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In order to dismiss an employee for misconduct, an employer must evaluate whether the misconduct committed was severe enough to warrant dismissal. In other words, the disciplinary action imposed by the employer must be proportionate to the offence.

In the recent case of Ahmad Farid bin Abdul Rahman v Telekom Research and Development Sdn Bhd & Anor [2020] MLJU 733, the Industrial Court upheld the dismissal of an employee. Upon judicial review, the High Court quashed the Industrial Court’s decision on the basis that the punishment of dismissal was not proportionate to the misconduct committed.

 

Brief Facts

  • The Employee submitted a claim of RM 488.00 for purchase of glasses / optical lenses. However, he submitted this claim under the category of “Miscellaneous – Dental”.
  • The claim was approved and paid to the Employee.
  • Later, the Employee was charged with submitting a false dental claim.
  • After a domestic inquiry, the Employee was found guilty of misconduct and was dismissed with immediate effect.
  • The Employee filed a representation of unfair dismissal. The Industrial Court dismissed his claim and held that the dismissal was with just cause and excuse.
  • The Employee filed an application to the High Court for judicial review against the Industrial Court’s decision.

 

Findings of the High Court

The High Court found that the Industrial Court’s decision was tainted with errors of law and irrationality, which warranted judicial intervention. The High Court quashed the decision of the Industrial Court and ordered the claim to be remitted back to the Industrial Court to determine the appropriate remedy to be awarded to the Employee for unfair dismissal.

The High Court made the following observations:

  • Based on the evidence adduced before the Industrial Court, the Employee had from the very beginning informed the Employer that he had made a mistake in his claim. The Employee had apologised for the error and also agreed to refund the sum of RM 488.00. Further, the receipts submitted with the Employee’s claim clearly showed that it was for purchase of “new optical lenses”.
  • The High Court was of the view that the above facts were not considered by the Industrial Court. If the Industrial Court had properly considered the facts, it would have been apparent that the Employee had no intention to cheat the Employer or make a false claim.
  • The finance department of the Employer didn’t reject the claim, but instead proceeded to approve and pay the claim to the Employee. If the claim was in violation of policy, the finance department should have rejected the claim and inform the Employee the reasons of the rejection. It should not have processed the claim and then taken disciplinary action against the Employee. The Industrial Court’s failure to consider this aspect of the case, rendered its decision irrational.
  • The doctrine of proportionality of punishment applies in determining whether a dismissal is with just cause and excuse. The test in determining whether a dismissal is fair is whether a reasonable employer would have done the same thing in the same situation, and not what the Industrial Court would have done.
  • The High Court was of the view that the punishment of dismissal was not proportionate to the offence, given:
    • There was no intention by the Employee to cheat the Employer or to make a false claim, based on the facts and evidence mentioned above;
    • There was an apology from the Employee who agreed to refund the sum of RM 488.00;
    • The Employee had worked for the Employer for 9 years and 9 months without any previous disciplinary record; and
    • The sum in question was nominal.
  • Based on the above, the High Court found that the Industrial Court’s decision was irrational and in contravention of Section 30(5) of the Industrial Relations Act 1967, which requires the Industrial Court to decide matters based on equity, good conscience and substantial merit.

 

Key Takeaways

The High Court’s decision is an important reminder that the act of misconduct doesn’t always justify dismissal. Employers in deciding what form of disciplinary action to take, should always consider factors such as:

  • the severity of the misconduct;
  • the length of service of the employee and their previous disciplinary record;
  • the loss and damage to the employer and / or other parties;
  • mitigating circumstances or explanations by the employee;

A dismissal that is disproportionate to the misconduct may amount to unfair dismissal – even if the employee did commit some wrong in the first place. However, in such situations, the Industrial Court will usually scale down the compensation to be awarded to take into account contributory misconduct of the employee.

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This article was written by Donovan Cheah. Donovan has been named as a Recommended Lawyer for Labour and Employment by the Legal 500 Asia Pacific 2017, 2018, 2019 and 2020, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work.

Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory.  Have a question? Please contact us.

 

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