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Understanding and Addressing Unfair Dismissal Claims

A cover photo with a girl holding a box of her belonging, and the text states "What is Unfair Dismissal?"

In the realm of Malaysian employment, the protection of employees' rights is paramount, governed by the Employment Act (EA) 1955 and Industrial Relations Act (IRA) 1967. One critical aspect is safeguarding against unfair dismissal, a legal minefield for employers. This article will delve into what constitutes unfair dismissal, explore the concept of constructive dismissal, and provide a brief guide to employers on the consequences they might face if an employee decides to challenge their dismissal.

Understanding Unfair Dismissal

According to section 20(1) of the Industrial Relations Act (IRA) 1967, an employee can only be dismissed with just cause or excuse. In the case employees are dismissed without just cause or excuse, it will fall under the category of unfair dismissal.

The concept of unfair dismissal encompasses situations where employees are terminated for exercising their legal rights, such as taking maternity leave or participating in trade union activities. Dismissing an employee under such circumstances not only qualifies as unfair but also constitutes a breach of legal obligations. Discrimination based on race, religion, gender, or other protected attributes is strictly prohibited, and any termination grounded in discrimination is automatically deemed unfair, underscoring the need for employers to uphold fair and unbiased employment practices.

This includes the intricate concept of constructive dismissal, a subset of unfair dismissal. Constructive dismissal occurs when an employer creates a hostile work environment, forcing an employee to resign.

Employees may be considered constructively dismissed if they resign due to:

  1. Reduction of salary and benefits or demotion without justification.

  2. Change of job scope and duties.

  3. Transfers to different/unrelated departments in bad faith.


Addressing Unfair Dismissal Claims

In the event an employee perceives unfair dismissal, they have the option to file a report with the Industrial Relations Department (IRD). As legal proceedings commence, employers find themselves navigating a complex legal journey, defending the company's decisions with meticulous documentation.

To claim unfair dismissal, the employee will need to follow these steps:

1. Collecting Evidence

To support an unfair dismissal claim, employees would need to gather relevant documents, such as letters, emails or any form of written communication leading to the unfair dismissal.

2. Reporting to Industrial Relations Department (IRD)

Employees would need to file a complaint with the IRD, presenting supporting documents. It's important to note that the complaint could only be filed within 60 days of the dismissal.

3. Attending the Conciliation Meeting:

The IRD organizes a meeting between the company and the employee to resolve the dispute without going to court. If parties are able to reach a settlement, an agreement will be drawn up and this will conclude the process. However, if an agreement isn't reached, the matter proceeds to the Industrial Court.

4. Settling in the Industrial Court:

Once the Industrial Court registers a matter, a notice is issued to inform both parties of the case number and the first mention date. This initiates a process similar to civil proceedings, involving the submission of cause papers, witness statements, and a bundle of documents. The subsequent trial includes oral testimony and examination, leading to a hearing where submissions are made and an award is issued.

If the Industrial Court finds that an employee has been unfairly dismissed, the Court may either award:-


  • Reinstating the employee back to the company. The court will rarely grant reinstatement as both parties' relationship would already have been damaged at this point.


  • Back Wages. Employees may be rewarded back wages they would have earned without being dismissed, up to 24 months.

  • Termination compensation. Employees may be rewarded one month’s salary for every completed year of service.

Understanding these steps is essential for both employers and employees to navigate the process effectively and ensure a fair resolution. If you have questions or need guidance on handling dismissal issues, feel free to reach out to our team 📞+603 7887 9889 or 📩 We're here to assist in creating workplaces that operate within the bounds of the law.


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