An employment contract may allow either party to terminate employment by giving notice.
However, this does not mean that an employer can dismiss an employee for any reason simply by paying the required notice.
Under Malaysian employment law, an employer must generally have just cause or excuse for dismissal.
What Is Unfair Dismissal?
Unfair dismissal occurs when an employer dismisses an employee without a genuine and sufficiently valid reason.
Section 20 of the Industrial Relations Act 1967 allows an employee who considers that they were dismissed without just cause or excuse to make a representation for reinstatement.
Common grounds that may justify dismissal include:
- misconduct;
- poor performance;
- redundancy; and
- prolonged medical incapacity.
The employer must prove that the reason existed and was sufficiently serious to justify dismissal.
Can an Employer Dismiss by Giving Notice?
Giving notice or payment in lieu of notice does not automatically make a dismissal fair.
A contractual notice clause determines how much notice must be given. It does not remove the employee’s protection against unfair dismissal.
In Dr A Dutt v Assunta Hospital [1981] 1 MLJ 304, the Federal Court rejected the idea that an employer could dismiss an employee merely by relying on a contractual notice clause without showing just cause or excuse.
Who Must Prove the Case?
Where dismissal is admitted, the employer bears the burden of proving just cause or excuse.
For misconduct, the employer must prove that:
- the misconduct occurred; and
- it was serious enough to justify dismissal.
The standard of proof is the balance of probabilities.
Where dismissal itself is disputed, such as in a constructive dismissal or forced resignation claim, the employee must first prove that there was a dismissal.
Must the Employer Give a Reason?
The employer should clearly state the genuine reason for dismissal.
In Maritime Intelligence Sdn Bhd v Tan Ah Gek [2021] 10 CLJ 663, the Federal Court confirmed that an employer cannot justify dismissal using reasons introduced or discovered only after the employee was dismissed.
The Industrial Court considers the reason operating in the employer’s mind at the time of dismissal. The Federal Court judgment explains this principle.
Need Help with an Unfair Dismissal Claim?
If you need help assessing, responding to or pursuing an unfair dismissal claim under Malaysian law, feel free to get in touch. You can also explore Employment Law Malaysia: The Complete Guide for Employees and Employers (2026) for practical articles covering workplace rights, termination and Industrial Court claims.
When May Dismissal Be Justified?
1. Misconduct
Misconduct may include dishonesty, theft, insubordination, sexual harassment, unauthorised absence or breach of confidentiality.
Not every offence justifies dismissal. The punishment must be proportionate to the seriousness of the misconduct.
Read more: What Is Misconduct in Malaysian Employment Law?
2. Poor performance
An employer should ordinarily identify the employee’s shortcomings, communicate the required standard and provide a reasonable opportunity to improve.
Dismissal based only on vague complaints that the employee was “not suitable” may be difficult to defend.
Read more: Poor Performance at Work in Malaysia: Can an Employer Dismiss an Underperforming Employee?
3. Redundancy
Redundancy may justify dismissal where a genuine restructuring causes the employee’s services to become surplus.
The employer should prove actual redundancy and a fair selection process. “Restructuring” should not be used merely to remove an unwanted employee.
Read more: Retrenchment in Malaysia: Can Your Employer Really Let You Go? A Practical Guide to Your Rights
Are Probationers Protected?
Yes.
Probation does not give an employer an unrestricted right to dismiss.
In Khaliah Abbas v Pesaka Capital Corporation Sdn Bhd [1997] 3 CLJ 827, the Court of Appeal confirmed that probationers are protected against dismissal without just cause or excuse.
Where performance is the concern, the employer should conduct an honest assessment and generally give the probationer an opportunity to improve.
Read more: The Rights of a Probationary Employee in Malaysia
Is a Domestic Inquiry Required?
A fair disciplinary process is strongly advisable where misconduct is alleged.
The employer should ordinarily:
- investigate the allegation;
- issue a show cause letter;
- allow the employee to respond;
- conduct a domestic inquiry where appropriate; and
- impose a proportionate punishment.
The absence of a domestic inquiry does not automatically make the dismissal unfair if the employer can still prove just cause or excuse before the Industrial Court.
Continue reading: Can My Employer Dismiss Me Without a Domestic Inquiry In Malaysia?
Can a Resignation Be an Unfair Dismissal?
Potentially.
A resignation may amount to dismissal where:
- the employee was forced or threatened into resigning; or
- the employer committed a fundamental contractual breach that caused the employee to resign.
These are commonly described as forced resignation and constructive dismissal.
An employee who resigns voluntarily because they are unhappy or have found another job has not been dismissed.
Read more: Constructive Dismissal in Malaysia: Can an Employee Resign and Still Claim Unfair Dismissal?
How Can an Employee File a Claim?
An employee must make a representation under section 20 of the Industrial Relations Act, generally within 60 days of dismissal.
Where dismissal is given with notice, the employee may file during the notice period or within 60 days after it expires.
The Department of Industrial Relations will first arrange conciliation. If the dispute cannot be settled, it will be referred to the Industrial Court.
The Department’s section 20 guidance explains the process.
Read more: Industrial Court Procedure in Malaysia: A Practical Guide to Unfair Dismissal Claims
What Can the Industrial Court Award?
The primary remedy is reinstatement.
Where reinstatement is unsuitable, the Industrial Court may award:
- back wages; and
- compensation in lieu of reinstatement.
Back wages are generally limited to 24 months for confirmed employees and 12 months for probationers. The award may be reduced based on post-dismissal earnings or contributory misconduct.
Compensation in lieu of reinstatement is commonly assessed at one month’s salary for each completed year of service.
Final Thoughts
An employer may dismiss an employee for a genuine and sufficiently valid reason, including misconduct, poor performance or redundancy.
However, paying contractual notice is not enough. The employer must be able to prove just cause or excuse and show that dismissal was proportionate.
An employee who wishes to challenge a dismissal should act quickly because the 60-day filing deadline is strict.
If you need help assessing, responding to or pursuing an unfair dismissal claim under Malaysian law, feel free to get in touch. You can also explore Employment Law Malaysia: The Complete Guide for Employees and Employers (2026) for practical articles covering workplace rights, termination and Industrial Court claims.
This article provides general information and does not constitute legal advice.
