Case Background & Strategy

What happened in this case?

A senior Sales Manager earning RM23,000 per month was summarily terminated in June 2024. The employer issued a Show Cause Letter setting out four allegations of misconduct, then terminated him before he could fully respond — in fact, the termination email was sent at 8.39 a.m., and the employee delivered his written response by hand at 11.38 a.m. the same morning.

The employer alleged:

1. Unauthorised price-fixing discussions with competitors;

2. Poor sales performance (a 12% decline in tonnage year-on-year);

3. Unsatisfactory management of the sales team (citing a high staff turnover rate); and

4. Disobeying company instructions on transportation charges.

The Industrial Court rejected all four.

Why did the employer lose?

This award is a textbook illustration of the employer’s burden of proof in Malaysian dismissal cases. Under settled law, once dismissal is established, it is for the employer to prove the dismissal was with just cause or excuse, on a balance of probabilities. Here is how each allegation collapsed.

Allegation 1 — Price-fixing with competitors (not proven)

The charge failed on both particularity and evidence:

• No competitors were named in the Show Cause Letter. The Court held that the identity of the alleged competitor was a material particular, not a peripheral detail. The names only appeared for the first time in a witness statement — far too late.

• The receipts and entertainment claims proved only that a meal took place, not what was discussed.

• No representative from either competitor was called to give evidence. The principle “he who asserts must prove” was fatal.

• The employer’s own witnesses contradicted each other on who reported the alleged price-fixing, and the Court found one witness’s account “untruthful and unreliable.”

• Crucially, the relevant outreach had been done on the instructions of the employee’s own superior — directly contradicting the claim that he acted without management approval.

The Court also refused to allow the employer to recast a price-fixing charge into a “disclosure of confidential information” charge mid-trial. An employer must stand or fall by the reason it actually gave.

Allegation 2 — Poor sales performance (not proven)

A decline in sales figures, without more, does not prove poor performance. The Court found:

• The employer never proved a clear, communicated, measurable sales target existed.

• The alleged target of 20,000 tonnes/month was not mentioned in either the Show Cause Letter or the Termination Letter.

• A salary increment relied upon by the employer was not tied to any performance condition on its face.

• Even for senior managers, the employer must still prove a target existed before alleging failure to meet it. “The Claimant cannot be faulted for failing to meet a target which the Company has failed to prove existed.”

Allegation 3 — Mismanaging the sales team (not proven)

The Court drew a sharp distinction: responsibility is not culpability. Staff turnover alone proves nothing without a causal link to the manager’s conduct. Some employees had left for “greener pastures” — by the employer’s own admission. The employer also tried to inflate the turnover figure mid-case, another impermissible departure.

Allegation 4 — Disobeying transport-charge instructions (not proven)

This allegation “collapsed” on the employer’s own evidence. The revised charges reflected C% SST imposed by logistics providers and were approved by the authorised person- in-charge. The employer’s witness admitted as much.

The smoking gun: “resigned colleagues”

Even though the Court found the dismissal unfair, it declined to order reinstatement — and the reason is a powerful lesson for employers. On the very day the employee was suspended pending investigation, an internal instruction was issued to remove his email, describing him as a “resigned colleague.”

At that point he had not resigned, had not been found guilty, and had not even received the Show Cause Letter. The Court found this showed the employer had already decided to remove him before the disciplinary process began — fatally undermining the good faith of the entire exercise.

How was the RM401,350 calculated?

Component	Basis	Amount
Backwages	17 months × RM23,000	RM391,000
Less 15% deduction	Post-dismissal earnings (new job from Oct 2024)	(RM58,650)
Backwages payable		RM332,350
Compensation in lieu of reinstatement	3 completed years × 1 month’s salary	RM69,000
Total award		RM401,350

Payable within 30 days, with 8% interest per annum thereafter until full realisation.

Key takeaways for employers

• Particularise your charges. Name names, dates, and specifics. Vague allegations invite the inference that you are “shifting the goalpost.”

• You stand or fall by the reason in your termination letter. You cannot invent or expand grounds later.

• Prove the target before alleging failure to meet it. A sales dip is not, by itself, misconduct.

• Causation matters. Staff turnover, exit interviews, and statistics prove nothing without a proven link to the employee’s conduct.

• Run a genuine disciplinary process. Treating someone as gone before the inquiry begins can destroy your case — even where reinstatement would otherwise be refused.
  
• Give a real opportunity to respond. Terminating hours before the response deadline is indefensible.

Key takeaways for employees

• The employer carries the burden — you do not have to prove your innocence.

• Insist on proper particulars in any show cause letter.

• Document instructions from superiors; they can defeat “unauthorised conduct” allegations.

• Mitigate your loss by seeking new employment, but know that post-dismissal earnings are not deducted ringgit-for-ringgit — the Court exercises broad, equitable discretion.

Frequently asked questions

What does “dismissal without just cause or excuse” mean in Malaysia? It means the employer could not prove, on a balance of probabilities, a valid and proven reason justifying termination. Under Section 20 of the Industrial Relations Act 1U67, such a dismissal entitles the employee to remedies including reinstatement or compensation.

Who has the burden of proof in an unfair dismissal claim? The employer. Once dismissal is established, the employer must prove the dismissal was with just cause or excuse.

Can an employer add new reasons for dismissal during the Industrial Court hearing? No. The employer is bound by the reasons stated in the termination letter and cannot introduce or recast grounds afterwards.

Is the absence of a domestic inquiry fatal to the employer? Not automatically. The Industrial Court hears the matter de novo on the totality of the evidence. But a flawed or bad-faith process can still weigh heavily against the employer, especially on the question of reinstatement.

How are backwages calculated? Generally up to 24 months for a confirmed employee, calculated on the last drawn salary, subject to deductions for post-dismissal earnings and the Court’s equitable discretion.

This article discusses a decided Industrial Court award for general educational purposes and does not constitute legal advice. Outcomes depend on the specific facts of each case. If you are facing a dismissal or a disciplinary process, speak to a qualified employment lawyer.

NZSK Legal acts for both employers and employees in unfair dismissal, industrial relations, and disciplinary matters before the Industrial Court of Malaysia. Follow @peguam.khoo for more on Malaysian employment law.