Sued by Your Former Employer in Malaysia? What to Do in the First 14 Days

What have I been served with?

A civil claim in Malaysia usually begins with two documents. The writ is the court's formal notice that you are being sued. It names the court, the case number, the parties and the claimant's solicitors, and it tells you how long you have to enter appearance. The statement of claim sets out the facts the company relies on, the legal claims it makes and the orders it wants, such as an injunction, damages or an account of profits.

You may also receive a notice of case management, which fixes the first date the court will deal with the case, and sometimes an application for an interim injunction with an affidavit. An injunction application can be listed for hearing much sooner than the case management date, so check every document for dates.

Write down the date and the way you were served, for example by hand or by registered post. The deadlines run from service.

What are the deadlines?

The deadlines are short and the court does not extend them automatically.

Entering appearance does not mean you accept the claim. It is the formal step that tells the court and the company you intend to defend, and it is usually done through solicitors.

What should I not do?

The first few days are when defendants most often damage their own position. Avoid these mistakes:

• do not ignore the papers or assume the case will go away;
• do not delete files, emails, chat messages or cloud folders, even ones you think are harmless, because deleting material after a claim is threatened can lead the court to draw adverse inferences and, once an order is made, may be contempt of court;
• do not keep using any document that came from the former employer, and do not destroy it either; keep it aside unopened and tell your lawyer;
• do not contact the company, its staff or its clients about the case;
• do not post about the dispute on social media;
• do not sign undertakings, statements or settlement terms before taking advice, because an undertaking given to the court binds you like an order.

What will the company have to prove?

Being sued is not the same as being liable. The company has to prove each element of each claim against each defendant. In a typical claim about confidential information and clients, that means:

• identifying the specific confidential information it says was taken or misused, because the Federal Court held in Dynacast (Melaka) Sdn Bhd & Ors v Vision Cast Sdn Bhd & Anor (2016) that a general allegation is not enough;
• showing that the information was confidential and not simply part of your skill, knowledge and experience;
• proving that you used or disclosed it without authority;
• showing the loss it says was caused, client by client and project by project.

A clause stopping you from competing after you left is generally void under section 28 of the Contracts Act 1950, so many claims rely instead on confidentiality clauses and duties owed during employment. We explain this in Is a Non-Compete Clause Enforceable in Malaysia?

I never worked for the company. Why am I being sued?

Companies often sue the people behind the new business as well as the former employee, such as co-founders, business partners, the new employer or family members who helped. The usual claims against them are conspiracy, dishonest assistance, inducing breach of contract and knowing use of confidential information.

These claims are harder to prove than the claim against the employee. Dishonest assistance requires proof that you helped a breach of trust or fiduciary duty and that you acted dishonestly, as explained in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378. Conspiracy requires an agreement or combination to injure the company and, for unlawful means conspiracy, an unlawful act. Inducing breach of contract requires knowledge of the contract and an intention to bring about its breach.

What you knew, and when you knew it, is usually central. Keep any emails or messages that show how the business was set up and how its work came in. Where co-defendants' accounts of events differ, they may need separate lawyers.

How are these claims usually defended?

Each case turns on its documents, but defences commonly include:

• the information was public, widely known in the industry or part of the defendant's own skill and knowledge;
• the claim does not identify the information with proper particularity;
• the clients came through their own enquiries, public tenders or the defendant's existing relationships;
• the clause relied on is a restraint of trade and void;
• the defendant had no knowledge of any breach, and no agreement to injure the company;
• the loss claimed is exaggerated or not caused by the defendant.

Where the company has applied for an interim injunction, the response also looks at whether there is a serious question to be tried against you, whether damages would compensate the company, and the harm an injunction would cause your business.

What should I gather now?

Your lawyer will need to see the documents quickly. Start collecting:

• the writ, statement of claim and every other document served, with the date of service;
• your employment contract, offer letter, handbook and any confidentiality or non-solicitation agreement, if you were employed;
• resignation or termination letters, and any statements or reports you gave during an investigation;
• records showing how each client named in the claim came to you or your business;
• company registration documents, invoices and bank records for the new business, if relevant;
• a list of devices and accounts you used, without deleting or altering anything on them.

A short written timeline, prepared for your lawyer and marked as such, is often the most useful document of all.

Can the case settle?

Many of these cases resolve once the facts are clearer, often through undertakings about the use of information, the return of documents and an agreed sum or terms of trade. Settlement discussions are usually conducted on a without prejudice basis, so that offers cannot be used as admissions.

A measured early response helps. A defendant who enters appearance on time, preserves evidence and responds to the specific allegations is in a far better negotiating position than one who has missed a deadline. For an overview of how these disputes work for both sides, see Ex-Employee and Competitor Disputes in Malaysia.