Termination as a last resort

Terminating an employee’s service is one of the most challenging tasks for any employer. If termination is unavoidable, proper planning is necessary to mitigate legal risks such as unfair dismissal claims.

Assoc Prof Dr Balakrishnan Muniapan from WOU’s School of Business and Administration (SBA) stressed that termination must be seen as a last resort after the employer has exhausted all necessary procedures and efforts.

He was speaking in a webinar on “Termination Without Violating the Law” organised by WOU Academy in conjunction with National Training Week 2023.

Dr Bala is an expert in human resource management studies.

Urging employers to be proactive in preventing termination, Dr Bala said, “Employers must provide employees with clear performance directions, goals, training, and assistance before initiating termination on the grounds of poor performance.”

He clarified that termination can be considered if the employee’s performance remains below expectations after the performance improvement plan (PIP) – a written document providing clear guidance on areas for improvement and corrective actions – is implemented.

Employers should be proactive rather than reactive.

He added that employers dealing with misconduct and breach of contract by employees should first issue a show cause notice, allowing employees to respond to the allegations against them.

“If the explanation is unacceptable, you can launch a domestic inquiry (DI),” he said, explaining that a DI begins with a written charge sheet that should clearly specify the date, time, place, and act of misconduct. “Only after DI, if found guilty, yes you have the right to terminate.”

He asserted that a DI must be conducted in accordance with the principles of natural justice, which is the right for the employee to be heard and the right to a fair and impartial hearing by the board of inquiry.

Emphasising the basic principle of industrial jurisprudence in Malaysia, Dr Bala stressed that in an unfair dismissal, the burden of proof lies with the employer to prove the employee guilty.

He highlighted that under Section 20 of the Industrial Relations Act 1967, an employee who claims to be unfairly dismissed without just cause or excuse may file a representation at the nearest Industrial Relations department within 60 days from the date of termination.

Dr Bala explains about the law of unfair dismissal.

Regarding retrenchment, Dr Bala said the employer must provide proof of redundancy indicating that the job is no longer required by the company. He noted that the Industrial Court recommends the last in, first out (LIFO) principle, which means the last person hired in the redundant position will be first to leave.

Constructive dismissal, according to Dr Bala, is an employer’s deliberate actions in creating an unbearable work environment that pressures the employee to leave. These include humiliating the employee, setting unattainable targets, making unilateral changes to the job scope, withholding wages and sexual harassment. “In this case, the employee is required to prove the employer guilty of a breach that goes to the root of the contract.”

Understanding unfair dismissal and constructive dismissal.

In cases of voluntary termination like resignation, he said that employers need to examine why employees are leaving. He observed that internal push factors – culture, management attitude, discrimination, workload, wages, employment security, working relationships, and working environment – account for about 70% – 80% of reasons for staff departures.

He also discussed other forms of termination including retirement, frustration of contract, ending of a fixed-term contract, and non-confirmation of a probationary employee.

Dr Bala discusses various forms of termination during the webinar.

Dr Bala remarked that law should not be relied upon as a substitute for good HR (human resources) practices which involve ensuring the right number of people are hired for the right job, at the right time, with the right motivation and the right pay.

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