Unfair Dismissal in Malaysia: What Can You Do If You Were Fired Unfairly?

An employer in Malaysia cannot dismiss an employee without just cause or excuse. Simply giving notice or paying salary in lieu of notice does not automatically make a dismissal fair.

If you believe you were dismissed unfairly, you may make a representation under section 20 of the Industrial Relations Act 1967. The most important point is timing. You generally have only 60 days to act.

Malaysia does not operate on a general system of "at-will employment" where an employer may dismiss an employee for any reason simply by complying with the contractual notice period.

The employer should have a genuine and legally supportable reason for dismissal. Common examples include proven misconduct, properly established poor performance, or genuine redundancy. If the reason cannot be proven, the dismissal may be challenged.

What is unfair dismissal?

Unfair dismissal generally refers to an employee being dismissed without "just cause or excuse."

That phrase comes from section 20 of the Industrial Relations Act 1967.

The law does not provide one exhaustive list of everything that amounts to just cause or excuse. Instead, the Industrial Court considers the reason relied on by the employer and the evidence supporting it.

For example, an employer may dismiss an employee for serious misconduct such as theft, dishonesty, violence, serious insubordination, or another substantial breach of employment obligations.

Poor performance may also justify dismissal, but the employer should normally be able to show that there was a genuine performance problem. Clear expectations, performance records, warnings, feedback, and a reasonable opportunity to improve can become important evidence.

Redundancy can also justify termination where the employer genuinely no longer requires the role or the same number of employees. Retrenchment cannot simply be used as a label to remove a particular employee.

The reason must match the facts.

Giving notice does not automatically make a dismissal fair

One of the biggest misconceptions is that an employer can terminate an employee for any reason as long as the employment contract allows termination with notice.

That is too simplistic.

The contractual notice clause deals with how the employment relationship may be brought to an end. It does not automatically answer the separate question of whether the dismissal was with just cause or excuse.

For example, an employment contract may allow either party to terminate by giving two months' notice. If the employer dismisses an employee because management simply dislikes the employee and gives two months' salary in lieu, the payment itself does not necessarily protect the employer from an unfair dismissal claim.

The employer may still have to justify the reason for dismissal.

This distinction is important because contractual termination rights and statutory unfair dismissal protection are not the same thing.

The 60-day deadline is critical

If you believe you were unfairly dismissed, do not wait.

Section 20 of the Industrial Relations Act 1967 provides a strict timeline for making a representation. It must generally be filed within 60 days of dismissal.

Where an employee is dismissed with notice, the representation may be filed during the notice period and no later than 60 days after that notice expires.

This deadline can become more important than the strength of the underlying case. A strong unfair dismissal claim may never reach the Industrial Court if the employee waits too long to file it.

Employees sometimes spend weeks negotiating with HR, appealing internally, waiting for management to reconsider, or trying to obtain a better settlement.

Those discussions do not mean the statutory deadline should be ignored.

Check the 60-day period immediately.

How do you file an unfair dismissal claim?

An unfair dismissal claim begins with a representation to the Director General of Industrial Relations under section 20 of the Industrial Relations Act 1967.

The Department of Industrial Relations Malaysia, commonly referred to as JPPM, currently allows section 20 representations to be submitted through its IRIS system.

After the representation is filed, the matter does not immediately become a full Industrial Court trial.

The first stage is conciliation.

What happens during conciliation?

JPPM will arrange a conciliation meeting between the employee and employer.

The purpose is to see whether the dispute can be resolved without proceeding to the Industrial Court. An Industrial Relations officer facilitates the process and attempts to help the parties reach a settlement.

A settlement may involve monetary compensation, agreed departure terms, withdrawal of allegations, employment references, confidentiality terms, or other matters depending on the dispute.

If an agreement is reached, JPPM may record the settlement through a Memorandum of Agreement.

If the Director General is satisfied that there is no likelihood of settlement, the representation is referred to the Industrial Court for an award.

One practical point is important. Advocates and solicitors are not permitted to represent the parties during the JPPM conciliation proceedings. Legal advice can still be obtained outside the meeting so that the employee or employer understands their position before attending.

