When drafting a show cause letter, the preciseness and the comprehensiveness of the allegations levelled against an employee is crucial. If there are any gaps in the charges, is the Industrial Court empowered to substitute the charge with its own interpretation? The High Court provided an answer to this in Kansai Paint Asia Pacific Sdn Bhd v Lee Ee Chai (Civil Appeal No.: WA-16A-25-02/2024).
Brief Facts
- The Claimant is a Senior Manager at Kansai Paint Asia Pacific Sdn Bhd (“the Company”).
- The Company has two premises in Selangor. One was in Port Tech Tower, Klang (“PTT Office”) and another was in Bukit Raja, Klang (“Bukit Raja Office”). The Company decided to vacate the PTT Office and the Company was required to return the PTT Office to the landlord.
- As part of the move, the Claimant was tasked to account for all listed items in his department.
- The Company discovered that two working chairs and two projectors were missing before the handover of the PTT Office to the landlord. It was subsequently discovered that the Claimant removed the said items.
- The Company convened a meeting to discuss this with the Claimant. During the meeting, it was revealed that the Claimant had placed one of the projectors in the Bukit Raja Office and was still holding on to the remaining 3 items. The remaining items were returned after the meeting.
- This led to the Company issuing a show cause letter to the Claimant and charging him for the following misconduct: –
“You have intentionally violated the company rules and regulations of the company”s handbook. You are hereby charge as follows:
Clause 12.4 Wrong doings
I – Serious offences requiring disciplinary action including dismissal
(b) Stealing or taking company property without permission”
- Eventually, the Claimant was found guilty and was dismissed for misconduct.
- At the Industrial Court, the Court treated the charge in the show cause letter as “theft”, defined under the Penal Code. As such, the Industrial Court held that the Company was required to prove the elements of theft, such as that the Claimant removed the items from the PTT Office, was dishonest in his intention to remove the same, and that he had an intention to cause wrongful loss to the Company or a wrongful gain to himself.
- Ultimately, the Industrial Court held in favour of the Claimant but also acknowledged that the Claimant was guilty of contributory misconduct.
- Dissatisfied with the Industrial Court’s decision, the Company appealed to the High Court.
High Court’s Findings
The High Court disagreed with the Industrial Court’s findings that the words “taking company property without permission” were vague, and that to hold so would mean disregarding what the Company and its employees agreed were misconduct.
The Industrial Court’s treatment of the misconduct as a criminal offence of theft under the Penal Code was an error of law.
To the High Court, the key issues that ought to be determined by the Industrial Court are as follows: –
- Whether the Claimant had the Company’s authority or permission to remove the items from the PTT office?
- If the items were removed without authority, whether such actions amounted to misconduct under clause 12.4 of the Company’s Handbook?
There was no necessity to consider whether the Claimant’s actions amounted to theft under the Penal Code.
On the facts, the High Court held that the property was left hidden from the Company until the Claimant was confronted with the accusation that he had taken the property from the PTT Office. Hence, the Claimant had clearly violated clause 12.4 of the Company Handbook and that his misconduct was serious enough to warrant dismissal.
Key Takeaways
This decision highlights the critical importance of precise drafting in show cause letters, as employers are bound by the charges set out within them. If the charges are vague or imprecise, the Industrial Court cannot reinterpret or substitute them with its own version and must decide whether the charges, as drafted, have been proven. Accordingly, a poorly drafted show cause letter can have serious consequences for an employer.
In addition, a comprehensive employee handbook and clearly written company policies can serve as valuable evidence of what both the employer and employee regard and agree upon as misconduct.
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This article was written by Leow Ho Eng (Associate) 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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