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Dr. Balakrishnan Muniapan
• The employment laws on termination &
• Types of termination of employment;
• The application of the rules of natural
justice in termination of employment; &
• Proactive management of employment
termination plus creating & sustaining a
harmonious employment relationship.
by employees, often
due to resignation &
by employers, often
due to misconduct,
performance, & other
types of termination.
• One of the difficult task managerial task.
• Results from poor selection & ineffective
• If termination is unavoidable, proper
planning can help to avoid unfair
dismissal claims & other related legal
THE EMPLOYMENT LAWS
Industrial Relations Act 1967
Trade Unions Act 1959
Employment Act 1955
Sarawak Labour Ordinance
Sabah Labour Ordinance
Occupational Health and Safety Act
TYPES OF TERMINATION
Breach of contract
Frustration of contract
Ending of a fixed term contract
Non confirmation of a probationer
Dismissal (misconduct & poor performance)
TERMINATION: BURDEN OF PROOF
In Stamford Executive Centre v. Puan Dharsini Ganesan
(Award 263 of 1985) the Industrial Court observed:
“In a dismissal case the employer must produce
convincing evidence that the workman committed
the offence or offence of the workman is alleged to
have been committed for which he has been
dismissed. ……. He must prove the workman guilty
and it is not the workman who must prove himself
not guilty. This is so basic a principle of industrial
jurisprudence that no employer is expected to come
to this Court in ignorance of it...”
THE LAW ON UNFAIR DISMISSAL
Section 20 (1) of the Industrial Relations Act,
1967 states:"Where a workman, irrespective of whether he is a
member of a trade union of workmen or otherwise,
considers that he has been dismissed without just cause
or excuse by his employer, he may make representations
in writing to the Director General to be reinstated in his
former employment; the representation may be filed at
the office of the Director General nearest to the place of
employment from which the workman was dismissed."
TERMINATION OF A PROBATIONER
• The Industrial Court and the superior
courts in Malaysia have over the years
ruled that a probationer enjoys the same
rights as a permanent employee.
• As a result the services of a probationer
cannot be terminated without just cause
or excuse (Section 20, IRA 1967).
TERMINATION OF A PROBATIONER
• When the employer seeks to rely on
unsatisfactory work performance or
inefficiency or misconduct on the part of
the probationer, the employer must
adduce convincing evidence to justify
them & not mere allegation.
• Remember, the burden of proof lies on
TERMINATION OF A PROBATIONER
The grounds that will enable
termination of probation are:
unsatisfactory work performance
reorganization of company
TERMINATING POOR PERFORMERS
• Performance goals must be clear.
• Competency development.
• Warning on unsatisfactory work or
• Opportunity to improve performance
such as training.
• Finally, termination should be on proper
DID THE COMPANY CONTRIBUTE TO
THE POOR PERFORMANCE?
The Industrial Court has clearly laid down the
guidelines for dealing with incompetence in Ginder
Singh Transport Co.Sdn. Bhd v Bijir Singh Juala Singh
 1 ILR 516. “An employer ought in the first place
to ascertain the cause for the employee’s poor
performance. Some of the causes may be attributable
to the company’s own weaknesses or inefficiencies in
the system of its operations. The claimant may not
have been given the right training or equipment to
do the task assigned to him. He might not have been
adequately instructed as to what was expected of
him. If so, the employer should attend to the
problem which is the source of the employee failing
to perform, and the latter can be expected to get on
with his work.”
INCREMENTS FOR POOR PERFORMERS
Increments granted to poor performers will also
negate an employers contention the employee
was a poor performer.
In Davotek Sdn. Bhd. v How Kor Wei - Industrial
Court Award 19 of 2000, the employee was
given a salary increase in March and
dismissed in April for poor performance.
Until his dismissal the company had no
complaint on the employee’s performance.
The Industrial Court held the dismissal was
without just cause or excuse and ordered
TYPICAL PM PROCESS
Employee Performance Plan
Provide feedback, coaching
or counseling as needed
Will Not Do,
How Suitable Are People For Their Assigned Jobs?
FRUSTRATION OF CONTRACT
• FRUSTRATE in the Oxford Dictionary has been
explained to "prevent from progressing,
succeeding or being fulfilled" while frustration
means "being frustrated".
