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(1) Either party to a contract of service may at any time give to the other
party notice of his intention to terminate such contract of service.
Provided that this section shall not be taken to prevent either party from waiving his
right to a notice under this subsection.
Ctd...
• If the employee’s contract of service does not provide a specific period of
notice that is required for its termination, the ‘minimum periods’ specified by
law will apply.
• However, in the exceptions stated under 12(3) such ‘notice periods’ will still
apply unless the notice in the employee’s contract of service provides for a
longer period.
• If either party agrees to dispense with the notice, it is in order.
• For instance, if the employee gives four weeks’ notice to the employer but
requests the employer to release him immediately, the employer may waive
the notice w/o requiring him to pay in lieu of notice.
Case: Bond Electrical (Kl) Sdn Bhd Lwn Abu Bakar Bin
Chik & Lain-lain [2002] 4 MLJ 139
• The appellant appealed against the decision of the Dungun Labor Officer who
had awarded RM1,600 to each respondent for the balance of 20 days’ salary in
lieu of the notice of termination.
• The respondents worked as electricians with the appellant as employees under
the Act.
• The respondent worked for less than two years. However, the appellant only give
four day notice of termination.
• This was contravened with section 12(2)(a) of the Employment Act which makes
a four week notice mandatory in such a case.
• Therefore, the CoA dismissed the appeal.
(3) Notwithstanding anything contained in subsection (2), where the termination of service of employee is
attributable wholly or mainly to the fact that –
a) The employer has ceased, or intends to cease to carry on the business for the purposes of which
the employee was employed;
b) the employer has ceased or intends to cease to carry on the business in the place at which the
employee was contracted to work;
c) the requirements of that business for the employee to carry out work of a particular kind have
ceased or diminished or are expected to cease or diminish;
d) the requirements of that business for the employee to carry out work of a particular kind in the
place at which he was contracted to work have ceased or diminished or are expected to cease or
diminish;
e) the employee has refused to accept his transfer to any other place of employment, unless his
contract of service requires him to accept such transfer; or
f) a change has occurred in the ownership of the business for the purpose of which an employee is
employed or of a part of such business, regardless of whether the change occurs by virtue of a sale
or other disposition or by operation of law,
The employee shall be entitled to, and the employer shall give to the employee, notice of termination of
service, and the length of such notice shall be not less than that provided under subsection (2) (a), (b) or (c), as
the case may be, regardless of anything to the contrary contained in the contract of service.
a) The employer has ceased, or intends to cease to carry on the
business for the purposes of which the employee was employed
Case: Kerisna A/L Govindasamy V Highlands & Lowlands, Ladang Bukit
Selarong[2003] 6 MLJ 739
• The appellant worked with the respondent as a foreman.
• By a termination notice dated 1 November 1998, the respondent informed the
appellant that his employment would be terminated with effect from 1 January
1999.
• The reason given for the termination was that the respondent had decided to
replant its rubber plantation with oil palm.
• Regarded the termination notice as effective, the appellant did not turn up for
work from 1 January 1999 onwards.
Ctd...
• The appellant then lodged a complaint saying that he did not receive
any termination benefit.
• Held: allowing the appeal.
• The respondent was obliged to give a notice of termination of service
pursuant to section 12(3)(a) and (d) of the Employment Act 1955
because the respondent intended to change the nature of its business
from rubber plantation to palm oil plantation.
(b) the employer has ceased or intends to cease to carry on the
business in the place at which the employee was contracted to work
Case: Metaldek Industries Sdn Bhd V Kamaruddin Bin Tokimon & Ors [1998] 7 MLJ 342
• The respondent worked with the appellant at the sole factory in Shah Alam. Later,
the appellant informed the respondent to move to Ipoh, Perak. It will not affect any
terms and condition of employment of the respondent.
• The respondent should report the work at Ipoh but instead filed their claims for
termination benefits.
• It was in evidence that the respondents had informed the appellant that they would
not report for work in Ipoh and it was also in evidence that the appellant knew that
the respondents did not want to go to Ipoh.
• Held, dismissing the appeal. The employer had the rights to shift the employee.
Ctd...
• However, the effect of the relocation is the matter here. The relocation from Shah
Alam to Ipoh should cause a considerable amount of inconvenience to the
respondents and their families.
• The respondents were entitled to refuse a relocation to a place which was more
than a daily travelling distance from their homes.
• The respondents' services were terminated, thus entitled the respondents to
termination benefits.
• The respondents were contracted to work in the Shah Alam Factory and the
appellants have ceased to carry on the business in that place. Thus the requirements
for the kind of work the respondents were employed for has also ceased in the place
where they contracted to work.
(c) the requirements of that business for the employee to carry out
work of a particular kind have ceased or diminished or are expected to
cease or diminish.
