Unfair Termination & Constructive Dismissal in Malaysia: What You Should Know

In Malaysia, employees are protected against unfair termination — dismissals without just cause or without following proper procedure may lead to claims under the Industrial Relations Act 1967 (IRA 1967) or relevant employment laws. 

❗ Unfair Dismissal: What it Means

“Unfair dismissal” occurs when an employer terminates employment without valid reason, or fails to follow required processes such as disciplinary hearings or notice periods. 

Employees may file a representation to challenge dismissal and seek remedies including reinstatement or compensation. 

🤝 Constructive Dismissal: When Resignation = Dismissal

Constructive dismissal happens when an employer’s actions or omissions — such as unilateral demotion, significant pay reduction, drastic changes to job scope, or creating a hostile work environment — make continued employment intolerable, effectively forcing the employee to resign. Malaysian courts apply the “contract test”: the employer’s conduct must amount to a fundamental breach of the employment contract or show an intention to no longer be bound by it. 

📝 What Employees Should Do If They Encounter This

• Document all relevant events, communications, and changes to employment terms.

• Avoid undue delay: if the breach is serious, act promptly rather than continue working under intolerable conditions. 

• Seek legal advice before resigning or responding. A well-prepared claim is critical, especially for constructive dismissal cases.

• File any representation under IRA 1967 within the statutory timeframe (usually within 60 days after dismissal or effective resignation). 

✅ Why This Matters

Whether you’re an employer or employee, understanding the boundaries of lawful termination and what amounts to dismissal is essential. Proper compliance helps avoid costly litigation; for employees, knowing your rights ensures protection against unjust or forced exits.