CHAPTER

7 9– 1

DISCIPLINARY SYSTEMS AND

TERMINATION OF SERVICE

Azira Rahim (Faculty Business & Management)

 PREVIEW
2

Effective
Effective systems fortaking
systems for takingdisciplinary
disciplinary action.
action.
-The
Penalties in a Disciplinary
problems System of workers.
relating to transfer
Dealing
The withtoemployees
criteria problems
be used in promoting workers.
-The problems relating to transfer of workers
Methods for handling employee grievances.
 The criteria to be used in promoting workers.
Dealing with absenteeism.
 Methods for handling employee grievances.
Types of with
Dealing termination
absenteeism.
 Types of termination

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Azira Rahim (Faculty Business & Management)
 DISCIPLINARY SYSTEMS
3

 A disciplinary system must be fair and just.

 In a fair disciplinary system, employees know the
rules and know what they can do and what they
cannot do.
 When employees behave in an unacceptable
manner, they are punished.
 The purpose of punishment is to change the
employee’s behaviour and to send a warning to
other employees that unacceptable behaviour will
not be tolerated.

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Azira Rahim (Faculty Business & Management)
 PENALTIES
4

When employees commit misconduct,

they may be penalized. Penalties that
may be imposed include:
 Oral warning
 Written warning(s)
 Suspension without pay
 Demotion or downgrading
 Dismissal

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Azira Rahim (Faculty Business & Management)
 Dealing with employees problems
5

Transfer
Transfer is a lateral move of an employee
from one job to another, or from one
department to another, or from one site to
another.

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Azira Rahim (Faculty Business & Management)
 TRANSFERS (cont.)
6

Employers transfer employees:

 To fill vacancies for experienced workers
 To solve people problems
 To provide training to employees

Employees may request transfers:

 For personal, non-work related reasons
 To have an opportunity to learn
 To overcome boredom

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Azira Rahim (Faculty Business & Management)
 TRANSFERS (cont.)
7

Transfer is a managerial prerogative.

Employers have the right to transfer an
employee, but the right is subject to:
 Any express clause in the contract of employment.
 The reason for the transfer must be a legitimate
business reason.
 The reason for the transfer must not be for the purpose
of harassing or victimizing the employee.
 The transfer must not be to the detriment of the
employee’s terms and conditions of employment.

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Azira Rahim (Faculty Business & Management)
 PROMOTION OF EMPLOYEES
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Promotion is reassignment of an
employee to a job at a higher level in the
organization.

Promotion opportunities motivate

employees, providing the promotion
system is perceived as being
fair and transparent.
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Azira Rahim (Faculty Business & Management)
 PROMOTION OF EMPLOYEES (cont.)
9

Criteria for Promotion

 Seniority
 Merit

An effective performance appraisal system is

required to identify which employees are suitable
for promotion.

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Azira Rahim (Faculty Business & Management)
 GRIEVANCE HANDLING
10

EFFECTS OF UNRESOLVED GRIEVANCES

 Resignation of employees
 Depression amongst employees
 Poor quality and quantity of work
 High accident rate
 High rate of illness
 Complaints from customers
 Complaints to the Department of Labour and other bodies
 Aggressive unionism
 Reduced output
 Lowered productivity
 Lowered profitability

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Azira Rahim (Faculty Business & Management)
 GRIEVANCE PROCEDURES
11

 A grievance procedure is a formal process for

hearing and resolving employees’ complaints.
 A grievance procedure will establish deadlines for
each stage at which a grievance is heard.
 Grievances should be settled at the lowest level
possible.

