Case Update: What can an employer do upon discovering that an employee lied in a job application?

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

The hiring process can often be tricky for employers. In the Malaysian job market, it is common for employers to receive hundreds of applications for certain vacancies. Employers then have to comb through these applications, shortlist candidates to be interviewed, and make a hiring decision based on fairly limited information.

To reduce the time spent on this process, many employers do not conduct thorough background checks on job applicants. The experience and employment history stated in the applications are often assumed to be accurate, with some allowance given for an expected reasonable degree of exaggeration.

What is the recourse for an employer who, soon after hiring an individual, realises that the employee had lied in his job application? Does this false information constitute just cause for an employment termination, or will the dismissal enable the employee to bring a successful unfair dismissal claim?

The Industrial Court considered these issues in two recent awards — Khoo Kim Loang v. Shock Media Studio Sdn Bhd (Award No. 51 of 2018) on 4 January 2018, and Khoo Kim Loang v. Kim Siah Electric Co Sdn Bhd (Award No. 137 of 2018) on 12 January 2018 — interestingly both involving the same Employee.

Brief background

The following are the brief background facts in the Shock Media Studio case:

  • Shock Media Studio employed the Employee from 1 November 2015. The Employee was terminated on 6 November 2015, with the employer claiming that he had submitted a false CV to apply for the job. The Employee brought an unfair dismissal claim.
  • At the first court mention on 30 September 2016, the employer’s COO informed the court that —
    • following searches made with the Companies Commission of Malaysia, the employer discovered that two of the previous employers listed on the Employee’s CV did not exist (the Employee admitted to the court that he had not worked at the most recent employer listed in the CV);
    • the employer realised that the Employee had falsified his previous salary; and
    • whe contacted by the employer, both personal referees listed in the Employee’s CV denied knowing the Employee.
  • At the case management on 19 September 2017, the employer’s lawyer informed the court that the employer had offered the Employee half a month’s wages to settle the matter out of court. The lawyer explained that the employer had decided to settle the matter out of court despite the obvious fraud because there had been a change in management, too many witnesses had left the company, and the case was taking up too much time.
  • On 27 September 2017, the court received a letter from the Employee withdrawing his case.

The following are the brief background facts in the Kim Siah Electric case:

  • The Employee commenced employment with Kim Siah Electric on 12 April 2016, and was dismissed on 15 April 2016.
  • The employer contends that the Employee was dismissed for, inter alia, misleading the employer by giving false information and failing to disclose his employment history with other companies that had employed him in the past.

Court findings in Shock Media Studio

Despite the out-of-court settlement, the Industrial Court in Shock Media Studio decided to proceed with reviewing the documents and pleadings filed by the parties, and publish its findings to issue a warning to employers to be aware of incidences of “resume fraud” or “application fraud”.

The court decided that the evidence was sufficient to show that the Employee had lied in his resume, and that therefore the termination was justified and was with just cause and excuse.

It was reiterated that “the employee-employer relationship is one that is built upon trust” and when an employer discovers that a job had been granted based on fictitious information “this trust is automatically breached and the employer has every right to terminate the contract of employment due to that breach”.

The court also highlighted that, following a search carried out in the Industrial Court, the employer had found that the Employee has been involved in 14 cases involving numerous employers, all of which were settled out-of-court.

Court findings in Kim Siah Electric

The court made reference to the Shock Media Studio case involving the same Employee. Upon comparing the resume in this case and the resume filed in the Shock Media Studio case, the court found that they were similar except for some typographical errors and some pertinent changes to the employment timeframe and salaries.

The court concluded that, in light of the facts, the employer could no longer have trust and confidence in the Employee. The facts showed that the Employee had made use of false documents to induce the employer to employ him, and that the employer had offered him the position relying on that CV. The court found that the Employee “had clearly misrepresented his work experience and past salary […] in order to obtain employment and as such, the misconduct had been established against him”.

The case of Telecipta Sdn Bhd v. Ng Pin Poh [2000] 1 ILR 630 (Award No. 184 of 2000) was cited by the court. In that case, the court found that the dismissal was with just cause of excuse as the employee had misrepresented his working knowledge and experience in his CV.

The court found that the Employee’s misrepresentations were “very serious in nature as he had been appointed based on fraudulent misstatements” and “involved elements of dishonesty and deception”. As such, the court held that the dismissal was with just cause and excuse.

In respect of procedure, the court held that there was no need for the employer to carry out a domestic inquiry in this case, as the misconduct perpetrated by the Employee was very clear, and was serious enough to justify immediate dismissal.

Comments

It is clear that false information in job applications are viewed as serious matters, and will constitute just cause for an employer to immediately dismiss an employee without the need for a domestic inquiry.

Despite the fact that an employer would still be able to justify terminating an employee upon discovering that he had lied in his job application, it would involve expending unnecessary time and costs in handling unfair dismissal claims. Employers would also be left to deal with the resulting workplace unrest, and still have to go through the hiring process all over again to hire another employee for the position.

Thus, employers should take note of the advice of the Industrial Court in the Shock Media Studio case: “It will do well for employers to carry out more thorough vetting of CVs submitted by prospective employees to save themselves time and money unnecessarily spent on litigation such as in this case […] CV fraud is on the rise, it is time for employers to check the CVs of prospective employees more thoroughly before making any job offers.”

Of course, such pre-employment background checks and vetting should be carried out while bearing in mind the employee’s right to privacy and the provisions of the Personal Data Protection Act.

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