Inside the Unfair Dismissal Process: An Employer’s Map of Section 20

An unfair dismissal claim in Malaysia begins with the employee’s written representation to the Director General for Industrial Relations within 60 days of dismissal, proceeds through conciliation, and if unresolved is referred to the Industrial Court, where the employer bears the burden of proving just cause and exposure is capped at 24 months’ backwages plus reinstatement or compensation in lieu.

How does a claim start and what are the deadlines?

A dismissed employee — including a probationer, a constructively dismissed employee or a non-renewed ‘fixed-term’ employee claiming permanence — may file a representation for reinstatement under section 20(1) of the Industrial Relations Act 1967 at the Industrial Relations Department (JPP) within 60 days of the dismissal. The 60-day limit is strictly applied.

The Department convenes conciliation between the parties. Since the 2021 amendments, unresolved representations are referred by the Director General directly to the Industrial Court, removing the former ministerial filter — which in practice means more cases reach the Court and employers should assume every unresolved representation will be heard.

What happens at the Industrial Court?

Pleadings are exchanged, documents disclosed and witness statements filed before a hearing at which the employer goes first: the burden lies on the employer to prove, on the balance of probabilities, that the dismissal was for just cause or excuse — and the Court confines the employer to the reasons it actually relied on at dismissal (Goon Kwee Phoy v J & P Coats (M) Bhd).

The Court acts according to equity, good conscience and the substantial merits of the case without regard to technicalities (section 30(5) IRA). Awards may be challenged on appeal to the High Court under section 33C, a route introduced by the 2021 amendments in place of judicial review for most awards.

What remedies can be awarded against employers?

The primary statutory remedy is reinstatement, but in practice the usual award is compensation: backwages capped at 24 months of last-drawn salary for confirmed employees (12 months for probationers), with deductions commonly made for post-dismissal earnings and contributory conduct, plus compensation in lieu of reinstatement conventionally computed at one month’s salary per year of service.

For employers, the economics are stark: a five-year employee on RM8,000 a month carries potential exposure approaching RM232,000 before legal costs. Early case assessment — and where the dismissal is weak, structured settlement at conciliation — is usually the financially rational course.

Key Takeaways for Employers

• Employees have a strict 60-day window to file a section 20 representation.
• Unresolved cases are now referred directly to the Industrial Court — assume every claim will be heard.
• The employer bears the burden of proof and is bound by the reasons given at dismissal.
• Exposure: up to 24 months’ backwages plus one month’s salary per year of service in lieu of reinstatement.
• Use conciliation strategically; weak cases are cheapest to resolve early.

Frequently Asked Questions

How long does an unfair dismissal case take in Malaysia?

Timelines vary by registry and case complexity, but from representation to award commonly spans one to two years or more, with appeals to the High Court adding further time.

What is the maximum compensation in an unfair dismissal case?

Backwages are capped at 24 months of last-drawn salary (12 months for probationers), and compensation in lieu of reinstatement is conventionally one month’s salary per year of service, subject to deductions.

Can an Industrial Court award be appealed? Yes. Since the 2021 amendments to the Industrial Relations Act, awards may be appealed to the High Court under section 33C in the same manner as appeals from Sessions Court decisions.