(d) the requirements of that business for the employee to carry out
work of a particular kind in the place at which he was contracted to
work have ceased or diminished or are expected to cease or diminish.
Case : Kerisna A/L Govindasamy V Highlands & Lowlands, Ladang
Bukit Selarong [2003] 6 MLJ 739
(e) the employee has refused to accept his transfer to any other place
of employment, unless his contract of service requires him to accept
such transfer
Case: Ayasamy A/L Manikam & Ors v Ladang Holyrood [2000] 5 MLJ 13
• The appellants were employed as rubber tappers by the respondent and were
informed that as the trees in their division would be felled, they were to be
transferred to the main division, which was 5 km away. The appellants refused
to accept the transfer and requested the respondent to pay termination and
lay-off benefits. The respondent claimed that the relocation of tapping task
was a legitimate right of the management.
• Held: allowing the appeal. The appellants were protected by section 12(3)(e)
that the contract of service must have a provision which required the
employee to accept such transfer before they could be transferred.
(f) a change has occurred in the ownership of the business for the purpose of which an
employee is employed or of a part of such business, regardless of whether the change
occurs by virtue of a sale or other disposition or by operation of law
Case: Barat Estates Sdn Bhd & Anor V Parawakan A/L Subramaniam & Ors [2000]
4 MLJ 107
• The respondents were employed by the appellants on two estates. Later,
the first appellant sold both estates to Prospell Enterprise Sdn Bhd.
• The first appellant wrote a letter to the respondents informing them about
the estates to and said that the change of ownership would not affect the
terms and conditions of the respondents' service and respondents'
employment would continue as if there had been no change in the
employer.
• Prospell also wrote to the respondents offering them to continue their
employment.
Ctd...
• All the respondents accepted Prospell's offer. Later, They claimed an indemnity
under section 13(1) of the Employment Act 1955 on the ground that the appellants
had failed to give them notices of termination of their contracts in accordance with
section 12 of the Act.
• Held, dismissing the appeal.
• Section 12(3) of the Act makes it clear in the context of para (f) that where there is
a termination of service because of a change in the ownership of the business in
which the employee is employed, the employer must give the employee the
appropriate period of notice.
• Apparently, the section did not recognized automatic continuation of employment
with the new owner of the business.
(4) Such notice shall be written and may be given at any time,
and the day on which the notice is given shall be included in the
period of the notice
• ‘and the day on which the notice is given’ means, the day the
notice will become effective.
• Example; if the employee’s letter of resignation is dated January 1
but he gives it to his employer on January 5, his notice is only
effective from January 5 instead of January 1.
Section 14 of
Employment Act 1955
Section 14(1) of Employment Act 1955 : Termination of contract for special reasons
14. (1) An employer may, on the grounds of misconduct inconsistent with the
fulfilment of the express or implied conditions of his service, after due
inquiry
(a) dismiss without notice the employee;
(b) downgrade the employee; or
(c) impose any other lesser punishment as he deems just and fit, and
where a punishment of suspension without wages is imposed, it shall not
exceed a period of two weeks.
TERMINATION FOR MISCONDUCT
• Section 14 gives the right to an employer to dismiss, downgrade or impose any other lesser
punishment on an employee who after holding of a due inquiry is found guilty of
misconduct.
• The employer wishes to suspend the employee from work for any reason he can do so up
to maximum of two weeks.
• However if he found not guilty of any misconduct, the remaining half pay must be paid
back.
MISCONDUCT
Every employer has such right to establish rules and regulations governing the conduct of his employee at
the workplace and during worktime.
• This rule and regulations governing the private conduct of employee outside the worktime. As example
drug abuse, loose moral or unlawful behavior.
• Although Employment Act 1955 did not formally define ‘misconduct’, section 14 implied that it is conduct
by an employee that is inconsistent with the fulfilment of the express and implied condition of service.
“ A workman has certain express and or implied obligation towards his employer. Any conduct that
inconsistent with his duties, or any breach of the express and implied duties of an employee towards his
employer would constitute an act of misconduct”
Ctd...
• The industrial court indicated that it is for the employer to determine initially whether or
not an employee has committed a misconduct. However, the employer must act fairly
and reasonably after appropriate investigation.
Case: Rasa Sayang Hotel and National Union of Hotel Bar & Restaurant Workers
“… the court agrees with the union that there is no denying the right of the
employer to punish, but there is also the right of the employee not to be punished
if there had been no offence. Before the hotel can show that the punishment does
fit the crime. It must first prove the crime…”
• Furthermore, Industrial court has commented not only on the burden of proving
misconduct but also on the standard of proof required to establish misconduct.
