Unfair Dismissal: What Malaysian Employees Should Know

Losing your job can be one of the most stressful experiences in a person's working life. But not every dismissal is lawful. Malaysian employment law provides robust protections for workers who have been terminated without just cause and excuse. Understanding these rights — and the steps to enforce them — can make the difference between accepting an unfair outcome and obtaining proper redress.

The Legal Framework

The primary protection against unfair dismissal in Malaysia comes from the Industrial Relations Act 1967 (Act 177). Section 20 of the Act provides that a workman who is dismissed without just cause or excuse may make a representation in writing to the Director General of Industrial Relations (DGIR) to be reinstated to his former position. This protection applies to employees who fall within the definition of "workman" under the Act — which covers most employees earning below a certain threshold and those in non-managerial or non-confidential positions.

It is important to note that the Industrial Relations Act operates separately from the Employment Act 1955. The Employment Act sets minimum terms and conditions of employment, while the Industrial Relations Act governs the relationship between employers and employees, including dismissal disputes.

What Constitutes Unfair Dismissal

A dismissal is considered unfair when the employer cannot demonstrate just cause and excuse for the termination. Malaysian courts have established that the burden of proof lies on the employer to show that the dismissal was justified. Common examples of unfair dismissal include terminating an employee without proper domestic inquiry, dismissing someone for reasons that do not warrant such severe action, constructive dismissal where the employer fundamentally breaches the employment contract, and retrenchment carried out without following proper procedures.

Even where an employee has committed misconduct, the employer must follow a fair disciplinary process. This includes giving the employee adequate notice of the charges, a reasonable opportunity to respond, and a proper domestic inquiry before the decision to dismiss is made. Failure to observe these procedural requirements can render an otherwise justified dismissal unfair.

Step 1: Representation to the DGIR

If you believe you have been unfairly dismissed, the first step is to file a written representation to the Director General of Industrial Relations under Section 20 of the Industrial Relations Act 1967. This must be done within 60 days of the dismissal. The representation should set out the facts of the case, the circumstances of the dismissal, and the relief sought — typically reinstatement to your former position with back wages.

The DGIR will then attempt to conciliate between the employer and the employee. Many cases are resolved at this stage through negotiated settlements, which may include compensation in lieu of reinstatement. If conciliation fails, the DGIR will notify the Minister of Human Resources, who may refer the case to the Industrial Court.

Step 2: The Industrial Court

Once a case is referred to the Industrial Court, it proceeds as a formal hearing. Both parties present evidence, call witnesses, and make legal submissions. The court examines whether the employer had just cause and excuse for the dismissal. The standard of proof is on a balance of probabilities, and the court takes a broad and liberal approach to industrial justice.

The Industrial Court process is designed to be less formal than civil court proceedings, but having legal representation is strongly advisable. An experienced employment lawyer can present your case effectively, cross-examine the employer's witnesses, and argue the applicable legal principles.

Remedies and Compensation

If the Industrial Court finds that the dismissal was without just cause or excuse, it may order one of two remedies. The first is reinstatement — ordering the employer to reinstate the employee to their former position or a comparable role, with full back wages from the date of dismissal to the date of the award. The second is compensation in lieu of reinstatement — typically calculated at one month's wages for every year of service, though the court has discretion to award more or less depending on the circumstances.

Back wages are a significant component of Industrial Court awards. In successful claims, the court may award back wages for the entire period between dismissal and the final decision, which can amount to several years' salary in protracted cases.

Time Limits and Practical Tips

The 60-day deadline for filing a representation under Section 20 is strictly enforced. Missing this deadline can extinguish your right to challenge the dismissal through the industrial relations system. If you have been dismissed, seek legal advice promptly. Gather all relevant documents — your employment contract, termination letter, payslips, correspondence with your employer, and any evidence of the circumstances leading to the dismissal.

At Messrs S.K. Song, we have represented both employees and employers in industrial disputes in Johor Bahru for over four decades. We can assess the merits of your case, prepare your representation to the DGIR, and represent you at the Industrial Court.

If you have been dismissed and believe it was unfair, contact us for a confidential consultation — time limits apply, so early advice is essential.