Unfair Dismissal Claims: What are the Available Reliefs?

Whenever a person considers taking legal action of any kind, one of the primary issues that must be settled is the reliefs that they are seeking. The type of reliefs one is entitled to, will depend on their cause of action or the source of their right.

1) Reinstatement

The primary remedy sought in unfair dismissal claims is the reinstatement to one’s former employment, as per Section 20(1) of the Industrial Relations Act 1967 (“IRA”). However, the Court may not grant reinstatement in certain cases such as where the claimant reaches the age of retirement, where there exists a breakdown in the relationship between parties, or where the job no longer exists.

In some instances, employees do not want to be reinstated to the company and simply seek monetary compensation. The previous legal stance on such instances, as stated in Holiday Inn, Kuching v Lee Chai Siok Elizabeth [1992] 1 MLJ 230, was that an employee must seek reinstatement and once reinstatement is no longer prayed for, the Industrial Court ceases to have jurisdiction over the dispute. The reasoning for this was that Parliament intended recourse through the Industrial Court to be reinstatement. As a result of this, many employers would offer reinstatement to employees, expecting such offers to be rejected. This rejection is then used as basis to argue that the Industrial Court no longer has jurisdiction over the dispute.

On the other hand, other Courts have decided that the workman’s plea will not affect the jurisdiction of the Industrial Court as this jurisdiction is conferred upon reference by the Minister pursuant to Section 20(3) of the IRA.

This conflict was resolved in Sanbos (M) Sdn Bhd v Gan Soon Huat [2021] 4 MLJ 924, where the Court of Appeal held that the Industrial Court was seized with jurisdiction to hear the dispute once the Minister made a reference to it. Therefore, it is no longer a requirement for employees to plead reinstatement as a relief in their claim for unfair dismissal. It is only material at the time when the representation to the Director General of Industrial Relations is being lodged.
 

2) Compensation in lieu of reinstatement

This form of relief is granted where reinstatement is not suitable given the circumstances of the case. Nevertheless, only an employee entitled to reinstatement is allowed to receive compensation in lieu of it, therefore employees who have reached their retirement age, and who would not be entitled to reinstatement, are also equally not entitled to compensation in lieu of reinstatement. The Federal Court in Unilever (M) Holdings Sdn Bhd v So Lai @ Soo Boon Lai & Anor [2015] 4 MLJ 326 found that as reinstatement was a statutory form of specific performance; monetary compensation could not substitute reinstatement if reinstatement did not exist.

The calculation for such compensation is usually equivalent to one month’s last drawn salary for every year of completed service. According to the Practice Note No. 1 of 1987, there shall be no compensation for any uncompleted year of service. Despite this, it can be argued that the Practice Note holds no force of law and is merely an internal administrative circular to be used as a guideline by the courts. In fact, the Court has discretion to award an amount having regard to the particular facts, circumstances and merits of the case, based on equity and good conscience, pursuant to Section 30 (5) of the IRA.

Punitive compensation may be granted at the Court’s discretion. In Sivabalan A/L Poobalasingam v Kuwait Finance House (Malaysia) Berhad [2016] ILJU 23, the Court granted 2 month’s salary for every year of completed service in lieu of reinstatement, having regard to the circumstances that showed that the company had acted in bad faith.
 

3) Backwages

This form of relief is to compensate employees for monies they would have earned had they not been unfairly dismissed. Pursuant to the Second Schedule of the IRA, backwages for permanent employees are to be capped at 24 months of their last drawn salary, whereas probationers are entitled to backwages capped at 12 months.

The calculation for backwages begins from the date of dismissal until the date the Court’s award is rendered. However, should the employee be found to have been making an earning post said dismissal, a percentage of it will be deducted from the backwages. The Court is also entitled to make further deductions based on any contributory conduct of the employee.
 

4) Contractual entitlements

Although some benefits, such as bonuses, may be found to be contractual entitlements, others may be given at the company’s discretion or only where certain condition precedents are fulfilled, and as such cannot be sought as of right. In Ang Teck Wang v Big Sdn Bhd [2017] ILJU 157, the Court found that even though the form for a RM60,000 bonus was signed by the company, the claimant had fraudulently misrepresented his entitlement to the bonus as it was only payable based on company profitability.

In All Malayan Estates Staff Union v Revertex (Malaysia) Sdn Bhd [2017] ILJU 215, the Court found that the bonus was payable at the company’s discretion and is not contractual. Nevertheless, the company ought to exercise such discretion fairly and reasonably. With reference to Castlefield (Klang) Rubber Estate plc v All Malayan Staff Union [1985] 1 ILR 214, if the company decides to pay a bonus, the discretion should be exercised in favour of all employees, although the company can decide on the quantum payable depending on the individual performance. The Court is also entitled to include payment in lieu of unused leave in its award.
 

5) Costs

While Section 5 of the Industrial Relations Regulations 1967 empowers the Court’s President to make orders with respect to costs and expenses, including expenses of witnesses, the Court is usually hesitant to exercise such power. In Athanasius Allapan Anthong v MyTeksi Sdn Bhd [2019] 1 ILR 66, the Court ordered that the claimant’s counsel be personally liable for costs of RM5,000 to be paid to the company, as it discovered that the claimant’s counsel’s application for earlier postponements were actually baseless, and two hearing dates had been wasted. The company, which was prepared to proceed with the hearings was prejudiced. The general practice of the Courts is to not grant costs, save for exceptional circumstances.
 

6) Other types of damages

The Industrial Court does not have jurisdiction to grant damages for loss of future earnings. The Federal Court in R Rama Chandran v The Industrial Court of Malaysia & Anor [1997] 1 MLJ 145 awarded a sum for loss of future earnings based on the period from dismissal until retirement. Much later, the Court of Appeal in Telekom Malaysia Berhad v Ramli Bin Akim [2008] 1 MLJ 770, clarified that R Rama Chandran should be confined to its facts, and not to be used as authority that future loss of earnings must be awarded. The distinguishing factor here was that compensation in lieu of reinstatement was not awarded.

In 2007, the IRA was amended to include the Second Schedule, which provides that any relief given by the Industrial Court shall not include that for loss of future earnings.

Closing remarks

Based on the above, there are clearly avenues for the unfairly dismissed. Nevertheless, before one chooses to embark on this route, various practical considerations ought to be weighed by the aggrieved (e.g. time, costs, employability) for one to make an informed decision.