The Tradition of 3 Warning Letters

There is no legal requirement for an employer to issue at least three warning letters before dismissing an employee, although some of them think they should.

The basis of this tradition is unknown. 

If an employer is ever in the unfortunate position of issuing multiple warning letters to the same employee, they should remember that dismissal is not a numbers game.

In the case of Muhammad Jamil Sabdani v Prima Union Plywood (M) Sdn Bhd [2008] 2 LNS 2112, the Claimant was an Assistant Superintendent with the Company. He was given three warning letters for failing to perform his duties as an Assistant Superintendent. In reviewing the warning letters, the Court observed that (1) The first warning letter did not specify the Company’s instructions that the Claimant allegedly did not follow (2) The second warning letter did not clearly state what was the reason for the warning (3) The purpose of the third warning letter was also ambiguous.

The Court held that despite there being 3 warning letters, the Company did not give adequate opportunity to the Claimant to improve his work performance (as these warning letters were issued across the same month).  It was unclear whether the Company had explained the warning letters to the Claimant. The Industrial Court also held that the Company provided no compelling evidence on the Claimant’s alleged poor work performance and quality of work. The dismissal was found to be unfair.

Zuraaida binti Che Zahari v The Pacific Insurance Berhad [2018] ILJU 74

The Claimant was initially a receptionist and was redesignated as a clerk. After her transfer as a clerk, she had problems fitting into her new role. Despite being given guidance and counselling sessions by her manager, the Company viewed that her performance was still lacking by her 8th month in the unique position, as she continued to make the same elementary mistakes.

The Claimant’s poor performance resulted in the Company incurring extra expenses to fix the mistakes, creating extra work for her manager. Although some counselling sessions were given to the Claimant, no warning letter was issued to the Claimant, and the Company dismissed her. The Claimant was of the view that the counselling sessions were insufficient. She also contended that the Company did not issue any warning letter stating that stern action would be taken against her if she did not improve

Despite the lack of a warning letter, the Industrial Court held that the Company had rightfully dismissed the Claimant with just cause and excuse, as she had been given ample guidance and sufficient opportunity to improve.

In dismissing an employee for poor performance, the crucial elements to be established are (1) That the employee was informed of their performance shortcomings; (2) That the employee was given sufficient opportunity to improve (3) That despite the opportunity given, the employee still failed to improve.

In the review of the above-reported cases, none of these elements requires a warning letter to be issued, much less three warning letters. However, warning letters (if drafted correctly) are helpful evidence to demonstrate the first two elements.

In dismissal for misconduct, the necessity of a warning letter before dismissal depends on factors such as the severity of the misconduct. For example, an employee who commits gross misconduct such as fraud or sexual harassment need not have received prior warning letters for misconduct before they are dismissed. A single act of gross misconduct may be enough to warrant immediate dismissal.

Employers should remember the following when dealing with warning letters:

• Does the warning letter contain sufficient details to ensure employees understand their mistakes?

• If a warning letter sets unrealistic expectations or deadlines by which an employee is expected to improve, this may be viewed as bad faith by the employer.

• The warning letter should spell out the consequences to the employee if they repeat the offence or fail to improve their performance.  If dismissal is a possible outcome, this should be in the warning letter, so the employee knows the severity.

One may say that more warning letters are better than fewer warning letters for justifying a dismissal. Maybe the myth of “3 warning letters” originated from a “three strike rule”, or that three warning letter seems like a reasonable number of chances to provide an employee. As dismissal can be a thorny issue, employers should not be focused on the number of warnings but instead, look at the substance. Multiple warning letters that are ambiguous or without basis can be viewed as bad faith (or even grounds for constructive dismissal). The lack of written evidence of warnings given is also not favorable.