9 February 2024

Common Issues In Unfair Dismissal Claims When Acting For The Employer

In the complex realm of employment law, unfair dismissal claims can be a challenging battleground for both employers and employees.
Malaysia Employment and HR
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In the complex realm of employment law, unfair dismissal claims can be a challenging battleground for both employers and employees. When a disgruntled employee files an unfair dismissal claim, it becomes crucial for employers to navigate the legal landscape with utmost caution and vigilance. Understanding the common issues that often arise in such claims is essential for employers and their legal representatives (ie: "Company lawyers") to effectively protect their interests.

This article delves into some of the common issues that Company lawyers should be aware of when defending against unfair dismissal claims.



Under section 20(1A) of the Industrial Relations Act 1967 ("IRA 1967"), aggrieved employees are required to file their complaints with the Industrial Relations Department within 60 days from the date of dismissal (or where the employee is dismissed with notice, within 60 days from the expiry of that notice). This is a strict timeline, as failure to do so would deprive the Industrial Court of the necessary jurisdiction to hear the dispute.

If the employee makes any internal appeal to the employer against the decision to dismiss the 60 days period runs from the date of dismissal and not from the date of decision of any internal appeal (See: Samiah Yasmin Abdul Kadir v Menteri Sumber Manusia & Ors [2023] 1 LNS 417).


The civil courts cannot award damages for unfair dismissal, as the remedies available are limited to contractual payments such as salary or payment in lieu of notice. An employee who files a civil suit claiming damages for unfair dismissal may have their claim struck out for abuse of process (See: 7-Eleven Malaysia Sdn Bhd v Ashvine Hari Krishnan [2023] 2 ILR 209).



Like any other civil case, it is imperative for Company lawyers to accurately identify who bears the burden of proof.

Employers usually bear the burden of proof of establishing that the employee's dismissal is done with just cause or excuse, in the following circumstances: –

  • Misconduct;
  • Poor performance; and
  • Redundancy.

However, if the dismissal itself is disputed, the burden of proof will instead lie on the employee to first establish whether there is a dismissal. Examples of such instances include forced resignation or constructive dismissal.

A common mistake made by lawyers who are not familiar with unfair dismissal claims is to assume that the employee, as the claimant, always bears the burden of proof. As the burden of proof affects which side starts their case first in a trial, the wrong assumption could jeopardize a party's preparation for the matter.


Whilst it is tempting to put in evidence for additional potential misconducts discovered against the employee after their termination, this is not allowed. The Industrial Court's jurisdiction is limited to the reasons, factors or events operating in the mind of the employer at the time of dismissal (See: Maritime Intelligence Sdn Bhd v Tan Ah Gek [2021] 4 ILR 417).

Therefore, practitioners should plan any case theory or litigation strategy based on the events or evidence available at the time of the employee's termination.



The main remedy that may be granted by the Industrial Court is reinstatement. However, reinstatement is not always granted in practice, as the relationship of trust and confidence between the dismissed employee and employer would often be irreparable and the dismissed employee may have even found alternative employment by then.

In such situations, the Industrial Court may grant compensation in lieu of reinstatement. Practice Note 3 of 2019 ("PN 3/2019") stipulates that the current rate of compensation is one month's salary for each year of completed service. There shall be no compensation in lieu of reinstatement for any uncompleted year of service.

For Company lawyers, it is crucial to remember that compensation in lieu of reinstatement can only arise if the employee is entitled to be reinstated in the first place. For example, an employee past the retirement age as at the date of any Industrial Court award would not have been entitled to reinstatement. Therefore, such employee is not entitled to compensation in lieu of reinstatement (Unilever (M) Holdings Sdn Bhd v So Lai @ Soo Boon Lai & Anor [2015] 4 MLJ 326).


Based on the Second Schedule of the IRA 1967, the Industrial Court may grant backwages to employees that have been unfairly dismissed:

  • Confirmed employees – Up to 24 months
  • Probationers – Up to 12 months

The granting of backwages is within the Industrial Court's discretion and it is entitled to impose any necessary deductions it deems fit, such as:

  • Contributory negligence of the employee – If the employee is found to be also at blame for the circumstances of his / her dismissal, an appropriate deduction may be made.
  • Any severance sum / termination benefits that has been paid. This also includes statutory benefits such as payments from the Employment Insurance System.
  • Post-dismissal earnings – The Industrial Court does not do a mathematical exercise (eg: calculating and awarding the difference between the new salary and his last drawn salary) but rather make deductions using a discretionary percentage.

Company lawyers can attempt to reduce the amounts awarded by adducing evidence related to the above – for example, by producing proof of payment of the severance sum or termination benefits, or by requesting the employee to produce documents related to their post dismissal earnings and cross-examining them on the same.


By understanding these common issues, Company lawyers can strengthen their clients' defence strategies and mitigate risks. Other key takeaways to note:

  • Establishing a valid reason for dismissal and ensuring it aligns with the applicable legal framework is essential. Adequate documentation, such as performance records or disciplinary procedures, can play a crucial role in supporting the employer's case.
  • Being cognisant of who bears the overall burden of proof will determine on what evidence should be produced and help avoid circumstances where adverse inference may be invoked against employers.
  • Employment law is dynamic. Company lawyers should stay up to date on developments to the law, so they can assist their clients navigate complex issues and protect their interests effectively.

By being proactive and addressing these common issues, practitioners can increase their chances of successfully defending employers against unfair dismissal claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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