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Azira Rahim (Faculty Business & Management)
 STEPS OF GRIEVANCE HANDLING PROCEDURE
9–
12

Workers raises grievance with immediate supervisor (within 5

working days of the problem arising)

If supervisor does not settle the grievance to the satisfaction of the

worker within 5 days, refer to Head of Department

If Head of Department does not resolve the grievance within 5 days,

the matter may refer to CEO

If the CEO fails to settle the matter within 5 days, it may be referred
to the Department of Industrial Relation for conciliation. (This last
step will only occur in a unionized environment)

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Azira Rahim (Faculty Business & Management)
 GRIEVANCE PROCEDURES (cont.)
13

Managers must be trained how to handle

grievances.
Grievance handling requires:
 Listening skills
 Understanding of rights of employees and
employers
 Counselling skills
 Problem-solving skills

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Azira Rahim (Faculty Business & Management)
 ABSENTEEISM
14

Workers who are regularly absent from work

without permission granted in advance cause
problems.
Employers must have systems in place to
reduce unauthorized absences.
 Keep records
 Have clear procedures
 Take disciplinary action, when necessary

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Azira Rahim (Faculty Business & Management)
 ABSENTEEISM (cont.)
15

Employers may encourage

full attendance by offering incentives

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Azira Rahim (Faculty Business & Management)
 PENALTIES FOR ABSENCE
16

Employees may be punished for absence.

Employees within the scope of the
Employment Act or Sabah/Sarawak Labour
Ordinances:
 Absence without leave for more than 2 consecutive
days is a breach of contract for which the employee
may be dismissed.
 Prior to any dismissal, proper procedures must be
followed.
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Azira Rahim (Faculty Business & Management)
 THE INDUSTRIAL RELATIONS ACT AND
TERMINATION OF EMPLOYMENT
17

All employees in the private sector have the

right to challenge the termination of their
contract of employment by taking the
following steps:
1. File request for reinstatement at the nearest
Department of Industrial Relations (IR).
2. Attend a conciliation meeting with the ex-
employer, called by the Department of IR.

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Azira Rahim (Faculty Business & Management)
 THE INDUSTRIAL RELATIONS ACT AND
TERMINATION OF EMPLOYMENT
18

3. As a result of conciliation:
 The employer may agree to reinstate the employee,
or
 The employee may agree to withdraw their claim, or
 The employer and employee may agree on a
compensation package to settle the claim, or
 The employer and employee may not reach any
agreement.

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Azira Rahim (Faculty Business & Management)
 THE INDUSTRIAL RELATIONS ACT AND
TERMINATION OF EMPLOYMENT (cont.)
19

4. Where no agreement is reached, the Director-

General of Industrial Relations will inform the
Minister of Human Resources who will decide
whether or not to refer the dispute to the
Industrial Court.
5. If the dispute is referred to the Industrial Court,
an arbitration hearing will be held.

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Azira Rahim (Faculty Business & Management)
 THE INDUSTRIAL RELATIONS ACT AND
TERMINATION OF EMPLOYMENT (cont.)
20

6. The Industrial Court will decide whether the

employee was dismissed with or without just
cause or excuse.
If the dismissal was without just cause or excuse,
the Court will either:

 Order the employer to reinstate the

employee OR
 Order the employer to pay compensation to
the employee for loss of his employment.
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Azira Rahim (Faculty Business & Management)
 COMPENSATION FORMULA FOR DISMISSAL
WITHOUT JUST CAUSE OR EXCUSE
21

The Industrial Court has the power to

decide on how much compensation should
be paid to the employee by the employer.
Typically, the formula followed is:
 Back wages from the date of dismissal up to the
date of the Court decision, and
 One month’s wages for every year of the
employee’s service.

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Azira Rahim (Faculty Business & Management)
 TYPES OF TERMINATION
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 1. EXPIRY OF FIXED-TERM CONTRACTS

 2. RESIGNATION
 3. RETIREMENT
 4. REDUNDANCY AND RETRENCHMENT

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Azira Rahim (Faculty Business & Management)
 1. EXPIRY OF FIXED-TERM CONTRACTS
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Fixed-term contracts expire at the end of the agreed time

period.
Fixed-term contracts are acceptable to the Industrial Court
if they are for genuine business reasons.
An employee on fixed-term contract may file a claim under
the Industrial Relations Act if his contract is not renewed.
The Industrial Court will not interfere with an
employer’s decision not to renew a fixed-term contract if
the employer has an acceptable reason for the decision.

