HR Guide: The Basics of Employee Dismissal

Dismissals are as natural as employment. As an employer, you should know about the reasons an employee can be dismissed. In this article, we will explain the types of employee dismissal and their examples. 

You will also learn more about the other causes of employee dismissal. 

Direct Dismissal

This type of dismissal is as straightforward as it gets. A direct dismissal is where an employer decides to end the employment relationship, and dismisses the employee. Usually, an employee is dismissed through a formal letter of termination.

According to law, employers are given a reasonable amount of space to make commercial decisions for their businesses and that includes employee dismissals. The courts would not interfere with a decision to directly dismiss an employee, except if it can be proven that the managerial power was not exercised in good faith. For example, the dismissal involves an underlying element of unfairness and victimisation. 

Constructive Dismissal

This one's a bit tricky. Unless an employment contract has a variation clause that allows the employer to exclusively modify the terms of employment, an employer cannot insist on changing the terms. 

An employer who insists on unilaterally modifying the employment terms is deemed to have breached the employment contract, and in fact in law would usually be considered to have repudiated (or cancelled) the contract. 

Here are examples of constructive dismissal:

1. The terms of the employment have been modified/changed without prior notice to the employee;
2. There have been incidents of harassment at work;
3. The employer has failed to duly pay the employee’s wages/salary; or
4. There has been a demotion/reduction of salary without just cause.

Read more about constructive dismissal here

Employers cannot dismiss employees without a just cause.

How can an employee be dismissed?

The basic acceptable reasons for dismissing an employee are:

1. Misconduct
2. Poor work performance

The two major factors of determining whether a dismissal is fair or not are that the employer must be able to show that the dismissal was substantively and procedurally fair. 

Substantive fairness means that there has to be a just reason which gave rise to the decision to dismiss the employee. 

Procedural fairness looks at the practical implementation of the dismissal process. This factor is more subjective as it heavily depends on the facts of each specific case. 

Reasons for employee dismissal

Death 

In instances where the worker has passed on, the employment will automatically be terminated. The employer has the responsibility to make sure that the salary and benefit due to the employee before their demise is paid to their respective personal representative.

Absenteeism

An employe can be dismissed from their employment if they have been absent from work for more than two consecutive days without obtaining leave from the employer unless that have any reasonable excuse of doing so and has made an attempt to inform their employer.

Retrenchment / Redundancy

In circumstances where there is a redundancy of employee's skill set, a corporate downsizing, or an organisational reshuffling, the employer may opt for dismissal or retrenchment:

• in pursuance of business goals; or

• in response to an economic downfall where the employee's skill is no longer relevant to the organisation; or

• there is no more work available for the employee; or

• the employer is reducing the overhead cost due to downsizing of the workplace.

An employer has the right to dismiss an employee if they're found to be performing poorly.

Poor Performance

if the employee's work performance is considered to be inadequate, an employer has the right to dismiss the employee as long as it is justifiable to do so. The employer can only dismiss the employee if they have:

1. informed the employee about their poor performance

2. gave warning to the employee 

3. allowed the employee a chance to improve their performance. 

Misconduct

An employer can dismiss an employee without due notice after an inquiry on the grounds of misconduct. Misconduct means any conduct that is inconsistent with the discharge of an employee's duty, such as improper behaviour, intentional wrongdoing or deliberate violation of a rule/standard of behaviour that is related to their work. 

For example, sexual harassment, constantly late for work, too many absences from work, stealing the company's property, or deliberately damaging employer's goods. 

The employment law in Malaysia seeks to balance the right of both employees and employers. Employees have the right to be secure in their jobs and employers have the right to decide how to manage their businesses, including the hiring and dismissal of employees. 

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Sources: The Malaysian Lawyer & Fareez Law

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