terminating without violating the law - malaysia
TRANSCRIPT
OVERVIEW
• The employment laws on termination &dismissal;
• Types of termination of employment;
• The application of the rules of naturaljustice in termination of employment; &
• Proactive management of employmenttermination plus creating & sustaining aharmonious employment relationship.
EMPLOYEE TERMINATION
Voluntary Termination
Termination initiated by employees, often due to resignation & retirement.
Involuntary Termination
Termination initiated by employers, often due to misconduct, absenteeism, poor performance, & other types of termination.
EMPLOYMENT TERMINATION
• One of the difficult task managerial task.
• Results from poor selection & ineffectivepeople management.
• If termination is unavoidable, properplanning can help to avoid unfairdismissal claims & other related legalissues.
THE EMPLOYMENT LAWS
Industrial Relations Act 1967
Trade Unions Act 1959
Employment Act 1955
Sarawak Labour Ordinance
Sabah Labour Ordinance
Occupational Health and Safety Act1994
MANAGERIAL PREROGATIVES
Industrial Relations Act 1967, Section 13(3)
1. Employment;2. Assignment of work;3. Promotion;4. Transfer;5. Termination; &6. Dismissal
TYPES OF TERMINATION
1. Retirement
2. Resignation
3. Breach of contract
4. Frustration of contract
5. Ending of a fixed term contract
6. Non confirmation of a probationer
7. Retrenchment
8. Dismissal (misconduct & poor performance)
9. Constructive dismissal
INDUSTRIAL COURT STATISTICS(AWARDS OF TERMINATION CASES)
TYPES OF TERMINATION
2005 2006 2007 2008 2009 2010 2011 2012
Constructive 22 42 97 126 140 135 91 96
Misconduct 2144 2051 1200 878 613 608 639 540
Retrenchment 16 32 422 155 114 67 90 62
Others 0 0 402 573 328 479 640 735
TOTAL 2182 2125 2121 1732 11951289
1460 1433
TERMINATION: BURDEN OF PROOF
In Stamford Executive Centre v. Puan Dharsini Ganesan(Award 263 of 1985) the Industrial Court observed:
“In a dismissal case the employer must produceconvincing evidence that the workman committedthe offence or offence of the workman is alleged tohave been committed for which he has beendismissed. ……. He must prove the workman guiltyand it is not the workman who must prove himselfnot guilty. This is so basic a principle of industrialjurisprudence that no employer is expected to cometo this Court in ignorance of it...”
THE LAW ON UNFAIR DISMISSAL
Section 20 (1) of the Industrial Relations Act,1967 states:-
"Where a workman, irrespective of whether he is amember of a trade union of workmen or otherwise,considers that he has been dismissed without just causeor excuse by his employer, he may make representationsin writing to the Director General to be reinstated in hisformer employment; the representation may be filed atthe office of the Director General nearest to the place ofemployment from which the workman was dismissed."
TERMINATION OF A PROBATIONER
• The Industrial Court and the superiorcourts in Malaysia have over the yearsruled that a probationer enjoys the samerights as a permanent employee.
• As a result the services of a probationercannot be terminated without just causeor excuse (Section 20, IRA 1967).
TERMINATION OF A PROBATIONER
• When the employer seeks to rely onunsatisfactory work performance orinefficiency or misconduct on the part ofthe probationer, the employer mustadduce convincing evidence to justifythem & not mere allegation.
• Remember, the burden of proof lies onthe employer.
TERMINATION OF A PROBATIONER
The grounds that will enable atermination of probation are:
• unsatisfactory work performance
• misconduct
• reorganization of company
• retrenchment/redundancy
TERMINATING POOR PERFORMERS
• Performance goals must be clear.
• Competency development.
• Warning on unsatisfactory work orincompetence.
• Opportunity to improve performancesuch as training.
• Finally, termination should be on propergrounds.
DID THE COMPANY CONTRIBUTE TO THE POOR PERFORMANCE?
The Industrial Court has clearly laid down theguidelines for dealing with incompetence in GinderSingh Transport Co.Sdn. Bhd v Bijir Singh Juala Singh[1995] 1 ILR 516. “An employer ought in the first placeto ascertain the cause for the employee’s poorperformance. Some of the causes may be attributableto the company’s own weaknesses or inefficiencies inthe system of its operations. The claimant may nothave been given the right training or equipment todo the task assigned to him. He might not have beenadequately instructed as to what was expected ofhim. If so, the employer should attend to theproblem which is the source of the employee failingto perform, and the latter can be expected to get onwith his work.”
INCREMENTS FOR POOR PERFORMERS
Increments granted to poor performers will alsonegate an employers contention the employeewas a poor performer.
In Davotek Sdn. Bhd. v How Kor Wei - IndustrialCourt Award 19 of 2000, the employee wasgiven a salary increase in March anddismissed in April for poor performance.Until his dismissal the company had nocomplaint on the employee’s performance.The Industrial Court held the dismissal waswithout just cause or excuse and orderedreinstatement.
Additional feedback,
coaching or counseling
may be utilized
Has Performance Improved?
