10 Common Questions on Unfair Dismissal in Malaysia

10 Common Questions on Unfair Dismissal in Malaysia

Unfair dismissal is defined as Termination of a contract of employment for unfair or inadmissible reasons. When challenged in a court, the employer must establish that the dismissal was based on a substantial reason such as gross misconduct, lack of qualification, incapability to perform assigned duties, or redundancy. In such cases, the courts usually take the employee’s statutory rights into consideration.

There are many instances where employers approached us for advice when things have gone terribly wrong in their firing or termination process of an employee and that they want advice on how to defend an unfair dismissal claim case in the industrial court.

Anyways, here are some common questions on unfair dismissal in Malaysia.

• My offer letter has this clause which reads “that either party may terminate the contract by providing 1 month’s notice in writing or by making payment in lieu of notice.” Does this gives my employer the rights to terminate my employment for any reason as long as he gives me 1 month’s notice or payment in lieu?

• Answer: Even with the notice clause stated, your employer still need to show “just cause and excuse” before terminating your employment. It simply means they must have proof and have showed good grounds for the termination and can’t just rely on the notice clause to terminate the employment whenever her or she feels like it. Termination in this instance by the employer purely on the notice clause could land the employer in facing a claim for unfair dismissal.   Please note that the requirement to show “just cause and excuse” only applies to the employer – an employee can terminate their employment/resign from employment for any reason by following the notice clause.

• Is it true that the law makes it unreasonably difficult to dismiss an employee, except for the most obvious cases of misconduct or poor performance, and is therefore ‘pro-employee’.

• Answer: The Industrial Court is neither “pro-employee” or “pro-employer” and will decide cases based on its substantial merits. The Industrial Court’s mechanics are known as court of equity and good conscience. This simply means that it is not strictly bound by technicalities or legal form. The Industrial Court has a wide range of discretion and flexibility in determining cases. The key indicator to know is that the Industrial Court is motivated by SOCIAL JUSTICE, and this means justice to both the employee and the employer.

• What sort of compensations will I get if I win my case at the Industrial Court?

• Answer: Interesting question and many employees who read this will like what they read here. The Industrial Court will usually award backwages (capped at 24 months of the last drawn salary for confirmed employees, and 12 months for probationers) and reinstatement. In the event reinstatement is not feasible (which is usually the case since the employer-employee relationship may have broken down by the time the matter goes to trial), the Industrial Court may also award compensation in lieu of reinstatement. There is no fixed formula for how much will be awarded as compensation in lieu of reinstatement, but the usual practice is one month’s salary for every year of service. This sum is still subject to reduction at the discretion of the Court depending on the circumstances such as the employee’s conduct and whether they are already gainfully employed.

• I am a foreigner working and employed by a Malaysian company. Do I have any option for unfair dismissal under the (Malaysia’s) Industrial Relations Act 1965?

• Answer: The answer is yes. The right to file a representation under the Industrial Relations Act is applicable to all employees in Malaysia regardless Malaysian citizens or not.

• If my monthly earning is more than RM2,000. Can I still file a complaint at the Industrial Relations Department for unfair dismissal?

• Answer: Any employee, regardless of monthly wages, can file a complaint to the Industrial Relations Department for unfair dismissal pursuant to Section 20 of the Industrial Relations Act.

• After I filed for an unfair dismissal claim against my employer, can my employer counter-sue me back in the Industrial Court?

• Answer: Good question. The answer is heck, a big NO. The Industrial Court has no authority to be amused by such counterclaims from the employers. However, your employer may commence a legal action against you in the civil court. How? We’ll talk about this in our next article.

• Do I have to pay some form of a fee to file an official complaint of unfair dismissal?

• Answer: There are no filing fees. Only when the matter is referred to the Industrial Court and if you wish to appoint a lawyer to represent you then only you will have to incur the legal fees.

• I filed a complaint at the Industrial Relations Department. During the conciliation meeting, the employer made me a settlement offer but I think it is too low. Am I obliged to accept his offer?

• Answer: You are not obliged to accept any settlement offer proposed by the employer. The Industrial Relations Department also has no power to compel you to accept such offers. You can make your own decision as to whether to accept any settlement offer or not.  Please note that what happens during the conciliation meetings are private and confidential and cannot be adduced as evidence in later proceedings.

• The Industrial Relations Department refused to refer my case to the Industrial Court. Do I have any other options?

• Answer: You may apply to the High Court for judicial review of the Industrial Relations Department’s refusal to refer your case. This must be done within 3 months from the date you were notified of their refusal. You will need to appoint a lawyer to handle the judicial review application for you.

• I won my case in the Industrial Court, but the employer refused to honour the Award and hasn’t paid me the award sum. What can I do?

• Answer: You may apply to have the Award recorded as a judgement of the High Court or Sessions Court and it can be enforced like a normal judgement from the Court.