Burden of Proof
The burden of proof and the standard of proof, the industrial court has commented on the
following aspects of misconduct:
2) Similar Misconduct
Case: PA Netto and Kulai Yong Estate
“In the law of evidence, the fact that a person has committed similar misconduct before,
although admissible, should not be prejudicial to show disposition of the person’s mind, but
it meant to rebut the defense, if any, of mistake or accident. The claimant made no such
defence and therefore the court cannot infer that he is likely to have committed now a
misconduct of the same nature as before.”
Ctd...
3) Past Misconduct
Case: Malaysia Airline System and A Kader bin M Zalman
“..if there was a charge against claimant for misconduct, pass misconducts could be considered to have a cumulative effect in
deciding on the punishment. But in the present case, the termination of the claimant’s service was not on the ground of
misconduct…therefore, his past misconduct, even if they were recent misconduct, became irrelevant to the issue before the
court.”
4) Criminal Misconduct
Case: Transport Workers Union and Lori Malaysia Sdn Bhd
“ It is not necessary, and decided by authority, that an employer should await the prosecution of criminal proceedings
against an employee before inquiring into a misconduct. If an employee is dismissed by an employer for misconduct after
due inquiry, there is no obligation to take back the employee even if he is acquitted in criminal proceedings brought against
him. In the present case, a period of over five months had elapsed before the company thought fit to make the claimant
answer his allegation. It could very well have done so earlier… Meanwhile, the claimant had been performing his duties and
earning the agreed remuneration without any interference from or restriction by the company. Even assuming that the
claimant had been negligent, the court is of the view that, by so allowing the claimant to carry on for such a long period, the
company had impliedly condoned such act of misconduct.”
Ctd...
5) Private Misconduct
Case: Transport Workers Union and Syarikat Pengangkutan Kemajuan Sri Perak Bhd
It is not this court concern whether the misconduct alleged amounted to khalwat or maksiat. But
the company did imply a moral misconduct grave enough to ruin the image of the company, and
therefore deserving of dismissal. The court agrees with the finding of EAT in Cassidy v HC Goodman
Ltd [1975] IRLR 86 that:
‘ For an employee to be justifiably dismissed on the ground of his private conduct, it has to be
exceptional gravity or be capable of damaging the employer’s business.’
The court cannot see how the claimant’s spending the night in the Bachelors’ Room could have
affected a public transport business to the extent of ruining its image. The court accordingly finds
her dismissal had been without just cause as the alleged offence was not related to her
employment.
Ctd...
6) Provocation of misconduct
Case: Van Leer Sdn Bhd and Chee Kong (Award 342 of 1987)
‘ Although contumacious and insolent acts towards a superior are in proper circumstances
misconduct, it is against equity and good conscience to mete out the extreme penalty of
dismissal when such acts were provoked by the superior, and that employee is not even-
handedly punished. The court is therefore of the view that the company should have
accepted recommendation of its own board of inquiry and given the claimant (and, it
should be said, the superior as well) ‘a stern and final warning’ instead of dismissing him
alone. The court therefore rules that the dismissal was without just cause and excuse.’
Ctd...
7) Condonation of misconduct
16 Halsbury’s Laws of England (4th Ed), p 439 para 648 under the heading Condonation states:
‘An employer who with full knowledge of his employee’s conduct elects to continue him in service cannot
subsequently dismiss him for the offence which he has condoned.’
Case: Esso Production Malaysia Incorporated and Kesatuan Pekerja-Pekerja Esso Production Malaysia (Award
75 of 1992)
‘Permission may be granted to an employee retroactively to cover a prior misconduct or breach of duty as well as
prospectively. Such retroactive permission is called condonation. The uniform rule is that an employer or his duly
authorised supervisor who continues in employment an employee with full knowledge that the latter has
committed a breach of duty, condones the breach, and such waiver or retroactive permission prevents the
employer from later punishing the employee for it, absent a revival thereof.’
Ctd...
8) Punishment for misconduct
Case: Goodyear Malaysia Bhd and National Union of Employees in Companies Manufacturing
Rubber Products (Award 88 of 1986)
‘It must be noted that not all misconduct deserves dismissal, which has been described as the
capital punishment in industrial relations. Important circumstances which mitigate the offence of the
workman should be taken into account by the employer before he can be said to have made a fair
and reasonable decision to dismiss. For example, a workman’s past record of good service, or the
management’s own actions or omission which contributed to the misconduct, are mitigating factors
which any reasonable company would take account of before dismissing. Length and quality of
service, good untainted record, and past service awards and recognition must also be taken as
extenuating circumstances when an employer decides the appropriate punishment for misconduct.’