• Frustration of contract can be defined as a
prevention from continuation of a contract when
the employee who is employed under the
contract becomes unable to perform the work for
which he was employed due to reasons beyond
control by both parties (employer and employee).
DOCTRINE OF FRUSTRATION
• The employee concerned becomes
incapable to perform duty due to an
accident or prolonged illness;
• The employee concerned was under
police detention or custody for infinite
period of time; and
• The professional license for the employee
concerned to practice a particular
profession was revoked.
TERMINATION FOR ABSENTEEISM
Based on the EA 1955, Section 15(2), an employer
can terminate an employee if:
1. He has been absent without permission for
three or more days; and if,
2. He has no reasonable excuse; or
3. He has an excuse but has not informed or
attempted to inform his employer of that
However, the rules of natural justice must not be
TERMINATING A FIXED TERM CONTRACT
A fixed-term contract clearly states that the employee is to
be recruited for a particular period of time.
In common law, when a contract for fixed term expires, it
terminates of itself: it has not been “terminated” by
either party. In the conventional sense, there is neither
dismissal nor resignation……The court finds that the
employment of the 35 teachers are ordinary employments
dressed up in form of fixed term contract…….. As such
they……. within the law……… right to security of
employment…. right not to be dismissed without just
cause or excuse.
Industrial Court in Han Chiang High School v National
Union of Teachers in Independent Schools, 1988
• Retrenchment is a termination of the contract
of employment due to redundancy or
• However, when the employer terminates the
employment contract of an employee on some
pretext other than the real reason like lawful
trade union activity, it is called victimization.
• The employer should comply with the principle
of LIFO unless there are sound and valid
reasons for departure.
TERMINATION DUE TO MISCONDUCT
“Misconduct is any conduct on the part of
the employee inconsistent with the
faithful discharge of his duties or any
breach of the express or implied duties of
an employee towards his employer would
constitute an act of misconduct”
(Industrial Court in Malayan Thung Pau
Bhd v Four Workmen - IC Award 17/1974).
MISCONDUCT IN EMPLOYMENT
Misconduct (minor & major) can be
broadly dealt under the three heading as
• misconduct relating to discipline
• misconduct relating to duty
• misconduct dealing with morality
PROVING THE MISCONDUCT
The employer has to prove the misconduct alleged
against the employee. In Rasa Sayang Hotel and
National Union of Hotel Bar & Restaurant Workers
(Award 82 of 1982) the Industrial Court said:
“The court agrees with the union that there is no
denying the right of the employer to punish, but
there is also the right of the employee not to be
punished if there has been no offence. Before the
hotel can show that the punishment does fit the
crime, it must first prove the crime”.
To find out if an offence has been
committed & whether or not
accused has a case to answer
Statements from witnesses
PREPARATION OF SHOW-CAUSE LETTER
A charge letter addressed to an accused employee must
be in writing & must have the following:1.
Must contain the allegation or allegations of the
misconduct. Allegation or allegations must be simple, clear,
accurate and precise so that the accused can know and
Must state that the accused has to show-cause as to why
disciplinary action should not be taken.
A reasonable time-frame for the accused to show-cause.
If accused does not show-cause within the stipulated timeframe or the excuse given is not accepted, appropriate
disciplinary action will be taken.
“a formal hearing held by an employer before an
employee is dismissed or before any other major
penalty is imposed”
Industrial Relations Act 1967 Section 13(3) states that
the employers have the right to dismiss employees
who commit misconduct. However, the right to
dismiss is limited by two requirements:
• Procedural Requirements - the employee must be
treated fairly and justly.
• Substantive requirements - the employee should not
be punished without sufficient proof of his guilt.
Domestic Inquiry Is Required By:• Statute - Section
Employment Act 1955
• Common Law - The rules of natural
before an employee can be punished for an
act of misconduct
DUE INQUIRY IN DISMISSAL
For employees governed by the Employment Act
1955, Section 14 of the Act states: “An employer
may, on grounds of misconduct inconsistent
with the fulfillment of the express or implied
conditions of his service, after due inquirydismiss without notice the employee
downgrade the employee
impose any other lesser punishment as he
deems just and fit.”
