There is a common misconception in Malaysia that a company has the absolute right to dismiss an employee simply by observing the notice period specified in their employment contract.
After all, Section 12(1) of the Employment Act 1955 attached below clearly states that both employers and employees can end a contract by giving notice, even prescribing the exact duration if none is stated in the agreement.
However, things are not quite as straightforward as they seem. On the contrary, Malaysian courts have consistently ruled that a company cannot end an employee’s contract by simply giving standard notice (known legally as ‘termination simpliciter’) without a valid reason, fault, or disciplinary cause.
In fact, any employee dismissed without “just cause or excuse” can take the matter to the Industrial Court to get their job back or seek compensation.
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So, what does this process entail? We reached out to a legal professional to find out.
What Malaysian laws say about unfair dismissal
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Speaking to WORLD OF BUZZ, Muhammad Qurtubi, an associate at Kuala Lumpur-based law firm ADIL Legal, shared that unfair dismissal in Malaysia is governed by the Industrial Relations Act 1967 (IRA).
Specifically, Section 20 of the Act states that a former employee who considers their dismissal was made without just cause or excuse may seek remedies by making a written representation to the Director-General of Industrial Relations (DGIR).
There are exceptions, though. Qurtubi pointed out that public servants, individuals employed in government services, or those under statutory authorities are excluded from unfair dismissal representation, as outlined in Section 52 of the IRA.
How to challenge an unfair dismissal: A 4-step guide
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Here are the steps an employee must take to challenge an unfair dismissal in Malaysia:
Step 1: Filing a representation
The unfair dismissal representation must be filed with the Department of Industrial Relations Malaysia (DIRM) within 60 days of the dismissal or during the period of notice of the dismissal. Any representations made outside of these periods will not be entertained.
On its official website, the DIRM states that representations can be submitted online through its IRIS system here.
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Qurtubi noted that when an employee files a representation, they must primarily seek reinstatement as a remedy. Any claims for compensation alone will not be accepted at this initial stage and may cause the Industrial Court to reject the case.
Step 2: Conciliation
The DGIR will then arrange and facilitate a conciliation meeting between the employer and the employee using Alternative Dispute Resolution (ADR) methods.
A date will be set for both parties to attend a face-to-face conciliation meeting. Under certain circumstances, the meeting can be conducted online.
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If the parties reach a settlement, the DIRM will prepare a Memorandum of Agreement (MOA) for both parties to endorse. Upon full compliance with the MOA terms, the case is deemed settled and closed.
However, if the worker fails to attend three scheduled conciliation meetings, the representation may be treated as withdrawn.
Qurtubi added that legal representation is not permitted during conciliation. Both parties must appear personally or through authorised non-legal representatives.
Step 3: Referral to Industrial Court
Should conciliation fail or if there is no likelihood of the representation being settled, the DGIR shall refer the matter to the Industrial Court for an award.
Upon referral, the Industrial Court will issue a Notice of Mention of Case outlining key details, including hearing dates, filing instructions, and other pre-hearing directives.
Unlike conciliation, legal representation is permitted before the Industrial Court. At the hearing, the employer bears the burden of proving that the dismissal was for “just cause or excuse” and that due process was observed.
Step 4: Award by Industrial Court
An Industrial Court award binds both disputing parties. If the employee succeeds in their claim, the Industrial Court may award:
- Reinstatement or compensation in lieu of reinstatement, which is usually calculated at one month’s salary per completed year of service; and/or
- Backwages (typically capped at 24 months for permanent employees) calculated from the date of dismissal to the date of the award.
Any party dissatisfied with the Industrial Court’s decision may appeal to the High Court within 14 days of receiving the award.
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So, what do you guys think of the process of challenging an unfair dismissal in Malaysia? Share your thoughts with us in the comments.
