The Federal Court in Maritime Intelligence Sdn Bhd v. Tan Ah Gek [2021] 10 CLJ 663 determined that the Industrial Court should not enquire into reasons raised or discovered by the employer after dismissal in order to determine whether the dismissal is fair.

Brief Facts

  • The Claimant was employed by the Company as Vice President of its educational institution.
  • During the interview stage, the Claimant included an impugned academic qualification, into which its qualification and accreditation in Malaysia was not inquired further. The Claimant’s qualifications were also not questioned throughout the course of the Claimant’s employment.
  • The Claimant had allegedly abused her power and conducted herself unethically and unprofessionally, and this conduct was reported by fellow employees to the Company.
  • A domestic inquiry was conducted and the panel found there was sufficient evidence to establish the allegations. The Claimant was dismissed with immediate effect.
  • The Claimant filed an unfair dismissal claim against the Company.
  • The Industrial Court found that the Company had failed to substantiate the allegations made against the Claimant and that the dismissal was without just cause and excuse.
  • In its pleadings to the Industrial Court, the Company raised new allegations post-dismissal for the first time, i.e. that the dismissal was justified because the Claimant was never qualified for her position from the outset. However, the Company only came to know about the Claimant’s impugned qualification after the Claimant was dismissed, and this could not have been considered at the time of dismissal.
  • The Company’s judicial review application to the High Court was dismissed. The High Court held that the Industrial Court did not have to consider the Claimant’s lack of qualifications as this was not one of the reasons for her dismissal.
  • The Company then appealed to the Court of Appeal, which dismissed the Company’s appeal and upheld the Industrial Court’s rejection of the Company’s new post-dismissal allegation.
  • However, the Court of Appeal held that the Industrial Court had the right to inquire into grounds that differed from the reasons for dismissal, and had the discretion whether to consider new grounds and the requisite weight to be accorded to the same, which was a new and definitive position on post-dismissal allegations.
  • Hence, the Company appealed to the Federal Court. 

Federal Court’s Findings

As per the rules laid down by the Federal Court in Goon Kwee Phoy v. J & P Coats (M) Sdn Bhd [1981] 2 MLJ 129 (“Goon Kwee Phoy”), the duty of the Industrial Court is to enquire on the reasons advanced by the employer regarding its actions; it cannot go into or find another reason not relied on by the employer.

The Federal Court held that:

  • Claims in the Industrial Court are based on a Claimant’s representation at the time of dismissal, for reasons that the Claimant feels are without basis or insufficient to warrant dismissal.
  • Following this, the focus of enquiry of the Industrial Court must be premised and limited to reasons operating in the mind of the employer at or immediately before the dismissal, which comprise the basis of dismissal.
  • This rule remains applicable whether or not the employer explained the reason for dismissal before terminating the employee; or whether these reasons were communicated by the employer in the termination notice or orally.
  • It is not open to the Industrial Court, in deciding whether dismissal was justified, to consider an employer’s evidence not in their knowledge at the time of the dismissal, but was discovered after the fact.
  • The Federal Court acknowledged that the reasons operating on the mind of the employer preceding the decision to dismiss an employee are usually specified in the termination notice. However, the law is not so far reaching as to say that the Court may look to reasons other than those advanced by the employer for the dismissal at the time of the dismissal.
  • While facts discovered post-dismissal can be considered by the Court, however, this would be applicable only in determining the correct remedy and relief to be accorded to the Claimant if a successful claim occurs, and not in deciding whether dismissal was justified. For example, post-dismissal facts may be used to reduce compensation in lieu of reinstatement, or as a basis for not granting reinstatement.

Key Takeaways

The Industrial Court must confine itself to considering specific factors, events or reasons that would have operated on the employer’s mind preceding the decision to terminate an employee.

But how does this apply in practice?

Realistically, employers always know the reason they have dismissed an employee. It is whether they have articulated this fully (or at all) in the termination notice.  Whether that reason amounts to just cause and excuse is another story.

It is a very subjective question to ask what was in someone’s mind at a specific period in time. It will not always be an obvious situation (such as this case) where such information is discovered at a specific point, and therefore, logically could not have been considered when the decision to dismiss was made.

As seen, the lower courts have attempted to further define the scope of this subjective test by arguing that the reasons for justifying dismissal should be limited to those written in the notice of termination. However, as the Federal Court explained, it is also not right to confine this solely to reasons written in the termination notice as this would be an overly restrictive interpretation as to what was on the employer’s mind in dismissing the employee.

Through this case, we see how social legislation works to safeguard the interests of employees from arbitrary decision-making processes by employers that come as afterthoughts. It pushes employers to think things through before executing their decision and deters employers from dismissing employees without proper reasons and evidence.

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This article was written by Donovan Cheah (Partner) and Adelyn Fang (Associate). Donovan has been named as a recommended lawyer for Labour and Employment by the Legal 500 Asia Pacific 2017, 2018, 2019, 2020, 2021 and 2022, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work. 

Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory.  Have a question? Please contact us.

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