In an era where remote work is increasingly common, can an employer suddenly demand an employee’s physical presence as a condition for continued employment? The case of JMN v E-Rete (Malaya) Sdn Bhd explores whether a long-standing agreement to work from abroad can be used as a reason for termination when the relationship sours.
Brief Facts
- The Claimant, an Australian citizen, served as the General Manager of E-Rete (Malaya) Sdn. Bhd. from 2014 until his termination in 2023.
- For nearly nine years, he operated on a series of two-year fixed-term contracts, frequently working remotely from Australia with the company’s full knowledge and financial support for his travel expenses.
- Following a shift in the company’s leadership and internal family dynamics, the Board of Directors insisted that The Claimant must be physically resident in Malaysia full-time.
- When the Claimant maintained his established working arrangement, the company terminated his services, citing the expiry of his work permit and his refusal to relocate.
- The Claimant subsequently filed a claim for unfair dismissal, arguing that his remote work had always been accepted and that the termination was a malicious act driven by a family feud.
Court’s Findings
A central pillar of the Court’s reasoning was that the remote working arrangement was not a new development; it had been the status quo for nearly a decade. For years, the company had accepted this arrangement and actively facilitated it by paying for the Claimant’s flights and accommodation. This established a mutual understanding that physical presence in Malaysia was not a strict requirement of his role, and the company could not unilaterally change these terms without just cause.
Addressing the company’s claim of poor performance and absenteeism, the Court found these allegations baseless. There were no prior warning letters or show-cause notices issued to the Claimant regarding his location or his output. Internal emails revealed that the directors had frequently praised his ‘extraordinary performance’ just months before the dismissal. If an employee’s performance is truly an issue, it must be preceded by warnings and an opportunity to improve, neither of which occurred here.
The Court also viewed the Company’s justification regarding the work permit with skepticism. Although the Company claimed the termination was due to the permit’s expiry, evidence showed that the Malaysian Immigration Department had approved a 24-month renewal shortly after the dismissal. The Company’s decision to revoke this approved permit suggested that the termination was a tactical manoeuvre rather than a legal necessity.
The Court concluded that the sudden demand for relocation was an afterthought designed to force the Claimant out, likely rooted in a family vendetta. As the company could not prove genuine misconduct or performance issues, the dismissal was ruled to be without just cause or excuse.
The Court awarded the Claimant backwages of 24 months, on the basis that had his employment not been terminated, the next renewal date for his contract would have been for 24 months (based on the validity of the approved work permit).
Key Takeaways
Consistency creates expectations. Where an employer has allowed remote work over a sustained period, that arrangement may come to be regarded as an accepted mode of working, even if it was never formally reduced into writing. While employers retain the right to determine work arrangements and operational needs, courts may scrutinise sudden reversals that appear to be driven by convenience or hindsight rather than genuine business considerations.
This is relevant when expectations evolve. Employers are entitled to review performance standards, adjust supervision methods, and require physical presence where operationally justified. However, such changes should be communicated clearly and in advance, with a reasonable period for adjustment. Employees should understand what is expected of them, the business rationale for the change, and the potential consequences of non-compliance. Abrupt enforcement may attract closer scrutiny, especially where surrounding circumstances could give rise to misunderstandings about the employer’s motives.
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This article was written by Donovan Cheah (Partner) from Donovan & Ho’s employment law practice.
Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.
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