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Industrial Relations Act 1967 — Employee & Employer Rights

Wrongful Dismissal in Malaysia: What You Need to Know

Our employment lawyers based in Klang advise employees and employers across Selangor and the Klang Valley on wrongful dismissal, industrial relations matters and workplace disputes. If you have been dismissed — or are facing a dismissal claim — understanding your legal position early is important.

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What Is Wrongful Dismissal Under Malaysian Law?

Wrongful dismissal — also referred to as unfair dismissal — occurs when an employee is terminated without just cause and excuse. The primary legislation governing this area is the Industrial Relations Act 1967, which gives dismissed employees the right to file a representation claiming that their dismissal was without just cause or excuse.

The burden is on the employer to establish that the dismissal was justified. An employer relying on misconduct must generally show that (a) the misconduct was proved on a balance of probabilities, and (b) the punishment of dismissal was proportionate to the misconduct in question. Where either element is absent, the Industrial Court may find that the dismissal was wrongful.

Our employment lawyers regularly advise clients — both employees and employers — across Selangor, Kuala Lumpur and the Klang Valley on wrongful dismissal claims and how to navigate the industrial relations process.

Wrongful Dismissal vs. Retrenchment: Key Differences

Wrongful dismissal and retrenchment are distinct legal concepts that are sometimes confused. Understanding the difference matters because the legal obligations, timelines and remedies available differ significantly.

Wrongful Dismissal

Termination alleged to be without just cause or excuse. The employee may file a representation under section 20 of the Industrial Relations Act 1967 within 60 days. The Industrial Court determines whether the dismissal was justified and may order reinstatement or compensation.

Retrenchment

Redundancy arising from genuine business restructuring, downsizing or closure. The employer must comply with the Employment Act 1955 requirements for termination benefits, notice periods and proper procedure. Retrenchment carried out without genuine basis may still attract a wrongful dismissal claim.

Constructive Dismissal

Where an employee resigns due to the employer's fundamental breach of the employment contract — for example, unilateral salary reduction, demotion or sustained harassment. The resignation may be treated as a dismissal, and the same protections apply. The 60-day period runs from the date of resignation.

The Domestic Inquiry Process and Just Cause

Before dismissing an employee for misconduct, an employer is expected to conduct a fair and proper process. This typically involves a domestic inquiry — an internal hearing in which the employee is given an opportunity to be heard before any decision is made. The following steps are commonly involved:

1

Investigation

The employer investigates the alleged misconduct and gathers relevant evidence before proceeding to any formal hearing.

2

Show Cause Letter

The employee is issued a show cause letter setting out the allegations and given a reasonable opportunity to respond in writing.

3

Domestic Inquiry Hearing

A panel is convened to hear the matter. The employee has the right to be present, to know the charges, and to present their case. The panel's findings are recorded.

4

Decision and Proportionality

A disciplinary decision is made based on the inquiry findings. The sanction imposed — including dismissal — must be proportionate to the misconduct established.

Dismissals made without a proper process — or where the punishment is disproportionate — are at greater risk of being overturned by the Industrial Court. Our lawyers in Selangor and Kuala Lumpur advise both employers designing fair processes and employees who have been dismissed without proper procedure.

Filing a Wrongful Dismissal Claim: The 60-Day Rule

A dismissed employee who believes the dismissal was without just cause and excuse must file a representation under section 20 of the Industrial Relations Act 1967 with the Director General of Industrial Relations (DGIR) within 60 days from the date of dismissal.

This deadline is strictly enforced. Missing it will generally bar the claim entirely, regardless of its merits. Once a representation is filed:

  • The DGIR attempts to conciliate the matter between the parties
  • If conciliation fails, the Minister of Human Resources may refer the matter to the Industrial Court
  • The Industrial Court holds a full hearing and delivers an award
  • Awards may include reinstatement, back wages (up to 24 months) or compensation in lieu of reinstatement

Our employment lawyers across Klang, Selangor and the Klang Valley regularly represent clients at conciliation sessions and in Industrial Court proceedings. If you believe you have been wrongfully dismissed, time is of the essence — contact our lawyers as soon as possible.

Employer Obligations When Facing a Dismissal Dispute

Employers who receive a wrongful dismissal representation should not ignore it. The industrial relations process involves active participation, and early advice from experienced employment lawyers can help protect the employer's position and explore resolution options before the matter proceeds to the Industrial Court.

  • Review and preserve all relevant employment documents, correspondence and investigation records
  • Engage legal representation early — ideally before the conciliation session
  • Assess the strength of the case and whether settlement is preferable to a full hearing
  • Ensure all witnesses are available and evidence is properly organised
  • Consider whether any procedural gaps in the dismissal process require addressing

Our lawyers in Selangor and Kuala Lumpur advise employers on their obligations at each stage, from the initial representation through to Industrial Court proceedings, helping to present a well-prepared and legally sound case.

Frequently Asked Questions

A dismissed employee must file a representation to the Director General of Industrial Relations within 60 days of the dismissal date. This deadline is strictly enforced — missing it will bar the claim entirely, regardless of its merit. Our employment lawyers advise acting promptly to preserve your rights.
Possibly. If you were forced to resign due to your employer's conduct — for example, through undue pressure, demotion, or a fundamental breach of your employment terms — this may constitute constructive dismissal. The same 60-day deadline applies from the date of resignation. Whether a particular set of facts amounts to constructive dismissal depends on the specific circumstances and is a question of fact and law.
A domestic inquiry is an internal hearing conducted by an employer to investigate alleged misconduct before a decision to dismiss is made. While not always legally mandatory, the Industrial Court considers whether a fair process was followed when assessing whether a dismissal was with just cause and excuse. Dismissals made without any form of inquiry or opportunity to respond are at greater risk of being found wrongful.
Dismissal without notice (summary dismissal) is permitted under the Employment Act 1955 only in cases of wilful breach of a condition of the employment contract. In all other cases, the employer must give the notice period specified in the contract, or payment in lieu of notice. Dismissal without cause or proper process may constitute wrongful dismissal.

Speak to Our Employment Lawyers

Our employment lawyers advise employees and employers across Klang, Selangor and the Klang Valley on employment law and industrial relations matters. If you are facing a wrongful dismissal situation — whether as an employee or employer — contact our lawyers for a clear assessment of your position and options.

Phone: +603 3325 7280

WhatsApp: +60 16-244 3367

Email: general@dmplegal.com.my

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