Malaysian court awards eight months' salary to wronged sales executive
The Industrial Court of Malaysia recently dealt with a workplace dismissal case that highlighted important considerations surrounding termination procedures and the rights of employees when facing performance-related dismissals.
The worker brought claims against his former employer alleging that his termination was executed without proper justification and in violation of established company policies.
He argued that the performance metrics used to justify his dismissal were misrepresented and that he was denied the opportunity to properly address the concerns raised.
The case raised significant questions about whether employers must strictly adhere to their own documented disciplinary procedures, and what constitutes sufficient evidence of underperformance to justify termination in Malaysia.
The worker started proceedings against the employer after being dismissed from his sales executive position that he had held for three years.
Court documents showed that the worker was terminated in January 2023 following allegations of failing to meet sales targets and inappropriate conduct towards colleagues.
The employer, a technology distribution company based in Kuala Lumpur, maintained through testimony that the termination was justified due to the worker's failure to meet quarterly sales targets for three consecutive quarters and an incident where he allegedly used abusive language towards a colleague in the marketing department.
"[The worker] was given ample opportunity to improve his performance through our standard performance improvement process, but continued to fall short of the minimum requirements for his position," stated the employer's HR manager during proceedings. The court examined company records that showed the employer had issued one formal written warning to the worker in November 2022.
The case brought attention to proper dismissal protocols that Malaysian organisations must follow. Evidence presented showed that while the employer had documented concerns about sales targets, there were irregularities in how performance meetings were conducted.
The worker's lawyer presented evidence that his client had actually met 85% of his sales targets during the period in question, which according to the company handbook was considered "meeting expectations" rather than underperformance. Additionally, the worker argued that the alleged incident with his colleague had been misrepresented.
The company's sales director stated during cross-examination that the decision to terminate was made following a management meeting on 15 December 2022, though formal documentation of this meeting was not presented to the court.
"The court notes with concern that [the employer] appears to have decided on termination before completing the third and final warning stage of their own disciplinary procedure as outlined in their employee handbook," observed the Industrial Court in its decision.
The court's examination focused on whether the employer had followed proper evaluation procedures before dismissal. The company's performance management policy, as presented to the court, required three formal review meetings with documentation before termination could be considered for performance reasons.
The worker maintained throughout proceedings that he had only received one formal performance review in November 2022, where he was told his performance needed improvement.
He stated that he was not given specific targets or a structured improvement plan following this meeting.
The employer's HR manager acknowledged during testimony that while performance discussions had occurred, only one formal review meeting had been properly documented with signed acknowledgement from the worker.
The sales director admitted that the final decision was made after a verbal report rather than following the complete formal review process.
"[The employer's] failure to adhere to its own established performance management framework as outlined in the company handbook section 4.2 constitutes a significant procedural irregularity," stated the Industrial Court in its analysis. This statement emphasised the legal requirement for companies to follow their documented procedures.
After reviewing performance records and company policies, the court determined that the worker's sales figures did not support the employer's claim of serious underperformance. Sales records from October to December 2022 showed the worker had achieved 87% of targets, which fell within the company's "acceptable performance" band.
The worker's immediate supervisor, a regional sales manager, testified that the worker had improved following the November review meeting and had secured two new clients in December 2022, which was not reflected in the termination documentation.
The court also found that the incident involving alleged inappropriate conduct towards a colleague had not been properly investigated, with no written statements collected from witnesses who were present during the alleged exchange.
"[The employer] has failed to establish that [the worker] was afforded procedural fairness in accordance with Section 20(3) of the Industrial Relations Act 1967, which requires employers to demonstrate that dismissal was carried out with just cause and excuse," the Industrial Court stated in its findings.
The Industrial Court ultimately ruled that the termination was unjustified due to procedural failures and insufficient evidence of poor performance. It ordered the employer to pay the worker compensation equivalent to eight months' salary and benefits under the provisions of the Industrial Relations Act 1967 (IRA).
The court noted that the employer's failure to provide proper documentation of all performance discussions and the lack of a structured improvement plan were serious procedural flaws.
"[The worker] was not afforded the opportunity to fully respond to performance concerns before the termination decision was made, which constitutes a denial of natural justice in employment relationships," the Industrial Court explained. This statement outlined a core principle that applies across Malaysian employment law.
"The court finds that [the employer's] claim of persistent underperformance is not supported by the sales data presented, which shows [the worker] operating within acceptable performance parameters as defined by the company's own metrics," the Industrial Court further noted, highlighting the importance of objective performance data in dismissal cases.
"In view of these findings, the court determines that the dismissal was carried out without just cause or excuse and accordingly orders compensation as prescribed under Section 30 of the Industrial Relations Act," concluded the Industrial Court.
This case reminds employers about the need to follow proper procedures and maintain accurate documentation when handling employee performance issues and terminations.