RULES OF NATURAL JUSTICE
‘Hear from the other side’ - audi alteram partem: This
means no man shall be condemned unheard, the accused
must be given sufficient opportunity not only to know the
case against him but also to answer it. He must have the
opportunity to actually see, hear & question all witnesses
one by one from whom statements were taken.
‘No man shall judge for his own cause’ - nemo judex in
causua sua: This means the person who sits in judgments
must be an independent person who is neither the accuser
nor the accused or any person who has any interest in or
dislike of any parties involved or any bias in any respect.
This is to ensure that the person who sits in judgments is
able to act impartially & without bias.
“If the right to be heard is a real right
which is worth anything, it must carry
with it a right in the accused to know the
case which is made against him. The
accused must be given sufficient
opportunity not only to know the case
against him but also to answer it”.
Lord Dennings in B Surinder Singh Kanda
v Govt of the Federation of Malaya (1962)
In deciding the nature of disciplinary action to
be meted out, consideration to be taken into
account:1. the severity of the misconduct committed.
2. the extent to which the employee is responsible.
3. the circumstances under which the misconduct was
4. the past record of the delinquent employee,
including his length of service.
5. bad past record would be aggravating and good
past record would be mitigating.
REMEDY FOR DISMISSAL WITHOUT JUST
CAUSE OR EXCUSE
Whether a workman is a member of a trade union or
not, he can file a representation to the DGIR in writing
seeking for reinstatement to his former employment if
he considers he was dismissed without just cause or
To qualify for this remedy • must be workman
• file representation within 60 days of the dismissal
Upon receipt of the representation, DGIR will take
steps as necessary or expedient for a settlement.
SECTION 20, IRA 1967
“Section 20 of the IRA embodies the concept of
security of tenure of employment…… a workman is
entitled to keep his job & no employer may be
allowed to throw a workman out of his employment
without good reason. This provision gives a workman
the right to claim reinstatement & this court may
order reinstatement in the workman’s former
employment if his dismissal is considered to be
without just cause or excuse”. (Industrial Court in PG
Pak Poy & Associates Sdn Bhd v Looi Sook Chan,
“An employer does not like a workman. He
does not want to dismiss him and face the
consequences. He wants to ease the workman
out of his organization……… Generally
speaking he will make life so unbearable of
the workman so as to drive the latter out of
Dato’ Gopal Sri Ram, JCA in Quah Swee Khoon
vs. Sime Darby Berhad (2000)
UNFAIR DISSIMAL & CONSTRUCTIVE
Unfair Dismissal - the
employer must prove a
fair reason for dismissal.
Constructive Dismissal the employee must prove
that the dismissal was
THE LANDMARK CASE
The Supreme (now Federal) Court in Wong Chee Hong
V. Cathay Organisation (M) Sdn. Bhd.  1 CLJ 298 Salleh Abbas LP stated the principle underlying the
concept of constructive dismissal as follows:
“The common law has always recognized the right of an
employee to terminate his contract of service and
therefore to consider himself as discharged from
further obligations if the employer is guilty of such
breach as affects the foundation of the contract or if the
employer has evinced or shown an intention not to be
bound by it any longer”.
Proactive measures in managing
Creating & sustaining a
HRM – CUSTOMER – PROFIT CHAIN
Remember, Law is NOT a
Substitute for Good
DR. BALAKRISHNAN MUNIAPAN
Dr. Balakrishnan Muniapan is a specialist in Human Resource Development
and is currently with Wawasan Open University in Penang. He is recognized by
scholars as a pioneer in the development and promotion of Vedic HRD
approach in Malaysia. Dr Bala also takes the role of Visiting Professor in HRM
for universities and business schools in Vietnam, Philippines and India. As a
corporate trainer and consultant, he has conducted training and consulted for
more than fifty organizations in Malaysia and in Asia. In academia, he has
published over fifty research papers in international journals, conference
proceedings and book chapters. A highly sought-after speaker in HRM, Dr Bala
is frequently invited to speak on HRM issues at international conferences in
countries in Asia, Australia, Africa and Europe. Prior to academia, he was in
production management with a large Japanese MNC at his hometown in Sungai
Petani, Kedah. Email: firstname.lastname@example.org