Case Update: Federal Court rules that an employer cannot use reasons discovered post-dismissal to justify an employee dismissal

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.

It is not uncommon, in instances where an employee has been dismissed, for new facts or circumstances to be discovered post-termination which are then treated as “justifying” the dismissal in the eyes of the employer.

For example, where an employee has been dismissed for poor performance, the employee or employees who then take on the dismissed employee’s responsibilities may discover a trail of errors or negligence that ran deeper than was known at the point of termination. In other cases, the employee may have been dismissed for one reason, but the employer later uncovers evidence of other misbehaviour or misconduct which the employer then takes as further proof that the dismissal was “the right decision”.

While these post-dismissal discoveries may make an employer rest more easily, convinced that dismissal was the correct option, what would happen if the employee brings an unfair dismissal claim? Would an employer who dismissed an employee because of Reason A be then able to justify the dismissal by later saying that, after the termination, they also discovered Reason X, Y, and Z, and that therefore even if Reason A was weak and insufficient to justify termination, the court should also consider Reasons X, Y, and Z?

This was the issue that went all the way to the Federal Court recently, in Maritime Intelligence Sdn Bhd v Tan Ah Gek [2021] 4 ILR 417.

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Case Update: Court of Appeal rules that employee demotion amounts to constructive dismissal

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.

It is recognised that it is a management prerogative for companies to decide on the best way to run their business, and that the courts will be slow to interfere with such management decisions. However, we do still see the courts stepping in when the decisions made by employers are deemed to be unfair, or in breach of the employment contract. I previously wrote about a case where an employee transfer was deemed by the Industrial Court to constitute a constructive dismissal (Case Update: When an employee transfer can amount to a constructive dismissal).

In this case update, I consider the Court of Appeal (“CoA”) case of Ng Teck Fay v. Mahkamah Perusahaan Malaysia & Anor. [2021] 10 CLJ 73, where the CoA found that an employee demotion or re-grading amounted to a constructive dismissal.

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Employment law: 2021 review and 2022 forecast

I am kicking off 2022 by looking back for a quick recap of the 2021 Malaysian employment law and industrial relations highlights, and a brief outline of what I expect to be the key developments in the coming year.

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Malaysia’s Anti-Sexual Harassment Bill tabled in Parliament

The Anti-Sexual Harassment Bill 2021 (“the Bill”) was tabled for its first reading in the Dewan Rakyat earlier today.

Addressing the media, Deputy Women, Family and Community Development Minister Datuk Siti Zailah Mohd Yusoff said that the Bill was drafted by a special project team consisting of representatives from government agencies, academicians, NGOs, as well as following consultation with several other stakeholders. According to Siti Zailah, the Bill will lay the foundations for structural reforms which seeks to “address legal gaps and improve the existing justice system”.

Last month, Siti Zailah shared that 775 sexual harassment cases had been reported so far in 2021, and that those cases were being handled through other laws such as the Penal Code, Employment Act, Communications and Multimedia Act, and the Sexual Offences Against Children Act.

This article sets out the key provisions of the current draft of the Bill.

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Malaysia Employment Act amendments: 7 key changes for employers to note

[Update: The Bill was tabled for its second reading and passed on 21 March 2022. There were only two minor amendments from the first draft which was the subject of this article, in relation to maternity and paternity leave. These have been updated in the text below.]

Wide-ranging amendments to Malaysia’s Employment Act 1955 (“the EA”) are now going through Parliament. The Employment (Amendment Bill) 2021 (“the Bill”) was tabled for its first reading on 25 October 2021.

The Explanatory Statement to the Bill states that it seeks to amend the EA “to comply with the international standards and practices as required by the Trans-Pacific Partnership Agreement, the Malaysia-United States Labour Consistency Plan and the International Labour Organization”. It further states that the purpose of the amendments, among others, is “to provide for the protection against discrimination and forced labour, and to provide for maternity benefits”.

As the Bill is only in its first reading, I expect some changes before it is finalised and passed. The current draft of the Bill does appear quite disjointed in parts, and there are some inconsistencies that will need to be cleaned up. It is worth noting that many of the amendments contained in the Bill have been mooted as far back as 2017, so while the fact that the Bill has been tabled is promising, there is no guarantee that it will be passed — though for political reasons it does appear very likely that it will happen this time.

The current draft of the Bill contains comprehensive amendments — there are 46 sections in total — but at this stage I will briefly set out the key changes that employers should take note of, along with some commentary.

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Just launched: “Guide to Malaysian Employment Law”

I have always believed that by writing about the law and related topics, I am not only sharing knowledge with others, but also richly expanding and deepening my own understanding of the topics I write about. This is why I have been consistently publishing my legal writings from my early days of practice, going back 18 years now.

Today, we have launched a Guide to Malaysian Employment Law. This Guide will be hosted on a standalone page on The Malaysian Lawyer, and is a one-stop introductory guide to Malaysian employment law, including categorised links to employment law articles I have published on The Malaysian Lawyer.

The topics in the Guide have been selected based on feedback from in-house counsel and HR professionals, and cover the usual high-level background legal information they would like to have on-hand, particularly as professionals from other jurisdictions considering employment issues in Malaysia.

The Guide will be constantly-evolving, and its contents will be updated from time-to-time. Please share the Guide with others who may find it useful, and leave a comment if you have any feedback, or requests or suggestions for other employment law issues that should be covered.

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