What happens at the Industrial Court?

Once the matter reaches the Industrial Court, the dispute becomes much more formal.

The parties will normally file pleadings, prepare documents, call witnesses, and present evidence. The Court then decides whether the dismissal was with just cause or excuse.

Where the employer accepts that it dismissed the employee, the employer generally carries the burden of proving the reason relied on for dismissal.

This principle has long been recognised in Malaysian industrial law, including in Goon Kwee Phoy v J & P Coats (M) Bhd.

The employer cannot simply make an allegation and expect the Court to accept it. If misconduct is the reason, the employer needs evidence of misconduct. If poor performance is relied on, the employer needs evidence of poor performance. If redundancy is claimed, the employer should prove genuine redundancy.

The Industrial Court applies the civil standard of proof, namely the balance of probabilities.

The employer is generally tied to its reason for dismissal

The reason stated at the time of dismissal matters.

An employer should not dismiss an employee for one reason and then attempt to construct a completely different justification after the employee files a claim.

The principle from Goon Kwee Phoy is important here. The Court examines the reason relied on by the employer and decides if that reason has been established.

This makes the termination letter, show cause process, internal investigation, emails, performance records, and HR documents particularly important.

For employers, the lesson is to identify the real reason before dismissal and document it properly.

For employees, keep every document connected with the termination.

What about misconduct?

Misconduct is one of the most common reasons for dismissal.

Section 14 of the Employment Act 1955 provides that an employer may impose disciplinary punishment for misconduct inconsistent with the fulfilment of the employee's service after due inquiry. This may include dismissal without notice in an appropriate case.

Due inquiry means the employee should have a fair opportunity to know and answer the allegations against them.

A formal Domestic Inquiry may be used, particularly for serious allegations, but the statutory requirement itself is for due inquiry. The adequacy of the process depends on the circumstances.

The employer should also consider whether dismissal is proportionate to the misconduct. Not every workplace mistake justifies the most severe punishment.

What about poor performance?

Poor performance should not be confused with misconduct.

An employee may genuinely try to perform but fail to meet the required standard. In that situation, the employer should be able to show the performance expected and the employee's failure to meet it.

Performance reviews, KPIs, written feedback, warnings, coaching, and performance improvement plans may all become relevant.

A sudden termination for "poor performance" is more difficult to defend where the employee previously received good reviews and was never told that their work was unacceptable.

The Court will look at the evidence, not simply the phrase used in the termination letter.

Probationers can also claim unfair dismissal

Being on probation does not remove protection against unfair dismissal.

The Court of Appeal in Khaliah Abbas v Pesaka Capital Corporation Sdn Bhd confirmed that a probationer is still protected against dismissal without just cause or excuse.

An employer is entitled to assess a probationer's performance and suitability. If the employee genuinely fails to meet the required standard, non-confirmation or dismissal may be justified.

What probation does not provide is a right to dismiss someone arbitrarily.

There is, however, a difference in potential remedies. If backwages are awarded to a probationer, the Industrial Relations Act caps them at 12 months rather than the usual maximum of 24 months.

What if you resigned instead of being fired?

A resignation can sometimes amount to constructive dismissal.

Constructive dismissal arises where the employer commits a fundamental breach of the employment relationship and the employee resigns because of that breach.

Examples may include serious non-payment of salary, unjustified demotion, serious unilateral changes to employment terms, or conduct that fundamentally damages the employment relationship.

The legal analysis is different from an ordinary dismissal because the employee first needs to establish that the resignation amounted to a constructive dismissal.

An employee considering this route should get advice before resigning where possible. The wording and timing of the resignation can become important evidence later.

What can you receive if you win?

The primary remedy under section 20 is reinstatement to the employee's former employment.

In practice, reinstatement may no longer be suitable by the time the case is decided. The employment relationship may have broken down, the position may no longer exist, or too much time may have passed.

The Industrial Court may therefore award monetary relief.

Backwages

Backwages compensate for wages lost following the unfair dismissal.

