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Handling Disciplinary Issues at the Workplace

Updated: Apr 2

From a legal standpoint, it is important for an employer to effectively deal with disciplinary issues in the workplace.

Misconduct in the workplace is when an employee partakes in behaviour that is out of line with the company’s own policy, goes against the terms of their employment or is unlawful. From a legal standpoint, it is important for an employer to effectively address disciplinary issues, otherwise termed as misconduct, in the workplace.

In addressing misconduct at the workplace, below are some factors that employers ought to consider: -

Notice Provision In Employment Contract

Employers cannot dismiss an employee by merely following the notice provision as per the employment contract. This is because the Industrial Relations Act 1967 states that termination of employment must be with just cause or excuse. Section 20 (hereafter referred to as “S.20 IRA”) states that any employee who feels that s/he was dismissed without just cause or excuse can bring legal action against his/her former employer for reinstatement.

No Condonation

Condonation in this context refers to an employer accepting the behaviour of an employee that is regarded to be wrong. This can take the form of the following behaviours exhibited by an employer: -

  • Word(s)

  • Action(s)

  • Non-action

The general principle behind condonation is that an employer must act against employee(s) in all situations of misconduct. Failure to do so may be regarded as the employer condoning the misconduct and any future attempts at dismissing the employee on such condoned behaviour will likely be found by a court to be unlawful dismissal despite the employee first exhibiting unlawful behaviour.

Showing Just Cause Or Excuse; Disciplinary Process

A key feature of employment law in Malaysia is that in a claim for unlawful dismissal, it is the employer who bears the burden of proving that there was just cause or excuse in dismissing the employee despite the employee being the one who initiated the claim. If the employer fails in proving just cause or excuse, it is open to the Industrial Court to order reinstatement of the employee or penalize the employer by awarding back-wages of up to 24 months plus compensation in lieu of reinstatement.

For an employer to stand a chance at succeeding before the Industrial Court, it must demonstrate that the stages of disciplinary process were duly followed and that the principles of natural justice were adhered to by providing the employee with the opportunity to defend his/her case. Adherence to a disciplinary process may amount to successful proof of just cause or excuse. Below is are the general stages of a recommended disciplinary process: -

General stages of disciplinary process:

  1. Preliminary investigation

  2. Service of Show Cause Letter

  3. Letter of Explanation from the employee

  4. Notice of Domestic Inquiry

  5. Suspension Pending Domestic Inquiry

  6. Appointment of Panel Members for Domestic Inquiry

  7. Conduct of Domestic Inquiry

  8. Panel Decision and Report

  9. Punishment

Factors to be considered when adhering to a disciplinary process include severity of the misconduct (i.e. whether it is a minor or major misconduct), whether the employee already admitted to guilt, past records, years of service, etc.

It is also essential that the above steps are documented. Always be mindful that in the absence of any documentation, it becomes a situation of one party’s word against another and vice versa. And typically, in this situation, the Industrial Court will take the side of the employee.

For employees who earn RM2,000 and below (subject to several exceptions contained in the First Schedule of the Employment Act 1955), employees may only be punished for misconduct following a ‘due inquiry’ into the alleged behaviour per section 14 of the Employment Act 1955. Such ‘due inquiry’ largely follows the structure of a disciplinary process as recommended above, as ‘due inquiry’ is largely understood to mean an employer investigating the alleged misconduct and providing the employee with an opportunity to defend themselves.


The employer must prove that dismissal of an employee was with just cause or excuse. Before dismissing, employers are advised to carry out the stages of disciplinary process stated above as failure to do so may expose the employer to an unfair dismissal claim and may render the company liable to pay a large compensation package.


Legal Disclaimer

We trust that you have gained some information from this article. If you have any specific questions related to this article, please contact us at

This article is posted for general information purposes only and should not be construed as legal advice. Facts and circumstances differ from case-to-case. Please consult your lawyer for specific legal advice and action to be taken.


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