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Chapter 9

Discipline in Workplace

Discipline and Misconduct

Industrial Relations and Employment Acts did not define discipline or misconduct
formally. Generally, a misconduct can be defined as any infringement of the rules and
regulations. These rules and regulations must be necessary and desirable for effective
management or efficient operation of the organization.
Section 14(1) Employment Act 1955 has implies the act of misconduct includes
inconsistent act by employee with the fulfillment of the express or implied conditions of
his service.
According to Industrial Court Awards, misconduct can be defined as
1. Improper behavior, intentional wrongdoing or deliberate violation of a rule or standard
of behavior (Holiday Inn Kuching Vs Elizabeth CS Lee [Award 255 of 1990]).
2. Inconsistent with the maintenance of the relationship created by the contract (Liew
Ken & Others Vs Malayan Thung Pau Berhad [Award 37 of 1974]).
3. Carelessness, negligence and idleness (Sutton & Gates (Luton) Vs Boxall [1979] ICR
4. Implement tasks recklessly, not caring what the result would be (Tractor Malaysia
Berhad Vs Wong Kam Yoon [Award 29 of 1972]).

Types of Misconduct
Companies usually formulate their own rules of conduct, incorporating the
work rules, regulation and safety precautions suited to the nature of their
organization. There are certain types of misbehavior which no employer may
tolerate. These behaviors are generally classified as major and minor

Organizations must specify type of behaviors that are clustered into minor or
major misconduct. This is because if an employee is found guilty doing a
minor misconduct, he/she may be punished by giving a show cause letter or
he/she may received a warning latter. But, if an employees is found guilty
committed with major misconduct he/she may be demoted or even
dismissed depend on the degree of seriousness of the particular misconduct

All organizations must have rules, regulations, conditions and procedure in
their attempt to control their employees behavior.
It is important to implement discipline procedure correctly in order to
eliminate disputes.

According to Section 20(1) Industrial Relations Act 1967, where a

workman, irrespective of whether he is a member of a trade union of
workmen or otherwise, considers that he has been dismissed without just
cause or excuse by his employer, he may make representations in writing
to the Director General to be reinstate in his former employment.
Therefore, an employer should only take disciplinary action if it is proven
that an employee has been committed with misconduct or an employee
failed to implement his duty according to the standard of performance. The
burden of proof falls on companys responsibility.

Actions Before Constructing Disciplinary Procedure.

1. Identify set of behaviors and performance needed by the

2. Evaluate the performance and employees behavior according to
disciplinary standard that has been set.
3. Identify controlling mechanism for the purpose of corrective actions if
a misconduct was proved.
4. Feedback on the effectiveness of corrective actions so that
employees behavior and performance satisfy the disciplinary

Disciplinary Procedure/Process
The purpose for a disciplinary procedure is to construct a machinery to
control employees behavior and performance if they fail to reach the
disciplinary standard.
Criteria for disciplinary procedure:
1. This procedure must be written and formal.
2. Specify the category of employees effected by the procedure.
3. Specify the disciplinary actions impose to employees if they are proven
committing with misconduct.
4. Specify the level of management that is authorized to implement the
disciplinary actions.
5. Give a chance to employee to file his complaint.
6. Disciplinary actions have to be taken after conducting a proper
domestic inquiry.
7. Give a right to employee to make an appeal.

Disciplinary Actions

The Industrial Court has recognized the right of the employer to discipline a unmanageable
or disorder employees. In Goodyear Malaysia Berhad Vs National Union of Employees in
Companies Manufacturing Rubber Products (Award 63 of 1986) the Court stated that we
are fully aware that discipline in industry is an absolute necessity for efficiency. If every
worker were to do what he or she wanted the productive process would never be carried
out effectively.The Court therefore realizes that the right that the right of the
employer to discipline is an indispensable prerequisite to the operation of a successful

Section 14(1) Employment Act allowing employer, after proper due inquiry, for the
purpose of misconduct, either a) dismiss without notice, b) downgrade or c) impose
any lesser punishment as he deems just and fit. If suspensions of work without
wages is imposed to the worker it will not exceed a period of two weeks.
In Central Kedah Plywood Factory Sdn. Bhd. Vs Timber Employee Union (Award
115 of 1988) it noted that the company might after due inquiry, take any of the
following actions against the employee for misconduct, inefficiency or indiscipline
a) verbal warning b) written warning c) suspension without pay (up to one week) d)
downgrading e) dismissal without notice (for misconduct)

