ARC News   •   April 06, 2018

A couple of weeks ago, I attended an employment seminar and some of the attendees seated next to me are either business owners and HR executives from start-ups, SMEs and leading MNC in Malaysia. Upon chatting up with them, they told me that they are quite worried in hiring new employees and most of their concerns are mainly with respect to handling employees’ termination legally and ethically.

In any case, all employers would wish that their employees can perform up to par and able contribute to the company positively – this would be the ideal plan for both the employer and employee. But things don’t always turn out as plan, the management dilemma is to clearly articulate to this employee that his/her attitude and inability to positively contribute to the department/ company are performance issues equal to not performing primary job responsibilities.

The truth is, it is not impossible for an employer to terminate/ dismiss an employee lawfully, without having to pay compensation for unlawful dismissal.

Basically, there are three acceptable reasons for lawful and fair dismissal – (1) misconduct; (2) poor work performance; and (3) redundancy/ retrenchment.

For one to determine whether a dismissal is fair, the employer must be able to show that the dismissal was (1) procedurally and (2) substantively fair.

The employer must be able to show that there was a just cause to terminate the employee. In addition, the employer must show that they had implemented a practical dismissal procedure of inquiry before deciding to dismiss. What constitutes a just cause and practical dismissal procedure of inquiry are often a subjective test and it must be based of the facts of each case. The employer however bears the burden of proof to convince the court that dismissal was warranted in the circumstances of the case.

If an employee is alleged of having performed poorly at work, a procedurally fair dismissal may be expected to contain the following steps:

• (a) Firstly, the employee must be informed or warned in writing that his/her work is not up to par.
• (b) The employer must then provide performance improvement plans (e.g arrange for coaching/ consultation sessions).
• (c) The employer must explain precisely the reason of the employer’s dissatisfaction on the employee’s performance and offer suggestions as to how to overcome the problem.
• (d) The employee must be allowed a reasonable amount of time to respond and to put forward any reasons or explanations for his poor performance.
• (e) All the meetings and coaching sessions must be properly documented.
• (f) The employee’s union representative (if he is a union member) should be invited to participate in the meetings; and
• (g) The employee must be provided with sufficient opportunities to improve.

The above suggested steps serve as a general guide, and if in doubt, it is highly advisable for an employer to seek legal advice on the specific matter before deciding to dismiss an employee.
There is a famous saying – ‘prevention is better than cure’, an employer who does not invest in doing some groundwork before the termination of an employee may find himself unpleasantly having to pay a large settlement sum to a disgruntled dismissed employee. Often, employers opt to do so to avoid more significant liability (e.g. the cost of a bad reputation).

Although many may argue that the Malaysian employment law is pro-employee but the fact is the law is not unfairly skewed in favour of the employee. One may say that the percentage of the court ruling in favour of the employee was higher in the past, especially if we look at many dismissal cases in the 90s. However, if we look at the present dismissal cases within the past 10 years or so, the ratio for the court to decide in favour of (between the employers and employees) are distributed fairly, depending on the facts of each case.

One of reasons for such a shift is, employers nowadays are more mindful and knowledgeable in managing their workforce in compliance with the employment law system. Essentially, 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 a company has a fair mechanism to dismissal, it is not impossible for an employer to terminate/ dismiss an employee lawfully in Malaysia.

Yuki Chong Mei Yoke is a Partner at Messrs. Afif Rahman & Chong

Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the authors for a specific technical or legal advice on the information provided and related topics.