Unfair Dismissal of Employee or Termination of Employment in Malaysia
The concept of “unfair dismissal” or “unlawful termination” is not new in Malaysia. Over the years, there has been a heightened awareness about employee rights in Malaysia. Nevertheless, there are many misconceptions that have not been corrected. Here are a few things about unfair dismissal law in Malaysia.
Q: According to an employment contract, either party has the right to terminate the contract with one-month notice in writing or by making payment in lieu of notice. Does the employer need to show the reason of dismissal or he could terminate the contract as long as one-month notice or payment in lieu is given?
A: Other than the notice clause in the employment contract, the employer still need to show reasonable “cause and excuse” of dismissal before the termination. With this in mind, an employer need to give tangible good reasons for any dismissal but not simply depends on the notice clause as in the employment contract. Otherwise, the employer might face the claim for unfair dismissal if they failed to do so. Having said that, an employee can terminate their employment contract (or resign) for any reason by following the notice clause.
Q: Industrial Court in Malaysia: pro-employee or pro-employer?
A: Pro-employee or pro-employer are both the misinterpreted statements because the Industrial Court in Malaysia is a court of equity and good conscience. As such, the court is not strictly bound by technicalities or legal form, and that means they possess the freedom and flexibility in determining cases. In short, the Industrial Court is motivated by social justice, to both employee and employer.
Q: What is the remedy (or damage) awarded if I win my case at the Industrial Court?
A: Backwages (capped at 24 months of the last drawn salary for confirmed employees, and 12 months for probationers) and reinstatement will be awarded by the Industrial Court. The Industrial Court may award compensation in lieu of reinstatement if the event reinstatement is not feasible. Compensation in lieu of reinstatement is usually awarded at the rate of 1 month for every year of service, but this is not a fixed formula and is still subject to the discretion of the Court.
Q: Is the Industrial Relations Act applicable to all resident and non-resident employees in Malaysia?
A: Yes. Every employee has the right to file a representation under the Industrial Relations Act no matter you are a Malaysian or an expat.
Q: Am I eligible to file a complaint at the Industrial Relations Department for unfair dismissal if my monthly income is more than RM2,000?
A: As a matter of fact, everyone can file a complaint for unfair dismissal pursuant to Section 20 of the Industrial Relations Act regardless of his or her monthly income.
Q: Will my employer counter-sue me in the Industrial Court if I file a claim of unfair dismissal against my employer?
A: The employer has the right to file a lawsuit if they have a valid legal claim against the employees. However, the industrial court has no jurisdiction to any counterclaims by the employers.
Q: Is there any charges I need to pay if I were to file a complaint of unfair dismissal?
A: There are no filing fees needed in such a case. Yet, you have to bear the fees if you appoint a lawyer to represent you if the matter is referred to the Industrial Court.
Q: If I win the case, can I recover my legal fees from the employer? Otherwise, do I have to pay the employer’s legal fees?
A: Each party has to pay their own legal fees, no matter they won or lose the case.
Q: The employer made me a settlement offer during the conciliation meeting after I file a lawsuit at the Industrial Relations Department. Am I obliged to accept his offer?
A: The Industrial Relations Department has no right to compel you to accept such offers from the employer and you are not obliged to accept any settlement offer proposed by the employer. Yet, you can decide whether to accept any settlement offer or not. Please bear in mind that the conciliation meeting at the IRD is not a court hearing, thus what happens during the conciliation meetings cannot be adduced as evidence in later proceedings.
Q: What are the alternatives I have if the Industrial Relations Department refused to refer my case to the Industrial Court?
A: Those who are not happy with the decision of the IRD can apply for judicial review of the decision at the High Court within 3 months from the date they were notified of the refusal. A lawyer is needed as a representative to handle the judicial review application for applicant.
Q: I won my case, a settlement agreement is reached, but I haven’t received any court-ordered Award because the employer refused to honor the Award. What should I do?
A: You could apply to have the Award to be recorded as a judgment of the High Court or Sessions Court and it can be enforced like a normal judgment from the Court.
Q: Are Industrial Court cases public information?
A: Industrial Court Awards are public record. Industrial Court Awards can be accessed by the public at the Industrial Court website. As such, both employers and employees should be mindful that issues relating to the termination and all evidence adduced thereto may be easily accessible by third parties. An out of court settlement can be confidential and if so requested, the terms of the settlement will not be recorded in a Court award.
If you are threatened with the claims of unfair dismissal from employees, and you don’t know what to do, you can get help from a third party to solve the issue by mediation, conciliation and arbitration. You can always engage with 3E Accounting where we can give you the right advice and we have affiliate who specialize in helping employer to resolve such cases. Call us at +603 26037328 or Email us at firstname.lastname@example.org to discuss more on how we can help you.