The Procedures for Lawful Dismissal

by Danial
Mar 20, 2019 at 7:00 AM

No employer should want their employees to fail. Employees are an asset for the company, as they are responsible for the company's success. But sometimes things don't work out, and there are times where the company has to let an employee go because they can no longer positively contribute to the company. 

There are so many cases in Malaysia about unfair dismissals. Is it even possible to terminate an employee lawfully?

The truth is, it is possible for an employer to dismiss an employee fairly, without having to pay compensation for unlawful dismissal.

Basically, there are three acceptable grounds for lawful and fair dismissal

  1. Misconduct;

  2. Poor work performance; and

  3. Redundancy / retrenchment.


To determine whether a dismissal is fair, as an employer, you must:

  1. Show that the dismissal was procedurally and substantively fair.

  2. Show that there was a just cause to dismiss the employee.

  3. Show that you had implemented a practical dismissal procedure of inquiry before deciding to terminate.

What establishes a just cause and practical dismissal procedure of inquiry are often a subjective test and it must be based on the facts of each case. However, the employer is the one who bears the burden of proof. As an employer, you must convince the court that the dismissal was justified in the circumstances of the case.


Procedure for Fair Dismissal

If you find your employee performing poorly at work, you may work on a procedurally fair dismissal. Here are the steps:

  1. First, inform or warn the employee in writing that their work is not good enough.

  2. As an employer, provide performance improvement plans such as training or coaching sessions.

  3. You must explain the reasons for your disapproval on the employee’s performance and offer suggestions on how to solve the issue.

  4. Allow a reasonable amount of time for the employee to respond and put forward any reasons or explanations for their poor performance.

  5. Make sure that all the meetings and coaching sessions are properly documented.

  6. The employee’s union representative (if the employee is a member of the union) should be requested to join in the meetings; and

  7. The employee must be given enough opportunities to improve.

The suggested steps serve as a general guideline. If you're in doubt, you should seek legal advice on the specific matter before deciding to dismiss an employee.

If you do not invest in doing some research before dismissing an employee, you may find yourself having to pay a large settlement sum to the dissed employee. Most of the time, employers prefer to do so to avoid more significant liability such as bad reputation.


Malaysian Employment Law Favours the Employee?

Even though many say that the Malaysian employment law is pro-employee but the reality is the law has been fair for both employers and employees within the past decade.

Nowadays, employers are more careful and knowledgeable in managing their workforce in compliance with Malaysia's employment law system. Basically, many employers are aware that it makes good business sense for them to treat their employees fairly.

Making sure a fair and proper process to dismissal is in place not only help to reduce legal costs, but it may also reduce employee turnover. In conclusion, if your business has a fair mechanism to handle dismissals, then it is not impossible for you to dismiss an employee lawfully in Malaysia.


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Source: ARC Law Firm

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