(a) The department may establish rules under which records of unsatisfactory service may lead to reduction in class and compensation, and providing for the manner in which persons falling below the standards of efficiency fixed by its rules may be removed from their positions by the department, substantially as in the case of removals for cause. The department shall report such unsatisfactory records to the appointing power. (b) If the provisions of this section are in conflict with the provisions of a memorandum of understanding reached pursuant to Section 3517.5, the memorandum of understanding shall be controlling without further legislative action, except that if such provisions of a memorandum of understanding require the expenditure of funds, the provisions shall not become effective unless approved by the Legislature in the annual Budget Act.
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