Under the Second Schedule to the Industrial Relations Act 1967, backwages are capped at a maximum of 24 months for an employee dismissed without just cause or excuse.

For probationers, the maximum is 12 months.

The final amount is not automatically the maximum. The Court may make deductions for post-dismissal earnings and must also consider any contributory misconduct by the employee.

Compensation in lieu of reinstatement

Where reinstatement is inappropriate, the Court may award compensation instead.

The Industrial Court commonly calculates compensation in lieu of reinstatement using the formula of one month's salary for each completed year of service, although the precise relief remains subject to the Court's powers and the circumstances of the case.

This is separate from backwages.

Example of an unfair dismissal dispute

Assume an employee has worked for a company for seven years.

The employee receives consistently satisfactory performance reviews. One day, the company terminates the employee with two months' salary in lieu of notice and states that the employee is being dismissed for poor performance.

There were no earlier warnings, no documented performance concerns, and no performance improvement process.

Paying the contractual two months' salary does not end the legal analysis.

If the employee files a section 20 representation within the required period, the employer may need to prove that poor performance was genuine and sufficient to justify dismissal.

If the evidence does not support the reason given, the Industrial Court may find that the dismissal was without just cause or excuse.

What should you do immediately after being dismissed?

Keep the termination letter and do not delete employment records.

Preserve your employment contract, payslips, warning letters, performance reviews, emails, WhatsApp messages, HR correspondence, company policies, meeting notes, KPI records, and any other documents connected with the dismissal.

Write down a timeline while events are still fresh. Record the meetings, allegations, explanations given, and the date you were dismissed.

Do not sign a settlement agreement, resignation letter, mutual separation agreement, or acknowledgment under pressure.

Most importantly, calculate the section 20 deadline immediately.

The 60-day period should be treated as urgent.

Frequently Asked Questions

What is unfair dismissal in Malaysia?

Unfair dismissal occurs when an employee is dismissed without just cause or excuse. An employer must have a proper and supportable reason for dismissal, even where notice or salary in lieu of notice is given.

How long do I have to file an unfair dismissal claim?

A section 20 representation generally must be filed within 60 days of dismissal. Where dismissal is with notice, it may be filed during the notice period and no later than 60 days after the notice expires.

Where do I file the claim?

The representation is filed with the Department of Industrial Relations Malaysia. JPPM currently provides an online filing route through the IRIS system.

Does my employer have to prove why I was fired?

In an ordinary dismissal where the fact of dismissal is established, the employer generally bears the burden of proving that the dismissal was with just cause or excuse.

Can a probationer claim unfair dismissal?

Yes. Probationers are also protected against dismissal without just cause or excuse. Their potential backwages are capped at 12 months under the Industrial Relations Act 1967.

Can I claim if I was forced to resign?

Potentially. A forced resignation may amount to constructive dismissal if the employer committed a fundamental breach that caused the employee to resign. Constructive dismissal has its own legal requirements and should be assessed carefully.

Final takeaway

An employer in Malaysia cannot make an unfair dismissal lawful simply by giving contractual notice or paying salary in lieu. The employer must still be able to justify the dismissal with just cause or excuse.

For employees, the most important practical rule is the 60-day deadline. Preserve your evidence, understand the reason given for dismissal, and get advice quickly.

For employers, dismissal should be based on a genuine reason, proper evidence, and a process suited to that reason. A poorly documented dismissal can become significantly more expensive once it reaches the Industrial Court.

Speak to JPP LAW

Justin, Poh & Partners, also known as JPP LAW, assists clients with employment-related disputes, unfair dismissal claims, constructive dismissal, misconduct and disciplinary matters, retrenchment disputes, settlement negotiations, and Industrial Court proceedings in Malaysia.

If you have been dismissed or are considering terminating an employee and need to assess the legal position, you may contact us to discuss the matter.

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Disclaimer: This article is for general information only and does not constitute legal advice. Employment disputes depend heavily on the facts, employment documents, reason for dismissal, evidence, and applicable law. You should seek advice based on your specific circumstances.