Implement performance improvement
plans
Transfer/Demote/Terminate
No
TYPICAL PM PROCESSIs Performance
Improving?
Strategic Plan
Performance Objectives
Employee Performance Plan
Competency Development (Ongoing)
Performance Monitoring (Ongoing)
Performance Appraisal
Provide feedback, coaching or counseling as needed
Recognize/reward performance,foster furtherdevelopment
Performancemanaged(repeat
performancecycle)
No
Yes
Yes
How Suitable Are People For Their Assigned Jobs?
Will Do,Can Do
Will Do,
CANNOTDo
Will Not Do,Cannot Do
Will NOT Do,
Can Do
Star Performers
Deadwood ?
Attitude & Motivation
Low
Low Competency High
High
Very Often
WATCH THESE !
FRUSTRATION OF CONTRACT
• FRUSTRATE in the Oxford Dictionary has beenexplained to "prevent from progressing,succeeding or being fulfilled" while frustrationmeans "being frustrated".
• Frustration of contract can be defined as aprevention from continuation of a contract whenthe employee who is employed under thecontract becomes unable to perform the work forwhich he was employed due to reasons beyondcontrol by both parties (employer and employee).
DOCTRINE OF FRUSTRATION
• The employee concerned becomesincapable to perform duty due to anaccident or prolonged illness;
• The employee concerned was underpolice detention or custody for infiniteperiod of time; and
• The professional license for the employeeconcerned to practice a particularprofession was revoked.
TERMINATION FOR ABSENTEEISM
Based on the EA 1955, Section 15(2), an employercan terminate an employee if:
1. He has been absent without permission forthree or more days; and if,
2. He has no reasonable excuse; or
3. He has an excuse but has not informed orattempted to inform his employer of thatexcuse.
However, the rules of natural justice must not beignored.
TERMINATING A FIXED TERM CONTRACT
A fixed-term contract clearly states that the employee is tobe recruited for a particular period of time.
In common law, when a contract for fixed term expires, itterminates of itself: it has not been “terminated” byeither party. In the conventional sense, there is neitherdismissal nor resignation……The court finds that theemployment of the 35 teachers are ordinary employmentsdressed up in form of fixed term contract…….. As suchthey……. within the law……… right to security ofemployment…. right not to be dismissed without justcause or excuse.
Industrial Court in Han Chiang High School v NationalUnion of Teachers in Independent Schools, 1988
RETRENCHMENT
• Retrenchment is a termination of the contractof employment due to redundancy orreorganization.
• However, when the employer terminates theemployment contract of an employee on somepretext other than the real reason like lawfultrade union activity, it is called victimization.
• The employer should comply with the principleof LIFO unless there are sound and validreasons for departure.
TERMINATION DUE TO MISCONDUCT
“Misconduct is any conduct on the part ofthe employee inconsistent with thefaithful discharge of his duties or anybreach of the express or implied duties ofan employee towards his employer wouldconstitute an act of misconduct”
(Industrial Court in Malayan Thung PauBhd v Four Workmen - IC Award 17/1974).
MISCONDUCT IN EMPLOYMENT
Misconduct (minor & major) can bebroadly dealt under the three heading asfollows:
• misconduct relating to discipline
• misconduct relating to duty
• misconduct dealing with morality
PROVING THE MISCONDUCT
The employer has to prove the misconduct allegedagainst the employee. In Rasa Sayang Hotel andNational Union of Hotel Bar & Restaurant Workers(Award 82 of 1982) the Industrial Court said:
“The court agrees with the union that there is nodenying the right of the employer to punish, butthere is also the right of the employee not to bepunished if there has been no offence. Before thehotel can show that the punishment does fit thecrime, it must first prove the crime”.
INVESTIGATING MISCONDUCT
Fact-finding
To find out if an offence has beencommitted & whether or notaccused has a case to answer
Statements from witnesses
Relevant documents
PREPARATION OF SHOW-CAUSE LETTER
A charge letter addressed to an accused employee must be in writing & must have the following:-
1. Must contain the allegation or allegations of themisconduct. Allegation or allegations must be simple, clear,accurate and precise so that the accused can know andunderstand them.
2. Must state that the accused has to show-cause as to whydisciplinary action should not be taken.
3. A reasonable time-frame for the accused to show-cause.
4. If accused does not show-cause within the stipulated time-frame or the excuse given is not accepted, appropriatedisciplinary action will be taken.
DOMESTIC INQUIRY
“a formal hearing held by an employer before anemployee is dismissed or before any other majorpenalty is imposed”
Industrial Relations Act 1967 Section 13(3) states thatthe employers have the right to dismiss employeeswho commit misconduct. However, the right todismiss is limited by two requirements:
• Procedural Requirements - the employee must betreated fairly and justly.
• Substantive requirements - the employee should notbe punished without sufficient proof of his guilt.
