Can an employer dismiss an employee without giving any reason, by relying on the notice clause? The Industrial Court has made it clear that such dismissal, often referred to as termination simpliciter, has no place in Malaysian employment law. Employers carry the burden of proving that a dismissal is with just cause or excuse, and failure to discharge this duty may result in substantial compensation being awarded to the employee.
This article spotlights the case of Ang Chin Gaik v WV Services Malaysia Sdn Bhd (Award No. 309 of 2025, 3 March 2025) where the Claimant was awarded RM1,380,722.20 after the Company terminated him without reason and failed to attend the hearing to prove that the dismissal was done with just cause or excuse.
Brief Facts
- On 18 June 2022, the Company terminated the Employee’s employment without giving any reason for the termination. The Employee claimed for unfair dismissal.
- The Company initially appointed solicitors where the Company’s Statement in Reply, Bundle of Documents and Witness Statement were filed. The hearing (trial) dates were then fixed.
- Subsequently, the Company’s solicitors discharged themselves from acting for the Company.
- No Company representative attended the next mention date, and the Company was also absent during the hearing date.
- The Court proceeded with the trial anyways under Section 29 of the Industrial Relations Act 1967, which allows the Court to determine matters even in the absence of any party to the proceedings.
Court’s evaluation and findings
The Court found that the dismissal was done without just cause or excuse.
- The termination letter did not state the grounds for dismissal. The Court held that termination simpliciter (termination without reason) is not applicable in Malaysia as under Section 20 of Industrial Relations Act 1967, the Company bears the burden of proving that the dismissal was done “with just cause or excuse”.
- Although the Company had filed documents and was aware of the hearing date, the Company was absent on the hearing date. Therefore, the Court disregarded the Company’s documents that were filed. As this meant that the Employee’s evidence before the Industrial Court was unchallenged, it was deemed admitted.
- As reinstatement was unsuitable, the Employee was awarded 20 months of back wages, amounting to RM1,380,722.20.
Key Takeaways
The Award reinforces the principle that termination in Malaysia must be carried out with just cause or excuse. While most employment contracts contain a notice clause allowing either party to terminate without giving reasons by serving notice or paying in lieu, relying solely on this clause without any substantive justification exposes an employer to the risk of an unfair dismissal claim.
Employers should also treat unfair dismissal proceedings with due seriousness, given the potential for significant financial exposure in the event of an adverse finding. Getting proper legal representation, and attendance at the hearing is critical, particularly for the employer, as the burden of proving that the dismissal was fair rests on them. If the employer fails to appear, the Court may proceed in their absence and accept the employee’s evidence as unchallenged.
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This article was written by Hooi Kit Yi (Associate) from Donovan & Ho’s employment law & dispute resolution 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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