• Direct dismissal – an employer decides to end the employment relationship, and dismisses the employee by way of a formal letter of termination.
  • Constructive dismissal – an employee is forced to resign due to a fundamental breach of contract committed by the employer. Practical examples include an employer, without good reasons, reduces the employee’s wages substantially, alters the employee’s job function dramatically or fails to provide a safe working environment. It must be highlighted that ‘unreasonable conduct’ alone may not necessarily give rise to a valid claim for unfair dismissal, especially if the conduct is trivial. In other words, ‘constructive dismissal’ arises only if the breach committed by the employer is so severe that it goes to the heart of the employment contract, rendering the employee impossible to continue his/her employment. An employer can resist a claim of constructive dismissal if it can be shown that the employer has acted in good faith at all times, for example, discussing any proposed changes with the employee before making a decision and supporting all managerial decisions with genuine and non-discriminatory reasons.


Section 20 of the Malaysian Industrial Relations Act 1967 (“IRA 1967”) provides several avenues for employees to seek redress if they feel their termination has been unfair.

  • Aggrieved employees may make a representation to the Director General for Industrial Relations within 60 days from the date of his dismissal.
  • After a representation is filed, the Industrial Relations Department (IDR) will organise a conciliation meeting between the employee and the employer, and an IDR officer will act as a mediator between the two parties to help resolve the matter amicably.
  • If a settlement cannot be achieved through conciliation, the matter will be referred to the Minister of Human Resources, who has the discretion to decide whether or not to refer the matter to the Industrial Court.
  • If the matter reaches the Industrial Court, the employee’s claim will be heard before the Chairman of the Industrial Court. In order to resist an unfair dismissal claim, the employer have to prove that the dismissal is supported by ‘just cause and excuse’, such as due to the employee’s misconduct or poor work performance. On the other hand, if the Industrial Court finds that the employee is unfairly dismissed, possible remedies include:
    • reinstatement into former employment;
    • award of back wages (from dismissal date to the final date of hearing – subject to maximum period of 24 months); or
    • compensation in lieu of reinstatement and back wages (based on the formula of one month salary for every year of service).

The remedies are subject to discretionary considerations including the conducts of the employee and his/her post-dismissal earnings.


Apart from the mechanism under the IRA 1967, aggrieved employees may also file a civil claim against their employers for breach of contract and/or unlawful termination.