HRM 582 (Employment Law)

Chapter 11,12,&13:
The law and practice relating to
termination of employment

Prepared by:
Suhaila Mohamed
Faculty of Business and Management
Sept - Jan 2018
Chapter outline
• Termination simpliciter

• Employees’ right to challenge a dismissal

• Termination on the grounds of misconduct and the domestic

inquiry

• Termination on the grounds of retrenchment

• Termination on the grounds of poor performance

• Role and awards of the Industrial Court

Central questions of this chapter

Who has What rights What are

rights to an employer’s
terminate employee obligations
employment has after prior to
contract? being termination?
terminated?
 What is termination simpliciter?

 Termination simpliciter refers to the absolute right of an

employer to terminate the employee by virtue of the
termination clause contained in most employment
contracts.

 In reality, does employer has the obsolete right to

terminate an employee?
 Employees’ Right to Challenge a Termination

▪Section 69(3) of
the Employment Act, 1955

▪Section 20 of
the Industrial Relations Act, 1967

▪Common Law
Channels for employees to claim their rights to
challenge termination

▪Labor Department

▪Industrial Relations Department

▪High Court
Questions
 Can an employee utilizes all rights they have to
claim unfair dismissal?

 Which channel should an employee choose to

claim unfair dismissal?

 Is there any difference between dismissal,

retrenchment, and termination?

 Can a public sector employee challenge

dismissal under the Industrial Court?
Procedure to Claim Unfair Dismissal via Labour Department

EMPLOYEE

Labour
Department

Labour
DGL Court
Remedies via Labour Department
▪Termination benefit under Employment (Termination and
Lay-Off Benefits) Regulations 1980 of Employment Act,
1955
For 1 < 2 years of service, 10 days’ wages for every year of
service
For 2 < 5 years of service, 15 days’ wages for every year of
service
For 5 years of service and more, 20 days’ wages for every
year of service

▪Wages in lieu of notice

▪Wages in lieu of Annual leave not taken (is any)

Procedure to claim unfair dismissal via High Court

EMPLOYEE

Lawyer

High Court
Remedies via High Court

▪Private sector employee

Wages in lieu of notice (common law)

▪Public sector employee

Reinstatement and backwages (common law)
 Procedure to claim unfair dismissal via Industrial Relations (IR)
Department

EMPLOYEE

IR
DEPARTMNET
Industrial
Court
CASE CONCILIATION
ENDS

The Minister CASE

DGIR of HR ENDS
Remedies via
Industrial Relations Department

Reinstatement AND backwages

OR IN LIEU OF
REINSTATEMENT

Compensation
(Backwages AND one month wages for
every year of service)
How much backwages?

▪ Amendment on Industrial Relations Act as at 28.12.2007

▪ Second Schedule (FACTORS FOR CONSIDERATION

IN MAKING AN AWARD)
Second Schedule of Industrial Relations Act

1. Backwages shall not exceed twenty-four

months’ backwages from the date of
dismissal;

2. In the case of a probationer, any

backwages given shall not exceed twelve
months’ backwages from the date of
dismissal;
3. Where there is post-dismissal earnings, a
percentage of such earnings, to be decided by
the Court, shall be deducted from the
backwages given;

4. Any relief given shall not include any

compensation for loss of future earnings; and

5. Any relief given shall take into account

contributory misconduct of the workman.
Exercise

Ali used to work as a Bus Driver at ZZ Bus

Express Sdn Bhd. During his employment he
earned RM3000 per month including
overtime. Last month he was dismissed by
his employer due to his negligence.

Calculate the possible remedies Ali may get if

he challenge the dismissal under various
Malaysian Employment Laws. Then, advise
Ali, on his options to challenge the dismissal.
SOMETHING TO PONDER

What makes an employer has NO absolute

rights to terminate employee?

Under Employment Laws, who has the

burden of proof?

What is acceptable proof by the Industrial

Court?
 How does the Industrial Court
scrutinize termination decision?

Burden of Proof is on the employer

1.Appropriate reason

2.Acceptable procedure
 Grounds of Termination

1. Misconduct

2. Redundancy

3. Incompetence

4. Ending of a fixed term contract

5. Ending of a probationary employee

6. Medical boarding out

7. Frustration of contract

8. Constructive dismissal
 What is Misconduct ?

▪[Section14 of EA] behavior inconsistent with the

express or implied terms of employment contract.

