Human Resources Risk Management with Employment Practice Liability Insurance for small and medium sized businesses in Malaysia. Why is it necessary for small businesses to adopt HR Risk Management in their business.

1. Human Resource Risk
Management
www.ihrnet.com

2. Dismissal Defined
 Dismissal: Termination with or without notice by the employer.
Types of Dismissal:
 Wrongful Dismissal: Termination of an employee with or without
notice and is without just or cause.
 Constructive Dismissal: In Malaysia, the concept of constructive
dismissal is also recognised by the court and it will treat a
resignation as a dismissal if the resignation is involuntary or under
threat of dismissal. Stanley Ng Peng Hon v. AAF Pte. Ltd. (1979) 1
MLJ 57.

3. Remedies – Dismissal Without Just and Cause
 Reinstatement: This is the primary relief conferred on the Industrial
Court by the Industrial Relations Act 1967 (IRA).
 Monetary Compensation: Compensation can be awarded to a
workman who had been dismissed without just cause or excuse up
to a maximum of 24 months in pack pay plus one month for every
year of service served by the employee.
 Monetary Compensation & Reinstatement.

4. Dismissal Risks To Employers
 Malaysian Labor and Industrial Law is viewed by a vast majority to offer protection to
employees in numerous ways. However recent development shows a small number
of companies adopting good human resource and management practices enabling
them to address dismissals more effectively which has resulted in companies winning
cases.
 In 2005, Malaysian employers had paid in arbitrated compensation to former
employees approximately RM 28 Million.
 Over 3,000 companies were expected to have been brought before the Industrial
Court in 2006 to answer allegations that they had wrongfully dismissed their
employees.
 A total of 2209 labor cases were heard in 2005 for a population of 25 million.
 The expected pay outs were estimated to be in the vicinity of RM35 million.
 Cases awarded to employees by The Industrial Court of Malaysia gives rise to
unexpected manpower costs, substantial legal fees and payouts, with a real
possibility of insolvency and bankruptcy faced by the business.

5. Sample Industrial Court Case
Ex-employee Wins Suit Over Charges He Did External Work
SOURCE: The Star
Thursday, Sept 7, 2006
KUALA LUMPUR: A supervisor who was demoted to the position of clerk three years
ago because he allegedly did external work during working hours won his case in the
Industrial Court.
MEC Forwarding System Sdn Bhd was ordered to pay K. Ramachandran a total of
RM114,917.40 in back wages and compensation in lieu of reinstatement.
Court chairman N. Rajasegaran ruled in an award handed down last Friday that the
international freight forwarding company based at KL International Airport had not
proven the charge of misconduct against Ramachandran.
He added that the company’s act of reducing Ramachandran’s salary of RM2,974 by
RM500 was “sufficiently serious enough to justify his leaving his employment.”
K. Ramachandran was an operations supervisor before he quit on June 14, 2003.

6. Statistics of Cases

7. Employment Practice Liability Insurance
 On the scenario presented, we identified an opportunity in the
provision of a professional Employment Practice Liability Insurance
policy to protect businesses from potential wrongful dismissal
compensation.
 This is applicable for both the SMI and MNC companies as long as a
company employs people.
 The risks is huge for the small and medium sized companies given
compensation awards in recent times puts a company into
significant financial difficulty and in some instances winding up of a
business.
 Professional legal help from IR Lawyers (Specialist) ranges from
RM 25,000 to RM 50,000 or higher if the case is escalated to Court
of Appeal and High Court.

8. Current Solution Launched
 April 3, 2014, I-HR Consulting Sdn Bhd and Tune Insurance Malaysia Berhad
collaborated to offer first of its kind solution called HR Risk Management.
 Initiative launched and commended by HR Minister Y.B. Dato’ Sri Richard
Riot Jaem
 HR Risk Management: a 3 in 1 solution offering SMEs
 Access to HR Knowledge and Content via a HR Portal www.ihrnet.com
 Real-time Advisory on HR matters provided by a team of consultants with
extensive HR and IR experience.
 Coverage of up to RM 100,000 to protect companies against wrongful dismissal
claims by an employee.
 This addresses a gap in the market for HR and Employment Practice Risk
Management.
 Exclusively available through iHR Consulting and starting from as little as
RM1,500 per year for all this.