A domestic inquiry ("DI") is an internal hearing conducted by the employer to provide an employee an opportunity to provide an explanation for misconduct alleged against the employee, before making a finding of guilt or otherwise. It is essentially a fact-finding exercise where there will be a prosecuting officer (usually a representative of the employer) and the accused employee, both of whom may call witnesses or produce documents before a panel or a single person who will decide whether the accused employee is guilty of the alleged misconduct.
 
The jurisprudence on the requirement (or otherwise) of holding a DI prior to the dismissal of an employee and on how the Industrial Court should approach the matter if a DI is held, has wound a long path in the past two decades. Some principles in relation to DI that were established over the years may be summarised as follows: -
 
  1. The failure of an employer to hold a DI before dismissing its employee is not fatal as the omission is "curable" by the inquiry that the Industrial Court is statutorily required to perform. The Industrial Court is duty bound to determine on the merits, firstly, whether the misconduct complained of by the employer has been established, and secondly, whether the proven misconduct constitutes just cause or excuse for the dismissal (See: Wong Yuen Hock v Syarikat Hong Leong Assurance Sdn Bhd (and Another Appeal) [1995] 3 CLJ 344; and Milan Auto Sdn Bhd v Wong Seh Yen [1995] 4 CLJ 449);
  1. The fact that an employer has conducted a DI which forms the basis for dismissing the employee is an entirely irrelevant consideration to the issue as to whether the employee had been dismissed with just cause or excuse. The findings of a DI are not binding as the matter is to be heard afresh by the Industrial Court. However, the Industrial Court may take into account the fact that a DI had been held when determining whether the employee was justly dismissed (See: Hong Leong Equipment Sdn Bhd v Liew Fook Chuan (and Another Appeal) [1996] 1 MLJ 481);
  1. If the Industrial Court finds that a valid DI had been held, it will then confine itself only to determining whether or not there was a prima facie case of misconduct justifying dismissal (See: Bumiputra Commerce Bank Bhd v Mahkamah Perusahaan Malaysia & Anor [2004] 7 CLJ 77; Multimedia Development Corporation Sdn Bhd v Clarence Augustine Tee Teck Huo [2018] 5 CLJ 570); and
  1. The Industrial Court would commit an error of law if it accepts or disregards the DI findings/notes produced in evidence when arriving at its conclusion on whether the dismissal was with just cause or excuse, without first determining whether the DI was validly held, and whether the DI notes were an accurate reflection of the evidence of witnesses (See: Bumiputra Commerce Bank (supra) and Multimedia Development Corporation (supra)).
LATEST DEVELOPMENT
 
Recently, the Court of Appeal in Lini Feinita binti Muhammad Feisol v Indah Water Konsortium Sdn Bhd [2021] 3 AMR 375, considered the question as to whether the Industrial Court is duty bound to consider the findings made by the DI panel when deciding whether the employee's dismissal was with just cause or excuse.
 
Background Facts
 
The appellant, Lini Feinita ("Claimant") was terminated from her employment with the respondent, Indah Water Konsortium Sdn Bhd ("Company") in 2017. Prior to her termination, the Claimant was issued with a show cause letter and was requested to provide an explanation to a number of misconduct alleged against her. Post receipt of her response, the Company convened a DI, levelling seven charges of misconduct against her.
 
During the DI, the Claimant admitted guilt in respect of the third charge and disputed the remaining charges. The DI panel found the Claimant guilty of only two out of seven charges, i.e., the second and third charges, following which, the Company issued a termination letter to the Claimant which inter alia, states:
 
"After careful consideration of the facts deliberated and seriousness of the charges and also taking into account your previous record of service, the Company has decided to terminate your services with immediate effect."
 
In other words, the DI panel found her guilty of two charges but the Company dismissed her on the basis of all charges.
 
The Industrial Court Award
 
Pursuant to a representation made by the Claimant under section 20 of the Industrial Relations Act 1967, the Industrial Court handed down an award in favour of the Claimant. In reaching its decision, the Industrial Court;
 
  1. found that the Company departed from the findings of the DI panel and terminated the Claimant based on the Claimant's past record of service and the seriousness of all seven charges;
  1. only considered the two charges which the DI panel had found the Claimant guilty of, and did not consider the remaining charges because the Company did not present any evidence on the reason(s) why it did not wish to be bound by the findings of the DI panel; and
  1. found that the Claimant's actions as alleged by the Company in support of the two charges did not amount to a serious misconduct and the Claimant's record had been largely unblemished.
The Decision of the High Court
 
The High Court allowed the Company's application for judicial review to quash the Industrial Court's award and inter alia, held that:
 
  1. the fact that the Company had conducted a DI against the Claimant is an entirely irrelevant consideration to the issue of whether the Claimant had been dismissed without just cause or excuse as the findings of a DI are not binding upon the Industrial Court which rehears the matter afresh. The Industrial Court may however take into account the fact that DI had been held when determining whether the Claimant was lawfully dismissed.
  1. the Industrial Court had failed to consider and had disregarded a series of warning letters and a lighter punishment imposed on the Claimant earlier and their cumulative effect. Based on the prior disciplinary actions taken against the Claimant, the Industrial Court had wrongly concluded that the Claimant's record had been largely unblemished.
  1. the Industrial Court failed to give effect to the law that the Company is entitled to take into account the cumulative effect of all the charges and the past record of service when it decided to impose the punishment of dismissal.
Decision of the Court of Appeal
 
On appeal, after considering the law on judicial review applications, the Court of Appeal first set out the law in relation to the duty of the Industrial Court in cases where a DI is held and not held:
 
