Termination Letter for Misconduct (Malaysia)

A Termination Letter for Misconduct in Malaysia is a formal written dismissal notice issued by an employer to an employee following a finding of misconduct at a domestic inquiry, informing the employee that the employment is terminated without notice or payment in lieu of notice under Section 14(1) of the Employment Act 1955 (Act 265). Misconduct in Malaysian employment law refers to conduct inconsistent with the express or implied conditions of the employment contract, including dishonesty, insubordination, theft, sexual harassment, and serious breach of company rules.

Under Section 14(1) of the Employment Act 1955, an employer may terminate the employment of an employee without notice where the employee has been found, on due inquiry, to have been guilty of misconduct inconsistent with the fulfilment of the express or implied conditions of service. The requirement for a domestic inquiry before dismissal is grounded in the rules of natural justice, as affirmed by the Federal Court of Malaysia in Dreamland Corporation (M) Sdn Bhd v Choong Chin Sooi & Industrial Court of Malaysia [1988] 1 MLJ 111, which held that natural justice requires the employer to hear the employee before dismissal.

A Termination Letter for Misconduct follows a three-step process mandated by Malaysian Industrial Court practice: (1) issuance of a Show Cause Letter specifying the alleged misconduct; (2) conduct of a Domestic Inquiry where the employee has the right to be heard and to call witnesses; and (3) issuance of the Termination Letter where the inquiry panel finds guilt. A dismissal without following these steps is at high risk of being found to be a dismissal without just cause or excuse under Section 20 of the Industrial Relations Act 1967 (Act 177), as the Industrial Court applies both substantive and procedural fairness.

For employees earning above the Employment Act 1955 threshold (RM4,000 per month in non-manual roles), the Industrial Relations Act 1967 and common law principles govern the termination, and the same natural justice requirements apply.

The legal framework governing the Termination Letter for Misconduct (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Termination Letter for Misconduct (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Employment Act 1955 (Act 265) sets the foundational requirements.

A Termination Letter for Misconduct is needed in Malaysia when an employer has completed the domestic inquiry process and the panel has returned a finding of guilt for a misconduct charge that warrants dismissal.

A Termination Letter for Misconduct is required when an employee has committed an act of serious misconduct such as theft of company property, falsification of records, sexual harassment contrary to the Code of Practice on the Prevention and Eradication of Sexual Harassment in the Workplace (2002), or wilful insubordination of a lawful order.

A Termination Letter for Misconduct is needed when an employee has received previous warnings for repeated minor misconduct and the latest offence — combined with the prior disciplinary record — justifies the ultimate penalty of dismissal at the domestic inquiry.

A Termination Letter for Misconduct is required when a domestic inquiry convened under the company's disciplinary procedure — which must comply with the principles in Goon Kwee Phoy v J&P Coats (M) Bhd [1981] 2 MLJ 129 — has concluded with a panel recommendation of dismissal, and the authorised management officer needs to issue a formal dismissal letter.

A Termination Letter for Misconduct is needed when an employee in a position of trust — such as a cashier, accountant, or purchasing officer — is found to have committed fraud or breach of fiduciary duty, and the termination must be documented to support any civil recovery action or police report under the Penal Code (Act 574).

A Termination Letter for Misconduct is required to formally record the dismissal for EPF, SOCSO, and EIS deregistration purposes, noting that an employee dismissed for misconduct under Section 14(1) of the Employment Act 1955 is not entitled to termination benefits under the Employment (Termination and Lay-Off Benefits) Regulations 1980.

A valid Termination Letter for Misconduct in Malaysia must contain the following elements to withstand scrutiny before the Industrial Court of Malaysia.

Reference to the show cause letter: The date of the show cause letter issued to the employee, specifying the misconduct charges that were the subject of the domestic inquiry. This establishes that the procedural prerequisite of notice was satisfied.

Domestic inquiry details: The date or dates on which the domestic inquiry was held, the composition of the inquiry panel, and the fact that the employee was given the opportunity to be heard and to present a defence. These details demonstrate compliance with the natural justice requirements established in Dreamland Corporation (M) Sdn Bhd v Choong Chin Sooi [1988] 1 MLJ 111.

Findings of the domestic inquiry: The specific misconduct charge or charges on which the inquiry panel found the employee guilty, stated precisely. The Industrial Court of Malaysia will scrutinise whether the finding is supported by the evidence presented at the inquiry.

Decision and effective date of dismissal: A clear statement that the employee is dismissed without notice under Section 14(1) of the Employment Act 1955 (Act 265), effective from a specific date. The effective date of dismissal determines the 60-day period within which the employee may file a representation under Section 20(1A) of the Industrial Relations Act 1967.

No termination benefits: A statement confirming that, as the termination is for misconduct under Section 14(1) of the Employment Act 1955, no termination benefits are payable under the Employment (Termination and Lay-Off Benefits) Regulations 1980.

Return of company property: The requirement to return all company property, access cards, IT credentials, and documents immediately upon receipt of the letter.

Outstanding wages: Confirmation that outstanding wages earned up to the dismissal date will be paid within three working days under Section 20 of the Employment Act 1955, as wages remain payable even for misconduct dismissals.

Additional compliance elements for a Termination Letter for Misconduct (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.