Absence from work

Section 15 (2) Employment Act An employee shall be deemed to have broken his contract of
service with the employer if he has been continuously absent from work for more than two
consecutive working days without prior leave from his employer, unless he has a reasonable
excuse for such absence and has informed or attempted to inform his employer of such excuse
prior to or at the earliest opportunity
during such absence.
Section 59 (1) IRA Subject to subsection 5(2), it shall be an offence to dismiss a workman or
injure or threaten to injure him in his employment or alter or threaten to alter his position to his
prejudice, by reason of the circumstances that the workman
(f) has absented himself from work without leave for the purpose of carrying out his duties or
exercising his rights as an officer of a trade union where he applied for leave in accordance with
section 6 before he absented himself and leave was unreasonably deferred or withheld; or
(g) being a member of a panel appointed under section 21 has absented himself from work for
the purpose of performing his functions and duties as a member of the Court and has notified
the employer before he absented himself.
Section 59 (2) IRA stated that an employer who contravenes any of the provisions of subsection
(1) shall be guilty of an offence and shall be liable, on conviction, to imprisonment for a term not

exceeding one year or to a fine not exceeding two thousand ringgit or to both

Disciplinary Actions in The Disciplinary Procedure

1. Verbal Warning
This disciplinary action is the most frequent action taken by
management and usually for non-serious minor misconduct. There are
two types of verbal warning:

a. Informal verbal warning

This type of verbal warning is used as a part of controlling purposes in
order the employees meeting the job requirement.
b. Formal verbal warning
This verbal warning is due to employees misconduct. Usually formal
verbal warning becomes the first stage in disciplinary action.
This type of verbal warning must be recorded for future references
because employee may be punished with warning letter if he or she
repeating the same misconduct.

2. Warning letter
This disciplinary action was taken when the employee repeating
the same misconduct after formal verbal warning was taken upon
him. In warning letter, an employee usually was asked to give
reasons why disciplinary action cannot been taken upon him.

Normally, organizations implement 2 stages of warning letter

which are first warning letter and last warning latter. A warning
letter must:
1. Have statement on the existence of problem.
2. Identify the misconduct activity.
3. State the effect from the misconduct.
4. Corrective action that the employee should implement.
5. Suggest further action by the management if the employee fail to
implement correction action.
6. Reference of verbal warning and the date it was taken.

3. Suspension
The suspension due to misconduct is different from suspension due to
domestic inquiry. In suspension due to misconduct, the employee will not
received his salary/pay during the suspension period. On the other hand,
employee will receive half of his salary during suspension due to domestic
inquiry and if he is found not guilty, he will receive the remaining salary.
A suspension due to misconduct can only being implemented if the
employment contract allowing employee to be suspended. The time period
for suspension is not exceeding 2 weeks (Section 14(2) Employment Act
4. Transfer and downgrade (demotion)
These actions are the alternative for dismissal and only can be impose if
the employment contract allowing employer to transfer or demote employee
due to misconduct.

5. Penalty and salary reduction.

Not many employers impose these actions as disciplinary action. Employment
Act do not listed penalty and salary reduction due to misconduct as lawful
deduction items. These actions can only be implemented if the employment
contract allowing the employer to impose penalty or salary reduction. Total of
salary deduction is subject to not exceeding 50% of salary earned on the
particular month (Section 24(8) Employment Act 1955) or not exceeding 75%
subject to permission by the Director General (Section 24(9)(c)) if the employee
has housing loan.
6. Dismissal
This disciplinary action is permitted by Section 14(1) Employment Act 1955.
Employees dismissal must be just cause or excuse. The just cause or excuse
must be based on the facts of each case, either misconduct, negligence or
performance (Great Wall Shopping Sdn. Bhd. Vs Gan Shang Eng (Award 241 of
1988). Hence, before a dismissal action is taken, the employer must conduct a
proper due inquiry.

In Rasa Sayang Hotel Vs National Union of Hotel, Bar & Restaurant
Workers (Award 82 of 1982) the Court mentioned that the court agrees with
the union that there is no denying the right of the employer to punish, but
there is also the right of the employee not to be punished if there had been
no offence.
Therefore, in Stamford Executive Centre Vs Dharsini Ganesan (Award 263
of 1985) indicated that the employer must produce convincing evidence that
the workmen committed with misconduct which he has been dismissed. The
burden of proof lies on the employer. He must prove the workman guilty and
it is not the workman who must proof himself not guilty.
In MSAS Cargo International Sdn. Bhd. Vs Rajaratnam a/l Rajan (Award 461
of 1994) the burden of proof placed on the employer is to prove beyond
reasonable doubt the said misconduct.

Domestic Inquiry
Section 14(1) of the Employment Act 1955 has urged that any disciplinary
action (dismissal, demotion, suspension or any lesser action) must be taken
after proper inquiry.
In Ibrahim Hassan Vs Diamond Cutting Sdn. Bhd (Award 79 of 1980) the
court has decided that the requirement of a domestic inquiry has acquired
great significant in our industrial law and has become a statutory
requirement prior to the inflicting of punishment for misconduct as laid down
in Section 14 of the Employment Act.
In Low Yat & Sons Realty Sdn. Bhd. Vs Yusof Bin Ahmad (Award 60 of
1989) the claimant argued that the dismissal was without just cause or
excuse because there was no domestic inquiry being implemented.
Unfortunately, Industrial Relations and Employment Acts have silent
according the procedure of domestic inquiry.