KINDS OF MISCONDUCT
1.Insubordination
8. Theft and dishonesty
2.Disobedience
9. Cheating and misappropriation
3.Lateness and absence
10. Fraud and misrepresentation
4.Dereliction of duty
11. Breach of duty fidelity
5.Threat and intimidation
12. Breach of duty of care
6.Assault and fighting
7.Gambling & Intoxication
Insubordination
Case: Clarion Sdn Bhd and K Sivalingam
In this case, it shows that the language used in disrespectful towards superior is considered
insubordination. It is insolent, impertinent and derogatory in nature as it is offensively and
tends to lower the dignity and the position of the superior.
“the company contended that coming to work late habitually was good ground for
dismissal and cited The Chartered Bank and Kuching Bank Employee Union (Award 10
of 1966) to support the contention. And I agree with the contention and dismiss the
claimant’s claim”
Absence from work without prior leave is not just a possible misconduct. Under the
Employment Act, it may amount to breach of contract and a willful breach would could
entitle the employer to terminate the contract of employee even if the absence was due to
sickness.
Ctd...
The industrial court has commented on both kind of absence:
i) Section 15(2) of EA declare that;
“An employee shall be deemed to have broken his contract of service with the employer if he has been continuously absent from work for
more than two consecutive working days without prior leave from his employer, unless he has a reasonable excuse for such absence and has
informed or attempted to inform his employer of such excuse prior to or at the earliest opportunity during such absence.”
ii) Section 13(2) of EA provides that;
“Either party to a contract of service may terminate such contract of service without notice in the event of any willful breach by the other
party of a condition of the contract of service.”
iii) Section 60F(2) of the Act provides that;
An employee who absents himself on sick leave—
(a)which is not certified by a registered medical practitioner or a medical officer as provided under subsection (1) or a dental surgeon as
provided under subsection (1A); or
(b) which is certified by such registered medical practitioner or medical officer or dental surgeon, but without informing or attempting to
inform his employer of such sick leave within forty-eight hours of the commencement thereof,
shall be deemed to absent himself from work without the permission of his employer and without reasonable excuse for the days on which he
is so absent from work.
Ctd...
Case: P Ramasamy (Pemborong) Ladang Batu Arang and Kesatuan
Kebangsaan Pekerja-pekerja Ladang (Award 52 of 1985) it was said:
“absence without leave for more than two consecutive working days is
deemed to be breach of contract of service by section 15(2) …The
employer can either terminate the employee’s contract of service under
section 13(2) or deal with him under section 14 after a due inquiry on the
ground of misconduct.”
SECTION 14(2)
In 1970-1980, if the employer dismissed the employee for misconduct without holding the domestic inquiry,
the termination of employee’s contract was automatically without just cause or excuse.
Section 14 of EA states that the employee can be dismissed on the ground of misconduct after “due inquiry”.
The domestic inquiry should be held before imposing the penalty of dismissal.
Ctd...
When an employer hold a domestic inquiry before dismissing the employee on the ground of
misconduct, he considered treated his employee justly and fairly.
Right where the accused man to know the case which is made against him. He must know what
evidence has been given and what statement have been made affecting him. Then, he must be given a
fair opportunity to correct or to contradict to them.
Case: Board of Education v Rice [1911] AC 179
No one who has lost case will believe he has been fairly treated if the other side has had access to the
judge without his knowing.
Ctd...
Industrial court has indicated that as long as the principles or the rules of natural
justice have been observed, or even violated, the domestic inquiry cannot be
faulted or characterised as bad or defective.
Case: Kuala Lumpur Hilton and National Union of Hotel, Bar & Restaurant
Workers
It is alleged by the union that the domestic inquiry was bad… it is this court’s view
that so long as the basic requirement of natural justice are observed, no strict rules
of procedure need be followed. From the evidence the court finds that the
claimant was informed of the charges against him and that he was given ample
oppurtunity for denying or explaining the alleged misconduct.
Ctd...
Once the inquiry has been held and the employee found guilty, the employer must decide on the suitable
penalty.
The punishment must be suitable with misconduct and take into consideration the mitigation factors:
I. The length of service of employee
II. The prior record of employee; and
III. Whether there was any provocation leading the employee to commit the misconduct.
Under Section 14 of EA gives the employers the right to punish the employee for misconduct includes:
(a) dismiss without notice the employee;
(b) downgrade the employee; or
(c) impose any other lesser punishment as he deems just and fit, and where a punishment of
suspension without wages is imposed, it shall not exceed a period of two weeks.
Ctd...
The maximum period of suspension shall be for two weeks at half pay
If a suspension exceeds two weeks, it would appear that full wages would have to be paid
in which case it is no longer a suspension as per the law.
If the inquiry does not disclose any misconduct on the part of the employee the employer
shall forthwith restore to the employee the full amount of wages so withheld.
SECTION 14(3)