Understanding Employee Termination Procedures in Malaysia: A Legal Guide

BY EMPLOYMENT LAW MALAYSIA

Understanding Employee Termination Procedures in Malaysia: A Legal Guide

Terminating an employee in Malaysia requires strict adherence to the country's labour laws. Employers must follow the correct employee termination procedure in Malaysia to avoid claims of unfair dismissal. This guide explains the legal termination process in Malaysia, offering insights into how to terminate an employee legally and the importance of consulting an employment lawyer in Malaysia.

Employee Termination Procedure in Malaysia

The employee termination procedure in Malaysia is governed primarily by the Employment Act 1955 and the Industrial Relations Act 1967. Employers must have "just cause and excuse" to terminate an employee. The most common reasons include:

• Misconduct

• Poor performance

• Redundancy or retrenchment

• Breach of employment contract

The key steps in the employee termination procedure are:

1. Establish A Valid Reason

Ensure there is a valid reason that justifies termination, such as proven misconduct, consistent poor performance despite warnings, or a genuine redundancy situation.

2. Conduct a Domestic Inquiry

If the termination is due to misconduct, employers are expected to conduct a domestic inquiry. This process allows the employee a fair chance to explain or defend themselves against the allegations.

3. Issue a Show Cause Letter

Before proceeding with termination, a show cause letter must be issued to the employee, outlining the reasons for disciplinary action and inviting a response.

4. Notice of Termination

If dismissal proceeds, employers must give appropriate notice as stipulated in the employment contract or as per Section 12 of the Employment Act 1955. Alternatively, payment in lieu of notice can be made.

Legal Termination Process in Malaysia

The legal termination process in Malaysia demands:

• Proper documentation: All warnings, inquiries, and correspondences must be properly recorded.

• Non-discrimination: Termination must not be based on race, gender, religion, or other discriminatory factors.

• Following procedural fairness: Ensure that the employee has had a fair chance to be heard.

Failure to adhere to the proper legal termination process can lead to claims of unfair dismissal, reinstatement orders, and significant financial compensation.

How to Terminate an Employee Legally in Malaysia

To terminate an employee legally in Malaysia, employers must:

1. Identify the Reason for Termination: Ensure the reason falls within just cause or excuse.

2. Communicate Clearly: Provide clear communication through letters and meetings.

3. Allow the Right to Respond: Offer the employee a chance to respond to allegations or performance issues.

4. Provide Appropriate Notice or Payment: Follow contractual and statutory notice periods or provide payment in lieu.

5. Consult an Employment Lawyer: Engage an employment lawyer in Malaysia to review the case and minimize the risk of wrongful dismissal claims.

Role of an Employment Lawyer in Malaysia

An experienced employment lawyer in Malaysia can:

• Advise on the legality of the proposed termination.

• Assist in drafting show cause letters, warning letters, and termination letters.

• Represent employers or employees in wrongful dismissal claims.

• Provide guidance during domestic inquiries.

• Protect the interests of both employers and employees under Malaysian labour law.

Consulting an employment lawyer in Malaysia is highly recommended to ensure that the termination process complies with legal requirements and to reduce potential liabilities.

Conclusion

Understanding and following the correct employee termination procedure in Malaysia is crucial for employers. The legal termination process ensures fairness and compliance with Malaysian employment laws. Knowing how to terminate an employee legally in Malaysia protects your organization from disputes and costly legal consequences. When in doubt, seeking advice from a reputable employment lawyer in Malaysia can provide peace of mind and safeguard your interests.

For professional guidance on employee termination and employment law matters, consult a trusted employment lawyer in Malaysia today.

Contact us today for a free consultation via WhatsApp (+6011-1630-0091) or email (general@employmentlawmalaysia.com) for expert advice tailored to your employment needs.