A show cause letter is a formal document issued by an employer requesting an employee to explain or justify conduct that may violate company policies or employment terms. It is typically part of an investigation process, giving the employee an opportunity to present their side before further action is taken, such as a domestic inquiry or disciplinary measures.
A show cause letter generally outlines the alleged misconduct, provides a deadline for the employee’s response, and may place the employee on suspension pending their reply and the investigation’s outcome.
Constructive dismissal occurs when an employer breaches a fundamental term of an employee’s contract. If the employee views the show cause letter as being “without basis”, can the issuance of this show cause letter justify a constructive dismissal claim?
This is what the Industrial Court said on this issue:
- Rudy Darius Ogou v Ming Court Hotel (Kuala Lumpur): The employee claimed (amongst other instances) that the Hotel’s issuance of a show cause letter for breaching of a Hotel House Rule amounts to a fundamental breach of his employment contract. The Court held that the issuance of the Show cause letter was an integral part of the investigation, providing him with an opportunity to respond to the alleged misconduct related to the breach of the House Rules. The Court disagreed that this is considered an act of victimization.
- Selvarajah Thiruchelvam v Samsung Electronics Display (M) Sdn. Bhd.: The employee claimed constructive dismissal based on the issuance of a show cause letter. The Court held that the Company was entitled to issue a show cause letter to seek an explanation. The employee replied to the letter and that was all there was to it. This action cannot amount to a fundamental breach of the employment contract.
- Jopp Builders Sdn. Bhd. v Amat Kamisan Askandar: Here, the Court held that any employer would issue a show cause letter to an employee to find out the reason behind the absenteeism if an employee failed to report to work. It cannot be regarded as victimization
The same issue was recently tested again in Prabavathi a/p Karuppiah v Advancelab Sdn. Bhd. Here, the Company issued a show cause letter levelling several charges against the employee for her explanation. The employee did not specifically respond to the charges, but instead submitted a meticulous “diary of events” to the Company, along with other allegations. She alleged that the show cause letter was the ‘final straw’ and that the contents of the show cause letter were baseless and unsubstantiated. She then deemed herself constructively dismissed.
The Court dismissed the employee’s claim for constructive dismissal, holding that the Company was entitled to issue the show cause letter as part of its investigation process on the employee’s alleged misconduct. In turn, it allowed the employee to explain the allegations levelled against her.
The Court further held that the Company, being employers, had the managerial prerogative to issue the show cause letter to seek the employee’s explanation on the allege misconduct. This was also a part of due process, and this cannot constitute an act of victimization nor a fundamental breach of employment terms and relationship.
Key Takeaways
Although employers have a right to issue a show cause letter to seek explanations from an employee, this may not stop an employee from contesting the letter as being without basis. Therefore, the charges or allegations within the letter should still be well-founded, specific, and have enough information for the employee to respond adequately. In complicated matters or in situations of doubt, employers should always obtain proper and professional advice when drafting such letters.
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This article was written by Lim Zi-Han (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. Have a question? Please contact us.
