Unfair Dismissal: What Are Your Rights as a Workman in Malaysia?

If you have been unfairly dismissed by your employer, you have the right to file a representation under Section 20(1) of the Industrial Relations Act 1967 (IRA) for reinstatement to your former employment. This is commonly referred to as a claim for unfair dismissal in the Industrial Court.

Remedies Available

Upon finding that the dismissal was without just cause or excuse, the Industrial Court has the discretion to award the following remedies:

1. Reinstatement

The Court may order that you be reinstated to your former position without loss of salary, benefits, or seniority. Additionally, the employer may be ordered to pay an amount equivalent to the wages you would have earned from the date of dismissal until the date of reinstatement.

2. Compensation in Lieu of Reinstatement

If reinstatement is not suitable or feasible, the Court may order the employer to pay compensation in lieu of reinstatement. The formula generally applied is one month’s last drawn salary for each completed year of service. No compensation is given for incomplete years.

For instance:

  • If you worked for 9 months, no compensation is awarded.
  • If you worked for 4 years and 8 months, compensation is calculated as one month’s salary x 4

3. Backwages

The Court may also award back wages, calculated from the date of dismissal to the date of the award, subject to a statutory cap:

  • Maximum of 24 months for a confirmed employee.
  • Maximum of 12 months for a probationer.

Back wages are based on the last drawn salary, which may include fixed allowances and commissions where applicable

Other Reliefs

The Industrial Court may also order the payment of:

  • Contractual bonuses,
  • Leave encashment (leave not taken),
  • Other contractual entitlements, but not compensation for future loss of earnings.

Mitigation of Loss

It is the workman’s duty to mitigate their losses by seeking alternative employment. However, the burden of proving failure to mitigate lies with the employer. Any post-dismissal earnings may be deducted from back wages, but:

  • The percentage of deduction is at the Court’s discretion.
  • No deduction is made if the workman has not secured any employment since the dismissal.
  • Mitigation affects back wages only, not compensation in lieu of reinstatement.

Citizens Commission as Part of Wages?

In many cases, disputes arise on whether commissions should be considered in calculating back wages and compensation. Employers often argue that commissions are not part of the basic salary.

However, in the landmark case of Lim Seng Huat v Fiamma Sdn Bhd [1996] 3 MLJ 604, the Court of Appeal affirmed the Industrial Court’s decision that commissions can be included in the computation of back wages and compensation. The Court held that:

  • The appellant’s commissions formed a substantial portion of his total earnings.
  • There was no evidence that commissions were not paid consistently.
  • The dismissal was found to be without just cause or excuse.

Accordingly, the Court ruled that commissions should be included in the back wages awarded.

Conclusion

If you believe you’ve been unfairly dismissed, it is important to act promptly and file your representation within 60 days from the date of dismissal. The Industrial Court offers effective remedies, including reinstatement, compensation, and back wages—ensuring that justice is served in the employment relationship.

If you have any questions or require any additional information or clarification, please contact our lawyer that you usually deal with.

This article is written by 
Gwen Yeap Siew Fen
Partners, Low & Partners
Jareen Lee Hoay Yin
Principal Associate, Low & Partners
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