From a jobseeker’s perspective, they will usually look for positions that align with their interests, expertise, expected salary, and other related benefits. However, one of the most important factors many jobseekers consider is whether the company complies with the requirements under the Employment Act 1955, which safeguards employees’ rights and interests.
This raises an important question: what is the correct procedure when managing employees?
When a candidate is hired, all relevant employment terms are typically captured in a letter of offer. The candidate will then decide whether to accept or reject the offer based on those terms. Once the offer is accepted, the employee begins work and becomes part of the company’s daily operations.
However, the employment relationship does not always last forever. At some point, it may end due to resignation, termination, or retrenchment. The process of ending an employment relationship can often be one of the most challenging aspects of running a company, particularly due to the protective nature of Malaysian employment laws.
Many employers are not fully aware of the proper legal procedures required to manage employee departures, voluntary or otherwise, which are part of “hiring” and cannot be overlooked. As a result, disputes may arise when employees lodge complaints with the Department of Labour Malaysia or file unfair dismissal claims before the Industrial Court of Malaysia.
Below are some common scenarios faced by employers:
Scenario A: Unfair Dismissal
An employer terminates an employee without just cause or excuse. The employee may challenge the dismissal by filing a representation under Section 20 of the Industrial Relations Act. If the matter is referred to the Industrial Court, the employer must justify the dismissal with proper evidence and documentation. Failure to demonstrate just cause may result in remedies such as reinstatement or compensation in lieu of reinstatement.
Scenario B: Misconduct
If an employee commits misconduct (such as insubordination, dishonesty, absenteeism, or breach of company policies), the employer cannot simply dismiss the employee immediately.
The employer should first conduct a domestic inquiry, allowing the employee an opportunity to respond to the allegations. Only after a proper investigation and fair hearing should disciplinary action be taken, which may include warnings, suspension, or dismissal depending on the severity of the misconduct.
Scenario C: Retrenchment
Retrenchment occurs when a company reduces its workforce due to business restructuring, financial difficulties, redundancy, or operational changes.
Employers must ensure the retrenchment is carried out bona fide and in accordance with established principles such as Last In, First Out (LIFO) where applicable. Employers must also comply with statutory obligations, including notifying the relevant authorities and paying termination or lay-off benefits where required.
Scenario D: Termination During Probation
Many employers assume that a probationary employee can be terminated freely without much justification. However, under Malaysian employment law, probationary employees are also entitled to protection.
If an employer wishes to terminate a probationer due to poor performance, the employer should ensure that:
- clear performance expectations were communicated;
- the employee was given sufficient training and guidance;
- performance issues were documented; and
- the employee was given opportunities to improve.
Termination without proper evaluation or documentation may still be challenged as unfair dismissal before the Industrial Court of Malaysia. In other words, probation does not mean automatic dismissal rights for the employer.
Scenario E: Employee Resignation and Notice Issues
Another common issue arises when employees resign without serving the required notice period stated in their employment contract.
Most employment contracts specify a notice period, for example one month or three months. If an employee fails to serve the notice period, the employer is usually entitled to claim payment in lieu of notice.
Employment Relationships
Employment relationships are not merely contractual arrangements; they are governed by a framework of statutory protections and industrial relations principles. Employers who fail to comply with these requirements may expose themselves to costly disputes and legal proceedings.
Understanding the proper procedures in hiring, managing, disciplining, and terminating employees is therefore crucial for every growing business.
In conclusion, while hiring employees is a crucial step in growing a business, managing employment relationships responsibly is equally important. Employers should ensure that proper procedures are followed not only during the hiring process but also when disciplinary actions or termination become necessary. A clear understanding of employment laws and proper documentation can significantly reduce the risk of disputes and ensure a fair and compliant workplace.
When in doubt, it is always advisable for employers to seek proper legal advice to ensure compliance with Malaysian employment laws and to maintain a fair and harmonious workplace.
——————————-
Ellie Law of Daphne Leong and Ellie Law Chambers is building a new kind of law firm—one grounded in empathy, education, and everyday people.
The views expressed in this article are those of the author. The content is provided for informational purposes only and should not be taken as professional advice. Readers are encouraged to consult a qualified professional before making any decisions.