DOMESTIC INQUIRY
Domestic Inquiry Is Required By:-
• Statute - Section 14(1) of theEmployment Act 1955
• Common Law - The rules of naturaljustice
before an employee can be punished for an act of misconduct
DUE INQUIRY IN DISMISSAL
For employees governed by the Employment Act1955, Section 14 of the Act states: “An employermay, on grounds of misconduct inconsistentwith the fulfillment of the express or impliedconditions of his service, after due inquiry-
dismiss without notice the employee
downgrade the employee
impose any other lesser punishment as hedeems just and fit.”
RULES OF NATURAL JUSTICE
‘Hear from the other side’ - audi alteram partem: Thismeans no man shall be condemned unheard, the accusedmust be given sufficient opportunity not only to know thecase against him but also to answer it. He must have theopportunity to actually see, hear & question all witnessesone by one from whom statements were taken.
‘No man shall judge for his own cause’ - nemo judex incausua sua: This means the person who sits in judgmentsmust be an independent person who is neither the accusernor the accused or any person who has any interest in ordislike of any parties involved or any bias in any respect.This is to ensure that the person who sits in judgments isable to act impartially & without bias.
NATURAL JUSTICE
“If the right to be heard is a real rightwhich is worth anything, it must carrywith it a right in the accused to know thecase which is made against him. Theaccused must be given sufficientopportunity not only to know the caseagainst him but also to answer it”.
Lord Dennings in B Surinder Singh Kandav Govt of the Federation of Malaya (1962)
DISCIPLINARY ACTION
In deciding the nature of disciplinary action tobe meted out, consideration to be taken intoaccount:-
1. the severity of the misconduct committed.2. the extent to which the employee is responsible.3. the circumstances under which the misconduct was
committed.4. the past record of the delinquent employee,
including his length of service.5. bad past record would be aggravating and good
past record would be mitigating.
REMEDY FOR DISMISSAL WITHOUT JUST CAUSE OR EXCUSE
Whether a workman is a member of a trade union ornot, he can file a representation to the DGIR in writingseeking for reinstatement to his former employment ifhe considers he was dismissed without just cause orexcuse.
To qualify for this remedy -
• must be workman
• file representation within 60 days of the dismissal
Upon receipt of the representation, DGIR will takesteps as necessary or expedient for a settlement.
“Section 20 of the IRA embodies the concept ofsecurity of tenure of employment…… a workman isentitled to keep his job & no employer may beallowed to throw a workman out of his employmentwithout good reason. This provision gives a workmanthe right to claim reinstatement & this court mayorder reinstatement in the workman’s formeremployment if his dismissal is considered to bewithout just cause or excuse”. (Industrial Court in PGPak Poy & Associates Sdn Bhd v Looi Sook Chan,245/1986)
SECTION 20, IRA 1967
CONSTRUCTIVE DISMISSAL
“An employer does not like a workman. Hedoes not want to dismiss him and face theconsequences. He wants to ease the workmanout of his organization……… Generallyspeaking he will make life so unbearable ofthe workman so as to drive the latter out ofemployment.”
Dato’ Gopal Sri Ram, JCA in Quah Swee Khoonvs. Sime Darby Berhad (2000)
Unfair Dismissal - the employer must prove a
fair reason for dismissal.
Constructive Dismissal -the employee must prove
that the dismissal was constructive.
UNFAIR DISSIMAL & CONSTRUCTIVE DISMISSAL
THE LANDMARK CASE
The Supreme (now Federal) Court in Wong Chee HongV. Cathay Organisation (M) Sdn. Bhd. [1988] 1 CLJ 298 -Salleh Abbas LP stated the principle underlying theconcept of constructive dismissal as follows:
“The common law has always recognized the right of anemployee to terminate his contract of service andtherefore to consider himself as discharged fromfurther obligations if the employer is guilty of suchbreach as affects the foundation of the contract or if theemployer has evinced or shown an intention not to bebound by it any longer”.
Proactive measures in managing employment termination
Creating & sustaining a harmonious employment
relationship
DISCUSSION
HRM – CUSTOMER – PROFIT CHAIN
HRMPractices
SatisfiedEmployees
• Lessturnover
• Consistentservice
Customer’sPerceived
Value
• Satisfiedcustomers
• Customerreferrals
HigherRevenue
Growth and Profits
CONCLUSION
Remember, Law is NOT a Substitute for Good
Human Resource Management Practices!
THANK YOU
DR. BALAKRISHNAN MUNIAPAN
Dr. Balakrishnan Muniapan is a specialist in Human Resource Developmentand is currently with Wawasan Open University in Penang. He is recognized byscholars as a pioneer in the development and promotion of Vedic HRDapproach in Malaysia. Dr Bala also takes the role of Visiting Professor in HRMfor universities and business schools in Vietnam, Philippines and India. As acorporate trainer and consultant, he has conducted training and consulted formore than fifty organizations in Malaysia and in Asia. In academia, he haspublished over fifty research papers in international journals, conferenceproceedings and book chapters. A highly sought-after speaker in HRM, Dr Balais frequently invited to speak on HRM issues at international conferences incountries in Asia, Australia, Africa and Europe. Prior to academia, he was inproduction management with a large Japanese MNC at his hometown in SungaiPetani, Kedah. Email: [email protected]