▪It covers an infinite range of activities, not

necessarily confined to the place of work, which
conflict with the legitimate interests of the
employer.

▪What is an acceptable proof for misconduct?

Acceptable procedure

▪ Statutory law
(Section 14 of Employment Act)

▪ Case law

1. Domestic inquiry

2. Principle of natural justice

Principle of natural justice

1. The rule of fairness

audi alteram partem
[Latin, hear the other side] 
1. The employee has the right to know of what he is accused
2. The employee should not be condemned unheard
3. The employee must be given time to reply to accusations

2. The rule against bias

nemo judex in causa sua
[Latin, no-one should be a judge in his own cause]
Procedure Prior to Termination due
to misconduct

Misconduct Report

No proof Investigation With proof

Show cause letter

No reply Denial Admit

Domestic Inquiry

Impose Penalty
Issues during Investigation

1. Why

2. When

3. Who

4. What (witness, document, and object)

5. How
Employer’s rights during
investigation

1. Within company’s property.

2. Within employee’s property at work and

self.

3. Within employee’s property outside

workplace.
Employer’s right to suspend
an employee under investigation

[Section 14(2) of EA]

 Employer may suspend employee

 Maximum 2 weeks with ½ pay

Question:
1. Can an employer suspend more than 2 weeks?

2. What if employee found not guilty?

Domestic Inquiry (DI)

Definition:
Internal trial to decide whether the employee
guilty or not guilty of misconduct.

Purpose:
To uphold the principle of natural justice.
Preparation prior to DI

1. Draft Charges (formal charge of allegation).

2. Give notice of DI

3. Appoint panel of inquiry (how many and who?)

4. Appoint secretary

5. Appoint prosecutor
On the day of DI

1. What must employer do if the accused

employee did not turn-up?

2. Does an employee has the rights to be

represented?
After DI
▪ Panel of DI will write findings to decide
employee guilty or not guilty and
recommend for penalties, if found guilty.

▪ If found guilty, employer will decide on

penalties (Section 14 of EA)
1. Warning
2. Suspension
3. Demotion
4. Dismissal
Sexual Harassment is a misconduct

In 1999, the Ministry of Human Resources

launched “Code of Practice on the Prevention
and Eradication of Sexual Harassment in the
Workplace”.

The purpose of the Code of Practice is to provide

practical guidance to employers, employees, trade unions
and others relevant parties on the protection of the dignity
of employees.

The aim is to ensure that sexual harassment does not

occur and, if it does occur, to ensure that adequate
procedures are available to deal with the problem and
prevent its recurrence.
OUTLINES OF IN-HOUSE MECHANISM TO
COMBAT SEXUAL HARASSMENT

Employers are encouraged to establish an in-house mechanism

to prevent, handle and eradicate sexual harassment in the
workplace. The mechanism should include at least the following
elements:

(i) a policy statement prohibiting sexual harassment in the organization;

(ii) a clear definition of sexual harassment;

(iii) a complaint / grievance procedure;

(iv) disciplinary rules and penalties against the harasser and against those
who make false accusation;

(v) protective and remedial measures for the victim; and

(vi) promotional and educational programmes.

Sexual Harassment under EA 1955

▪S. 81B (1)

Employer shall inquire into the complaint of sexual
harassment

▪S. 81B (2)

If employer refuses to inquire into the complaint of
sexual harassment, he must write a letter to inform the
complainant of the reasons for the refusal, not later
than 30 days after receiving such complaint.

▪
Redundancy
Definition: excess or surplus of workers.

What causes redundancy?

1. Changes in technology
2. Mergers and acquisition
3. Financial problem
4. Re-organizing / re-engineering

Question:
Does redundancy leads to retrenchment?
Alternative to retrenchment

1. Attrition

2. Retrain and redeploy

3. Volunteer separation scheme (VSS)

4. Reduce costs

5. Reduce wages and working hours

Retrenchment Procedure
1. Try to avoid if possible

2. Choose who to retrench (The Industrial Court follow the

principle of LIFO and FOF (S. 60N EA 1955)

3. Inform the workers and give notice to retrench

4. Inform Labor Department one month before any

retrenchment

5. Pay termination benefit (if employee are entitled by

law)

6. Good practice: outplacement service

Poor Performance

What is poor performance?

Procedure to terminate employment on

the ground of poor performance:

1. Give warning (s)

2. Time to improve

3. Provide assistance

4. Terminate with notice

The End