Managing Employee Misconduct: A Guide for Malaysian Employers

Handling employee misconduct is a critical responsibility for employers, as it can significantly impact the workplace environment, productivity, and legal standing of a business. Dealing with misconduct effectively requires a balanced approach that is both legally compliant and ethically sound. This articles discusses methods on managing employee misconduct cases in Malaysia, ensuring that employers adhere to legal requirements and maintain a fair process.

1. Understanding Employee Misconduct

Employee misconduct refers to behaviour that violates the company's policies, ethical standards, or legal obligations. Misconduct can be classified into two main categories:

a. Minor Misconduct

Minor misconduct includes less severe breaches of company policies or codes of conduct. Examples may include tardiness, failure to follow dress code, minor breaches of workplace safety rules, or insubordination. These issues typically do not warrant severe disciplinary action unless they are repeated or escalate.

b. Major or Gross Misconduct

Major or gross misconduct involves serious violations that may justify immediate dismissal or severe disciplinary action. Examples include theft, fraud, violence, sexual harassment, discrimination, serious breaches of safety protocols, and gross negligence.

2. Legal Framework for Handling Misconduct in Malaysia

The process for handling employee misconduct in Malaysia is governed by various statutes, including the Employment Act 1955 and the Industrial Relations Act 1967. Adhering to these laws is crucial to avoid legal disputes and potential claims of wrongful dismissal.

a. Employment Act 1955

• Section 14(1):

  This section allows employers to dismiss an employee without notice, downgrade them, or impose lesser punishment (such as suspension without pay) in cases of misconduct, after due inquiry. The law emphasises the need for a fair and thorough inquiry before taking any action.

  
  

• Section 14(2):

  Permits suspension of the employee from work during the inquiry, provided that the suspension does not exceed two weeks, and the employee receives half their salary during this period.

  
  

b. Industrial Relations Act 1967

• Section 20:

  Provides employees the right to challenge dismissals they believe were without just cause or excuse. If an employee claims wrongful dismissal, the case may be referred to the Industrial Court for resolution.

  
  

3. Steps for Handling Employee Misconduct

To manage misconduct effectively, employers should follow a structured process that is legally compliant and fair to all parties involved:

a. Establish Clear Policies and Procedures

• Code of Conduct:

  Develop a clear and comprehensive code of conduct that outlines acceptable and unacceptable behaviour in the workplace. Ensure that all employees are aware of these policies and receive training on them.

  
  

• Disciplinary Procedures:

  Define the procedures for handling misconduct, including how investigations will be conducted, the rights of the employee, and the potential disciplinary actions.

  
  

b. Conducting an Investigation

• Gather Evidence:

  Promptly gather relevant evidence related to the misconduct allegation. This may include documents, emails, CCTV footage, and witness statements. Ensure that evidence is collected in a manner that respects the privacy and rights of employees.

  
  

• Interview Witnesses:

  Speak to witnesses and obtain their accounts of the incident. Document these interviews carefully, noting the time, date, and details of the discussions.

  
  

• Interview the Employee:

  Give the accused employee an opportunity to respond to the allegations. This interview should be conducted impartially, allowing the employee to present their side of the story and any evidence they may have.

  
  

c. Conducting a Domestic Inquiry

• Due Inquiry:

  Before taking disciplinary action, conduct a formal domestic inquiry to determine whether the employee committed the misconduct. The inquiry panel should be impartial and include individuals who are not directly involved in the case.

  
  

• Notice of Inquiry:

  Provide the employee with a written notice of the inquiry, detailing the allegations, date, time, and place of the hearing. Allow the employee sufficient time to prepare their defense and to be represented by a colleague or union representative if desired.

  
  

• Presentation of Evidence:

  During the inquiry, present the evidence against the employee and allow the employee to cross-examine witnesses and present their evidence.

  
  

d. Making a Decision

• Deliberation:

  After the inquiry, the panel should deliberate on the findings and decide based on the evidence presented. Consider the severity of the misconduct, the employee’s past record, and any mitigating circumstances.

  
  

• Written Decision:

  Document the decision in writing, including the findings of the inquiry, the reasons for the decision, and the disciplinary action to be taken. This record will be crucial if the decision is later challenged.

  
  

e. Taking Disciplinary Action

• Appropriate Action:

  Based on the inquiry’s outcome, decide on the appropriate disciplinary action. This could range from a warning or suspension to demotion or dismissal, depending on the severity of the misconduct.

  
  

• Communication:

  Inform the employee of the decision in writing. Clearly explain the reason for the disciplinary action, the terms of any suspension or termination, and any rights the employee has to appeal the decision.

  
  

4. Ensuring Fairness and Ethical Conduct

a. Avoiding Bias

• Ensure that the inquiry is conducted impartially, and that all parties involved are treated fairly. Avoid any actions or decisions that could be perceived as biased or retaliatory.

  
  

b. Maintaining Confidentiality

• Keep all information related to the investigation and inquiry confidential. Limit access to sensitive information to those directly involved in the case to protect the privacy of the employee and the integrity of the investigation.

  
  

c. Providing Support

• Offer support to employees involved in misconduct cases, such as access to counseling services or employee assistance programs. This support can help maintain morale and provide guidance during challenging times.

  
  

5. Documentation and Record-Keeping

• Maintain detailed records of all steps taken during the investigation and inquiry process. This includes copies of all notices, evidence, interview notes, inquiry proceedings, and the final decision. Proper documentation is essential for defending the company’s actions if challenged in court.

  
  

6. Handling Appeals and Disputes

• If the employee appeals the decision, follow the company’s internal appeal procedures. Review the appeal objectively and consider any new evidence presented.

  
  

• If a dispute arises and the employee files a claim for unfair dismissal under the Industrial Relations Act 1967, prepare to present the case to the Industrial Court. Legal representation and thorough documentation will be critical in defending the company’s position.

  
  

Conclusion: Managing Misconduct Legally and Ethically

Effectively managing employee misconduct requires a clear understanding of legal obligations, established procedures, and a commitment to fairness and transparency. By adhering to Malaysian employment laws, conducting thorough investigations, and maintaining ethical standards, employers can handle misconduct cases responsibly and protect their business interests.

Engaging legal professionals for advice and support can help ensure that disciplinary actions are legally sound and uphold the rights of all parties involved. Should you have any questions related to the article above, please do not hesitate to contact our managing partner, Eugene Yeong for clarification.