Can a professional like a dentist or doctor claim unfair dismissal even if their contract labels them an independent contractor? The recent Industrial Court case of TJS v BP Diagnostic Centre Sdn Bhd [Award No. 235 of 2026] highlights the crucial factors the Industrial Court looks at when deciding if someone is truly an employee or a business partner.
Brief Facts
- The Company operates specialist centres/clinics.
- The Claimant, a Claimant, was engaged by the Company under a contract called “Terms of Engagement – On Demand Partnership Scheme” (ODS).
- Under this arrangement, she was paid sessional rates and a 50% share of net profits from sales exceeding a specific monthly target.
- In late 2019, the relationship broke down. The Claimant claimed constructive dismissal, alleging the company failed to pay her commissions, tried to force her into a less favourable contract, and intimidated her with a police report on a missing whitening machine.
- The Company, however, raised a preliminary objection, arguing that the Industrial Court had no jurisdiction because the Claimant was an independent contractor, not a “workman” under the law.
Court’s Findings
The Court found that the Claimant was not a workman, but an independent contractor:
- The ODS was clear and unambiguous, explicitly stating that the Claimant was an independent contractor and not an employee. While labels in a contract are not always final, the Court found this document accurately reflected the parties’ original intentions.
- The Claimant had operated under these terms for years without once challenging her status or requesting employee benefits like EPF and SOCSO.
- Moving to the financial reality of the relationship, the Court noted that the Claimant’s income was not a fixed salary. Instead, it was a variable amount tied to the number of sessions worked and a share of the profits. This “shared risk and reward” architecture is a hallmark of someone in business on their own account rather than that of an employee. The Claimant’s financial interests were integrated with the clinic’s commercial performance, which fundamentally contradicts traditional employment.
- Addressing the issue of control, the Claimant argued that she had to follow rosters and Company policies. However, the Court viewed these requirements as necessary for the orderly coordination of a healthcare facility rather than evidence of a master-servant relationship. A key distinction was made: the company coordinated the ‘what, where, and when’ of the work, but it did not control the ‘how’, i.e. the professional judgment and method by which the Claimant treated patients.
- Another decisive factor was the right of substitution. Under the ODS, if the Claimant was unavailable, she was contractually responsible for arranging a replacement. This ability to delegate the work to another professional is the opposite of the “personal service” obligation required in an employment contract.
The Court concluded that the Claimant was a self-employed professional in a commercial partnership. As she was not a “workman,” the claim was dismissed for lack of jurisdiction.
Key Takeaways
Whether an individual is an employee or an independent contractor significantly impacts their rights and remedies at law. An independent contractor does not have a right to claim for unfair dismissal upon termination of their services, and any such claim will be dismissed by the Industrial Court. Parties consider these factors when assessing whether an individual is a ‘workman’:
- Labels in a contract are a starting point, but the Court will look at the ‘operational reality’ of the relationship.
- Features that lean towards an independent contractor relationship include a remuneration structure based on profit-sharing and variable fees, the right to provide a substitute for the services to be provided, and the lack of employment benefits such as statutory contributions.
- While assessing ‘control’ is a material part of the test, general coordination (like following a roster or clinic safety rules) does not necessarily equal the ‘master and servant’ relationship found in employment.
- Conduct is important, since parties who accept the benefits of a contractor arrangement for years may find it difficult to later claim employee status when the relationship ends.
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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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