5 November, 2016
Most employees do not expect to get fired. While Malaysian law does prevent employees from being fired without a good reason, this does not mean that employees are infallible. We’ve set out below the 3 main things that can be legitimately used to terminate an employee:
Misconduct is a general term used to describe actions or conduct which negatively affects the employee’s duty towards their employer. Not all misconduct warrants termination – in the event of dismissal, the employer must establish, among other things, that the misconduct committed was sufficiently serious to justify dismissal.
The list of what amounts to misconduct is not exhaustive, but can include things like:
- Insubordination or willful disobedience
- Dishonesty and cheating
- Committing criminal offences such as theft, assault or bribery
- Intoxication or being under the influence of illegal drugs at work
- Sexual harassment
- Prolonged or repeated absence from work without leave or consent
- Conflict of interest
- Sending inappropriate e-mails
An employee can be terminated for misconduct even if it occurs outside the workplace or after working hours, especially if the misconduct causes damage to the employer’s business and reputation.
#2: Poor performance
Poor performance means the employee’s work or standard of work is not up to par. There are different ways to describe poor performance, for example incompetence, inefficiency, inaptitude or even negligence.
Standards of performance can vary depending on factors such as the employer’s personality, requirements of the jobs and the employee’s skill and expertise. The law recognises that the yardstick to be used to gauge the employee’s performance is best left to the employer’s prerogative and judgment so long as it is supported by evidence and not tainted with bad intentions. An employee’s performance can therefore be measured based on a combination of variables such as actual performance, values, suitability, aptitude, conduct, behaviour and even mannerism.
As the above factors are extremely subjective, the law does require employees to have been notified of their shortcomings and to be given sufficient opportunity to improve before they are terminated.
A popular myth is that 3 warning letters are required before an employee can be terminated for poor performance.
There is no such requirement under law.
#3: Redundancy / Retrenchment
Employers have the right to reorganise their business to achieve maximum efficiency. In some cases, this involves terminated employees who are considered a surplus to the business requirements. Where an employee is made redundant, it means that their role or position is no longer required. This could be due to various reason such as:
- Closure of a specific department or branch
- Significant reduction of turnover or profits
- Reduced productivity
- Escalating expenditures due to adverse economic climate or business conditions
- The role still exists, but can be done by fewer workers
- Duplicity of work or rationalisation of functions
An employee is said to be “retrenched” when their role is identified as redundant and no longer required by the business.
The law requires employers to have a legal basis and justification to carry out the retrenchment exercise, and this includes having an objective and fair selection process for identifying employees to be retrenched.
What we’ve listed above are 3 broad areas in which an employer may use to legally terminate an employee unilaterally. Employers should take note that purely relying on the notice clause to terminate an employee may result in legal complications if the termination is challenged.
For further information, please contact:
Donovan Cheah, Partner, Donovan & Ho