Are You A Victim Of Dismissal?


Are You A Victim Of Dismissal?


Employment Law in Malaysia

The year 2020 has been a roller coaster ride for many and due to the impact of Covid-19 on the economy, many employees have been unfairly terminated and/or dismissed by their employers. Hence, it is important to understand your rights and as well as what steps can you take if you have been a victim of unfair termination and/or dismissal.

As a brief introduction, the main statute that governs the employment related issue in Malaysia would be the Employment Act 1955 (“EA 1955”).  The EA 1995 sets out the minimum benefit that the employees are entitled to under their employment contract. However, the act does not protect all classes of employees but only limited to the following:-

  1. Employees whose monthly salary does not exceed RM2,000.
  2. Employees who are engaged in manual labour, regardless of salary.
  3. Employees engaged in the operation or maintenance of mechanically propelled vehicle.
  4. Employees who supervise or oversees other employees engaged in manual labour.
  5. Employees engaged in any capacity on a vessel. 


Industrial Relations Act 1967 (“IRA 1967”) 

Hence, you might be wondering where or what can you resort to when your service in your Company has been terminated and/or you have been dismissed by your employer and you do not fall under the categories above mentioned?  Your answer to this would be the IRA 1967 in the Industrial Court.

 S. 20(1) IRA 1967 stated that the dismissed employee must make a representation in writing to the Director General of Industrial Relations Office nearest to the place of employment from which the employee was dismissed. The representation must be made within 60 days from the dismissal. 

It is also important to note that the Malaysian position on termination of service, it requires the employer to provide a just cause or excuse before an employee’s service can be terminated.  


Types of Termination of Service

There are various forms of termination of service. The following guide will provide an brief overview:  


Direct Dismissal

This is an express dismissal by the employer and there are various possible grounds:-

  • Dismissal for Misconduct;
  • Dismissal for Poor Performance;
  • Retrenchment;
  • Termination of service on grounds of business closure;
  • Non-confirmation of probationer; and
  • Revocation of the offer of employment before the commencement of work. 


Indirect Dismissal 

This arises when the employer has breached a fundamental term of the contract or the employee has been forced to resign. This is regarded as Constructive Dismissal where an employee considers himself to be dismissed when an employer has shown an intention that he/she is no longer bound by the contract of employment or a breach by the employer of a fundamental term of the said contract. In such circumstances, the employee may consider himself dismissed by the employer without just cause or excuse and leave the employment.  

For example:-

  • Where the employee, without a valid reason, is relieved from his duties and responsibilities;
  • Where the employee is given an ultimatum to either resign or face dismissal;
  • Where the employee is transferred, reassigned or demoted (without any reduction of benefits or wages) as a mean to exert pressure on the employee to resign;
  • Where the employee’s rights and entitlements have been violated by the act of the employer (reduction and/or withholding of benefits or wages without the employee’s consent); and
  • Where the employee has lodged a legitimate complaint and the employer failed to act. 


The Award 

If the Industrial Court made a finding that the dismissal was indeed without just cause or excusethe employee will be awarded the following:-

  1. Reinstatement (or compensation in lieu of reinstatement); and
  2. Backwages.


Reinstatement (or compensation in lieu of reinstatement) 

The industrial Court’s primary remedy is to reinstate the employee. However, if reinstatement is impossible or undesirable in the circumstances, the Court may instead award a compensation in lieu of reinstatement.

The formula used for the calculation of the award would be one month’s salary x each year of service.

i.e. If your monthly salary is RM3,000 and you have been working for 5 years.

      Award: RM3,000 x 5 years = RM15,000 



This is subjected to a statutory limit of 24 months and further deduction may be made based on any post-dismissal earnings and/or where the employee had contributed to his dismissal through his conduct.   



After reading the brief summary above, the question to ask yourself is whether you are a victim of unfair dismissal and/or termination. 

To understand more about your rights and/or to seek legal consultation on employment matters, you are welcome to consult us for further advice.