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Azira Rahim (Faculty Business & Management)
 2. RESIGNATION
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Employees have the right to voluntarily terminate his

service for no reason. Some of the reason can be:
Emigrating
Starting own business
Join another organization
Returning to studies
Staying home to look after dependents
Prior to resigning, an employee must give notice to the
employer as required by his contract of employment.
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Azira Rahim (Faculty Business & Management)
 3. RETIREMENT
25

 The minimum retirement age act 2012 prohibits an

employer from establishing a retirement age less
than 60 years.
 If the employer wish to retain the employee, he may
offer him further employment.
 Employers can assist employees to survive the
retirement period by providing EPF.

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Azira Rahim (Faculty Business & Management)
 4. REDUNDANCY AND RETRENCHMENT
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Redundancy occurs when an employer

has excess employees.
Redundancy may be caused by:
 Mergers and acquisitions
 Restructuring
 Financial problems
 Changes in technology

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Azira Rahim (Faculty Business & Management)
 REDUNDANCY AND RETRENCHMENT (cont.)
27

Redundant employees may be retrenched.

Because of the negative consequences to employees
and society of retrenchment, employers are
expected to avoid retrenching employees if
possible.

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Azira Rahim (Faculty Business & Management)
 REDUNDANCY AND RETRENCHMENT (cont.)
28

To avoid retrenchment, employers could:

 Freeze external recruitment and redeploy employees
into any vacancies which arise.
 Conduct a voluntary separation scheme (VSS).

 Reduce costs.

 Reduce wages if employees agree.

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Azira Rahim (Faculty Business & Management)
 REDUNDANCY AND RETRENCHMENT (cont.)
29

Procedures for Retrenchment

 Consult the trade union and inform the workforce

 Choose who to retrench

 Provide outplacement services

 Inform the Labour Department

 Pay termination or retrenchment benefits

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Azira Rahim (Faculty Business & Management)
 DISMISSAL FOR MISCONDUCT
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Misconduct is any behaviour which is in conflict with

the employer’s interests.
Employers have the right to punish an employee for
misconduct.
Major misconduct may be punished by dismissal.

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Azira Rahim (Faculty Business & Management)
DISMISSAL FOR MISCONDUCT (cont.)
31

Before dismissing an employee on grounds

of misconduct, an employer must:
 Carefully record any complaint of alleged
wrongdoing.
 Investigate the complaint thoroughly.
 Charge the employee.
 Hold a domestic inquiry.

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Azira Rahim (Faculty Business & Management)
 DISMISSAL FOR POOR PERFORMANCE
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Before dismissing an employee on grounds

of poor performance, an employer must:
 Warn the employee.
 Assist him to improve his performance.
 Give him adequate time to improve.

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Azira Rahim (Faculty Business & Management)
 FRUSTRATION OF CONTRACT
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Frustration of contract occurs when an

employee is unable to perform the work for
which he was employed because of reasons
beyond his control.
For example:
 Detention by the authorities for a lengthy period of
time
 Serious illness or medical incapacity
 Withdrawal of license required for the job

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Azira Rahim (Faculty Business & Management)
 CONSTRUCTIVE DISMISSAL
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Tests for constructive dismissal:

 The employer must have breached the employee’s
contract of employment.
 The breach of contract must be a breach of a
major or key element in the contract.
 The employee must leave his employment in a
timely manner.
 The employee must leave his employment as a
result of the breach, and not for any other reason.
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Azira Rahim (Faculty Business & Management)
 REFERENCE
2–
35

Maimunah Aminuddin (2008).Human Resource Management:

Principles and Practices. 3rd edition. Oxford University : Press
Malaysia.
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Azira Rahim (Faculty Business & Management)