solution: Specify in writing what the employee must improve during the extension period.
Automatic confirmation by default
Many employees get confirmed because no one reviewed their performance before probation ended.
Solution: Build probation review deadlines into your HR calendar and require manager sign-off before confirmation.
Inconsistent application across teams
If some managers rigorously assess probationers while others approve everyone automatically, you create unfairness and potential grievances.
Solution: Train all managers on the same process and require HR oversight for all confirmation decisions.
Probation for promotions and internal transfers
Probation is not only for new hires, many companies also apply probation periods when:
- an employee is promoted to a higher role
- an employee transfers to a new department or function
Your policy should also clarify:
- whether promoted or transferred employees are subject to probation
- what happens if they do not successfully complete probation in the new role (do they revert to their previous position or leave the company?)
Protect your business with a tailored policy
Many employers in Malaysia have felt the pain of underperforming employees passing probation because no one documented concerns or conducted proper reviews.
A clear Probation Policy is a key component of preventing this, and if you are looking to formalise yours or update an existing framework, we can help you draft clear probation terms tailored to your business needs and industry.
