Can disciplinary action be taken against an employee who does something inappropriate outside office hours and outside of the company premises?

The law entails that employers can hold an employee accountable for his conduct if they can successfully establish a sufficient nexus between the employee’s off duty conduct and its impact on the business and image of the employer.

The common law position was highlighted in the case of The Post Office v Liddiard [2001] EWCA Civ 940, whereby the employee’s involvement in football hooliganism during the World Cup had brought bad publicity towards his employer. The Court found that the employee’s dismissal was valid as his conduct had brought his employer into disrepute. An employer can therefore justify a dismissal if they can prove that the employee’s conduct had tarnished, or had a considerable prospect of damaging the employer’s business image.

The position of the law is similarly echoed on our Malaysian shores. In Perwira Habib Bank Bhd v Yusoff Bin Zakaria [1995] 1 ILR 123, the Industrial Court had upheld the employer’s decision to dismiss one of their bank managers who had allegedly engaged in illegal activities outside of his employment. The Court held that as the bank manager was a senior executive and branch manager of the Bank, a high-standard of conduct was expected of him. Such illegal conduct would prejudice the bank by not only disrupting its business but causing disrepute to its corporate image.

Whether or not an off-duty conduct deserves a dismissal would be subjected to a “band of reasonableness test” by the courts. The court would consider whether a reasonable employer would have dismissed the employee given the circumstances. The fairness of a dismissal would depend on factors such as the nature of the individual’s job and the conduct in question.

Most of us would probably agree that assaulting a supervisor outside working hours would almost definitely be valid grounds for dismissal.  However, is it so clear cut when it comes to things like being drunk at a social event outside office hours, or making inappropriate or offensive statements online from a personal computer?

Drinking during social events

In Mattel Tools Sdn Bhd v Anuar bin Hassan [1995] 1 MELR 294, an employee was dismissed for being drunk and misbehaving at the company’s annual dinner.  It was alleged that the employee, in a drunken stupor had used force against other guests, damaged property, thrown napkins, toppled chairs, and shouted at other employees.

Although the Industrial Court found that the employee was “fully drunk” and had misbehaved, the dismissal was still held as being unfair because another senior manager who was also drunk and misbehaving was let off with just a warning.  The Court however, reduced the compensation awarded to the employee by 50% since “the employee had misbehaved at an important function of the company, tarnishing the image of the company”.

The outcome of this case may have been different had the Company not practised double standards in meting out its punishments. An employee’s conduct during off-duty hours may still warrant dismissal, or at the very least, reduce any compensation awarded by the Court.

Employers will also be expected to mete out punishments in proportion to the conduct in question. For example, in Williams and Others v Whitbread Beer Co [1995[ UKEAT 1), a UK case, 3 employees were dismissed because they were in a drunken, abusive and violent state during a seminar.  The Court found that a final written warning or suspension would have been more reasonable because the incident had been contained, was for a limited duration and had taken place where a free bar was provided by their employer.

Use of illegal substances

In Zulhilmi Fauzi v MISC Berhad [2014] MELRU 5, an employee was dismissed after failing a random drug test.  The employee was dismissed because he had tested positive for morphine, and there was no allegation that his work performance was affected or that he had acted inappropriately while under the influence of drugs. The Court found that the dismissal was fair since failing a drug test is a major misconduct which was “clearly inconsistent with the fiduciary relationship between the employer and an employee”. It was reasonable to dismiss the employee because the safety of other employees had to be considered and the reputation of the company had to be maintained.

E-mails sent using a personal computer outside working hours

In Gosden v Lifeline Project Ltd, the employee, during his off hours, received a chain email on his home computer which contained racist and sexist material with the instructions to forward it to others.  He forwarded that e-mail to the home computer of another colleague. That colleague forwarded it to another colleague at his place of work and it therefore winded up on the Company’s intranet. The Company dismissed the Claimant on the basis of gross misconduct.

The Employment Tribunal upheld the dismissal even though the original transmission of the email by the claimant was after working hours, through the claimant’s personal computer, and to another home computer of another colleague. The Tribunal found that the claimant should have been aware that those he sent it to were likely to pass it on.  The Tribunal held that a reasonable employer would be entitled to conclude that the claimant had committed an act of gross misconduct that could damage the company’s reputation or integrity.

Malaysian Courts have also previously found that an employee can be dismissed for sending offensive or inappropriate e-mails (although those cases involved e-mails sent using the Company e-mail and equipment).

Practical Tips For Employers

In light of the above, employers should take note of the following:

  • Employers should not practice double standards when dealing with potential misconduct. The same level of punishment or disciplinary action should be meted out for the same type of misconduct.
  • Employers should act reasonably and comply with procedural fairness before terminating an employee for misconduct which took place outside work. Minor misconduct may not warrant termination, especially if the employee has shown genuine remorse and has promised not to repeat such actions.  Prior to termination, employees should be made aware of the allegations made against them, and be given an opportunity to explain their conduct.  Major misconduct (eg: use of illegal substances) may be a valid ground for dismissal even if it took place during off-duty hours.
  • Employers have the burden of proof when it comes to unfair dismissal cases. They have to prove that the dismissal is fair. As such, a dismissal for misconduct must be supported by evidence and should not be premised on mere allegations or rumours. Employers should assess the evidence available and seek legal advice before dismissing an employee for misconduct.
  • Employers should have clear guidelines and policies about what is appropriate (or inappropriate) conduct, and the consequences for non-compliance. The list should not be exhaustive but used to illustrate what the company would view as misconduct. For example, it is now common for employers to have policy statements on drug and alcohol use.
  • Employers should focus on educating and training their employees to conform to appropriate standards. Employees should be made aware that their actions outside of work may result in disciplinary action if it would negatively impact the company’s reputation.


About the author: Amirul Izzat Hasri is an associate in the dispute resolution practice group at Donovan & Ho. He has experience in a diverse area of practice, including general civil and corporate litigation, judicial reviews, land related matters, defamation, debt recovery, and shareholder and boardroom disputes. He has also appeared in Industrial Court proceedings, having represented both employers and employees in unfair dismissal claims.

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