The Take of the Industrial Court in Malaysia on the Findings & Decision of an Employer's Domestic Inquiry

It is not an uncommon thing for employers in companies to dismiss employees for various reasons. However, can an employer simply dismiss an employee just because they feel like it, or on mere suspicion that an employee has committed or omitted an act of misconduct which warrants a last resort punishment as severe as a dismissal?

The short answer to the above is 'No'. This is because Parliament has ensured some form of protection for employees against unfair dismissals through the enactment of the Employment Act 1955 (Act 265) (hereon referred to as 'the Act').

Section 14(1) of the Act states that an employer may, on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his service, after due inquiry do three things:-

a)    Dismiss the employee without notice;

b)   Downgrade the employee; or

c)    Impose any other lesser punishment as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks.

According to the provisions of this Act, it is clear that an employer may not dismiss employees as and when they like, but ‘due inquiry’ must first be had before any decision against an employee can be taken. While the Act does not define what ‘due inquiry’ is, it is pretty standard for most employers in Malaysia to fulfil this statutory obligation via a procedure known as a Domestic Inquiry.

What is a Domestic Inquiry?

A Domestic Inquiry is an internal investigation process concerning the charge(s) against an employee who allegedly committed certain acts of misconduct. This is usually done after a show cause letter (a letter requiring the employee to provide an explanation why they should not face disciplinary action for an allegation of misconduct) and subsequently a Notice of Domestic Inquiry have been issued to the said employee.

A Domestic Inquiry is often but not always conducted under the Human Resources Department, depending on the size of the company. It can be akin to a court proceeding, consisting of an appointed prosecuting officer and a panel who will deliberate facts, evidence and witness testimonies before making a finding. Once a finding is made and the charged employee is found guilty, the employer may then decide what action will be suited against the employee in accordance to the options laid out in Section 14(1) of the Act, which includes but is not limited to a dismissal without notice.

The benefits of conducting a Domestic Inquiry is summarised in Syarikat Telekom Malaysia Berhad v Saidon bin Puteh (Award No. 157 of 1996) as follows:

“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 employee to turn to when, due to the effluxion of time witnesses have become unavailable of 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.”

What Happens if The Employee Is Not Happy?

After findings having been made, there can be many reasons why an employee may not be satisfied with the outcome of the Domestic Inquiry. When this happens, some companies may provide an avenue for “appeal” against the decision in its policies or procedural manual. In absence of which, an employee may take the next step of lodging a complaint for unfair dismissal pursuant to Section 20 of the Industrial Relations Act 1967 (Act 177). The aggrieved employee will then have his or her case heard in the Industrial Court.

The Case in the Industrial Court

What happens in an Industrial Court proceeding? Will the findings and decisions of the Domestic Inquiry be adverse against the employee? Will it be a level playing field? These are often questions that run through the minds of aggrieved employees bringing their case to the Industrial Court. After all, it will admittedly take courage to bring up a case against a former employer. This is more so when the Industrial Court finds that the Domestic Inquiry was valid and/or conducted in a practical manner, or finds no fault in it.

In response to this, an aggrieved employee can rest knowing that this may not have to be a cause for concern. Per Gopal Sri Ram JCA (as he then was) in Hong Leong Equipment Sdn Bhd v Liew Fook Chuan & Other Appeals [1996] 1 MLJ 481, it was stated that:-

“The fact that an employer has conducted a domestic inquiry against his workman is, in my judgment, an entirely irrelevant consideration to the issue whether the latter had been dismissed without just cause or excuse. The findings of a domestic inquiry are not binding upon the Industrial Court which rehears the matter afresh. However, it may take into account the fact that a domestic inquiry had been held when determining whether the particular workman was justly dismissed.

Were it otherwise, the guilt or innocence of a workman, upon a charge of misconduct would be decided not by the Industrial Court, but by the employer himself. That, with all respect, is not the purpose for which Parliament went through the elaborate process of legislating the Act and setting up special machinery for the vindication of the rights of workmen.”

According to the principle laid down by the Court of Appeal in this case, although an employer had conducted a Domestic Inquiry prior to dismissing the employee, whether or not the Domestic Inquiry was conducted fairly, it is still the duty of the Industrial Court to determine whether the misconduct complained of was in fact committed by the employee, and that the proven misconduct constitutes a just cause or excuse for the dismissal.

In other words, whether a Domestic Inquiry was held and how good or bad it was conducted becomes entirely irrelevant because the Industrial Court hears both parties all over again, it studies the facts all over again and then analyses the material through the lens of equity and good conscience before making a decision that is consonant with industrial harmony.

In fact, this goes both ways as where the Domestic Inquiry process was flawed, the employer is still given a renewed opportunity to present its case in the Industrial Court. The decision in Tai Chin Yee v Tong San Chan Distributors Sdn Bhd (Award No 1819 of 2019) aptly illustrates the approach taken by the court: 

“Sekiranya siasatan dalaman tersebut tidak mematuhi prinsip keadilan asasi, ianya langsung tidak menjejaskan keputusan pembuangan kerja Pihak Yang Menuntut oleh Syarikat. Ini adalah kerana Syarikat masih berpeluang untuk membuktikan kes mereka dengan mengemukakan saksi-saksi di hadapan Mahkamah ini. Ini adalah seperti yang diputuskan dalam kes Wong Yuen Hock v. Syarikat Hong Leong Assurance Sdn Bhd [1995] 3 CLJ 344, dimana Mahkamah Persekutuan telah memutuskan iaitu….”

The burden of proof is on the employer and the employer has to prove, on a balance of probabilities, that the employee’s dismissal was with just cause and excuse.

Conclusion

Regardless of the outcome of a Domestic Inquiry, when any dispute comes before an Industrial Court, the Industrial Court adjudicates or hears the matter afresh (de novo). While the notes and findings of a Domestic Inquiry may serve as a reference for the employer in advancing its position, the employer will still be required to prove at the Industrial Court, all over again, that there was a misconduct and that the resultant dismissal against the employee was justified.

So even where a Domestic Inquiry has been executed perfectly, it changes nothing at the Industrial Court – because the employer still has to repeat the process of proving misconduct at the Industrial Court level.

Authored by Yap Tsu Sheng. Advocate & Solicitor.

DISCLAIMER:

The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organisation or other group or individual.

The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.