  1. In a case where no DI is held by the employer prior to the employee's dismissal, the Industrial Court is entitled to take the position that such absence of a DI will not be fatal to the employer's case since the Industrial Court has jurisdiction to rehear the matter de novo, i.e., hear the matter afresh.
  1. However, in the case where a DI is held, the Industrial Court is duty bound to consider the findings made by the DI panel in deciding whether the employee's dismissal was with just cause or excuse and that the Industrial Court should not proceed to hear the matter de novo.
The Court of Appeal then:
 
  1. noted that the Company took into account all the seven charges and the Claimant's past record as the basis for terminating the Claimant, when the Claimant had only been found guilty of two charges by the DI panel; and
  1. held that to allow the Company to justify the dismissal on all seven charges when the Claimant was expressly found not guilty of five out of seven charges would be highly inequitable and unconscionable.
The Court Appeal further held that:
 
  1. The Industrial Court had stated the law correctly that the Company ought to take into account its own findings in the DI although the Industrial Court has the discretion to rehear all the evidence and issues regardless of whether a DI has been held or not, which is consistent with the principle in Wong Yuen Hock (supra).
  1. The Industrial Court had not erred by taking into consideration the Company's failure to present any evidence before the Industrial Court as to why the findings of its own DI panel should be disregarded to the detriment of the Claimant.
  1. The Industrial Court was correct in holding that the Company was not entitled to reassess all the charges preferred against the Claimant at the DI and dismiss her based on the same without any evidence to contradict the findings of the DI panel.
The Court of Appeal therefore unanimously found that the Industrial Court had reached a wholly reasonable decision based on the facts and evidence before it.
 
SHOULD EMPLOYERS THEREFORE CONDUCT DOMESTIC INQUIRIES?
 
Prior to this Court of Appeal decision, it was settled law that the Industrial Court is free to hear the matter afresh notwithstanding the findings by the DI panel, unless the DI findings are relied on by any of the parties; and if it is indeed relied on, the Industrial Court will have to first determine if the DI was valid.
 
However, with this decision, the law now is that if a DI is conducted, the findings of the DI panel will generally bind the employer and the Industrial Court is limited to considering only the charges that the DI panel found to be made out and not reopen the whole matter for consideration. This may place the employer at a less advantageous position particularly in cases where the employer is actually able to prove in the Industrial Court that the employee is guilty of more than what the DI panel found the employee guilty of, and in cases where the charges made out against the employee at the DI are considered not serious enough to warrant dismissal.
 
On the other hand, the benefit of conducting a DI cannot be downplayed. In Syarikat Telekom Malaysia Berhad v Saidon bin Puteh [1996] 1 ILR 619, the Industrial Court held:
 
"A due inquiry properly conducted and well documented serves to ensure that a disciplinary authority has acted only after giving fair consideration to the matter. It also provides a reliable record for the employer to turn to when, due to the effluxion of time witnesses have become unavailable or memories have faded, the employer is fixed with difficulties in having to prove his case before an industrial tribunal. Confronted with such forensic difficulties, an employer might well have to make extensive references to the records of the domestic inquiry." (Emphasis is ours)
 
In cases where documentary evidence is lacking and the matter turns on the testimony of witnesses, it is practically impossible to avoid a DI without the employer appearing to have made a decision purely on suspicion, suppositions and presumptions.
 
Further, the DI proceedings may provide a proper record of evidence which an employer may rely on in the Industrial Court more so when not all witnesses may be available to attend the Industrial Court proceedings. In this regard, it should be noted that the employer bears the burden to prove the charge(s) against the employee, therefore the absence of DI records in such instances would be detrimental (if not, fatal) to the employer's case at the Industrial Court.
 
In the case of Kahan Singh v Air Asia Berhad [2015] 2 LNS 1303, a material witness for the company could not be called despite the efforts made by the company and the Industrial Court found that the non-calling of the witness was not fatal to the company's case as the records of DI proceedings were sufficient to substantiate the company's case.
 
Additionally, having a proper record of evidence would mean that the employee is, to a certain extent, limited to the defence and evidence given at the DI. Any inconsistencies between the evidence given at the DI and in the Industrial Court could discredit the employee and in turn, assist the employer's case.
 
For example, in Kahan Singh (supra), the Industrial Court found that the claimant's evidence in the Industrial Court was inconsistent with the evidence he provided in the DI, and therefore did not accept the claimant's version of events. Further, in the case of United Parcel Service (M) Sdn Bhd v Wan Saadiah Mohd Ghani [1999] 1 ILR 668, the Industrial Court found that the employee had sought to explain her actions for the first time in the Industrial Court, and not earlier in the DI, therefore held that such explanation was an afterthought.
 
CONCLUSION
 
The answer to the question is therefore 'yes', a DI should be held where the evidence is heavily dependent on witness testimony. However, the worth of a DI is directly dependent on the skills of the prosecuting officer and a DI panel that is fully competent. Too often we see DI records that are lacking in many ways and the findings of a panel that are unfathomable.
 
The Court of Appeal's decision in Lini Feinita binti Muhammad Feisol may give rise to the temptation for a DI panel to simply find an employee guilty of all or most charges so as to leave the door open for the employer to prove its case in the Industrial Court without limitation. This however is not the intention of convening a DI and may also cast both the panel and employer in bad light which in turn could cause the Industrial Court to view the employer with jaundiced eyes.
 
The key therefore is to ensure that the in-house personnel who are tasked with this important role are properly equipped and as with all else, this can be achieved with the right training. Investing in training for management level employees who may be called upon to discharge these roles is invaluable especially in organisations with a large workforce. Alternatively, external support could be sought when it becomes necessary to convene a DI.
 
To put it simply, a DI can be invaluable and should be held only if you have the necessary means and support to ensure that a DI is properly conducted!
 

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.