Employment Law
(Reliefs for Unfair Dismissal)

Reliefs for unfair dismissal

Whenever an individual contemplates taking legal action, one of the primary concerns is determining the remedies they seek. The type of relief available depends on the cause of action or the underlying right.

A. Reinstatement:

Unfair dismissal claims often aim for reinstatement to their previous position, as stated in Section 20(1) of the Industrial Relations Act 1967 (“IRA”). However, there are instances where reinstatement may not be granted, such as when the claimant reaches retirement age, if the relationship between parties breaks down, or if the job no longer exists.

Previously, it was believed that employees must seek reinstatement, and failure to do so would lead to the Industrial Court lacking jurisdiction over the dispute. However, in the case of Sanbos (M) Sdn Bhd v Gan Soon Huat [2021] 4 MLJ 924, the Court of Appeal clarified that the Industrial Court has jurisdiction once the Minister refers the case. As a result, employees are no longer obligated to explicitly request reinstatement as a relief in unfair dismissal claims

B. Compensation in lieu of reinstatement:

In cases where reinstatement is unsuitable, compensation may be granted as an alternative. However, only employees entitled to reinstatement can receive compensation in lieu of it. For example, employees who have reached retirement age and are not eligible for reinstatement are also not entitled to this compensation. The amount is generally equivalent to one month’s last drawn salary for each year of completed service, and it may be subject to the Court’s discretion based on the specific circumstances of the case

C. Backwages:

Backwages are awarded to compensate employees for the earnings they would have received if not unfairly dismissed. Permanent employees’ backwages are capped at 24 months of their last drawn salary, while probationers are entitled to backwages capped at 12 months. Deductions may apply if the employee earned income after the dismissal or due to contributory conduct.

D. Contractual entitlements:

Certain benefits may be contractual entitlements, while others might be discretionary or contingent on specific conditions. For instance, bonuses may be considered contractual if the employment agreement explicitly states such terms. However, the Court may require the company to exercise its discretion fairly and reasonably. Additionally, payment in lieu of unused leave might be included in the Court’s award.


The Court has the power to order costs and expenses, including witness expenses. However, the Courts typically refrain from exercising this power unless exceptional circumstances exist. In some cases, counsel may be personally liable for costs if their applications for postponements are found to be baseless, leading to wasted hearing dates and prejudice to the other party.

Written by Lawyer Khoo


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