In Credit Corporation Sdn Bhd. Vs Mohamed Bin Abdullah (Award 259

of 1985) it was stated that there are some guidelines on how to hold a
domestic inquiry.
The court, in KJJ Cleetus Vs Unipalmol Sdn. Bhd. (Award 66 of 1975)
stated that certain guidelines, as follows, are useful to observe:
1. The inquiry is to be instituted as early as possible after the suspension of the
employee. According to Section !4(2) of the Employment Act 1955, for the
purpose of an inquiry under section 14(1), the employer may suspend the
employee from work for a period not exceeding 2 weeks but shall pay him not
less than half his wages for such period. Provided that if the inquiry does not
disclose any misconduct on the part of the employee the employer shall
forthwith restore to the employee the full amount of wages so withheld.
2. The employee is to be given particulars of the misconduct, preferably in writing;
and a reasonable time before the inquiry to enable him to prepare his case.

3. Wherever applicable, the employee is to be accompanied by his union or

committee representative, if any, at the inquiry.
4. The inquiry is to be conducted, as far as possible, by such officer (s) as
are not directly connected with the investigation of the misconduct, so as
to give the hearing impartially.
5. Examination of relevant witnesses is to be allowed at the reasonable
discretion of the officer-in-charge of the inquiry; and
6. Notes in the form of the questions and answers and the final decision are
to be recorded to show that the inquiry was proper and that the decision
arrived at was fair.


Principles that have to be followed in conducting a domestic

1. No person shall judge his own case. Officer (s) who do the investigation
cannot influenced by his/their personal interests.
2. No person shall be punished without being hearing. He must have an
ample notice regarding his prosecution and must have opportunity to
defend himself. In Kuala Lumpur Hilton Vs National of Hotel, Bar and
Restaurant Workers (Award 13 of 1983), the court viewed that as long as
the basic requirement of natural justice are observed, no strict rules of
procedure need to be followed. The employee must be informed the
charges against him and given ample opportunity for denying or
explaining the alleged misconduct.
3. Results from domestic inquiry must be just and honor.
4. The facts that direct to the decision must be handed to the employee.

Preparation for a domestic inquiry:

1. Make sure that there was a prima-facie case.
2. Make sure whether is it necessary that the employee has to be
punished. Identify type of disciplinary action that going to be taken.
3. Refer the employees employment record.
4. Notify the employee about the domestic inquiry so that he can prepare
the evidences. Allow the alleged employee to be represented by union
representative if he is a union member.
5. Make sure no technical questions will be asked during the domestic
inquiry session.
6. Sustain justice along the proceeding of domestic inquiry.


The Rule of Natural Justice

Theres no strict procedure to uphold natural justice. In Kuala Lumpur Hilton Vs
National Union of Hotel, Bar & Restaurant Workers (Award 13 of 1983) the court
decided that it is the courts view that so long as the basic requirement of natural
justice are observed, no strict rules of procedure need to be followed. In this case,
the court found that the company has informed charges against the alleged
employee and the employee has been given ample opportunity for denying or
explaining the alleged misconduct. The court satisfied with the conduct of the
domestic inquiry and in accordance with the rules of natural justice.

In Eastern Plantation Agency Sdn. Bhd. Vs Association of West Malaysian

Plantation Executives (Award 93 of 1985) the court commented, the concept of
justice has two basic components:
i. Audi alteram partem the rule of fairness. This rule is important to construct a
whole code of administrative or procedural right.
ii. Nemo judex in causa sua the rule against bias. This rule avoid a man from
judge his own cause. It urged that justice must not only be done but manifestly
seen to be done.

Representation of Unfair Dismissal (Section 20 Industrial Relations Act 1967)

If any workman considers that he was dismissal without just cause or excuse, he shall
represent in writing to the Director General at the nearest DGs office (S 20(1)) within 60
days from the dismissal (S20(1A).
Upon receiving the representation, the DG has to take necessary steps to settle the
representation or refer to the Minister if he is satisfied that the representation is no likelihood
being settle at his level (S 20(2)). The DG may use his power to direct either party to furnish
him with information (S 20(8)(a). He may call upon any person engaged directly or indirectly
with the dismissal to attend a conference presided over by the DG or any person appointed
by him. Upon receiving reference from the DG, the minister, if he thinks fit refer the
representation to the Court (S 20(3)).
In any proceedings under S20(2), the employer may represented by his authorized
employee or trade union if he is the member of the trade union (S 20(6)(a)). In addition, the
employee may represent himself or if he is a member of a trade union, he may represented
by the trade union (S 20(6)(b)). An employee and employer shall not be represented by an
advocate, advisor, consultant or any other person whatsoever.

Representation of unfair dismissal to the Industrial Court under S20(3) IRA

Section 23(4) IRA stated that notwithstanding the foregoing subsections, for the
purpose of dealing with any reference to the Court under subsection 20(3), a
Division may be constituted by the Chairman sitting alone.
Section 27 (c) IRA where the party is a workman (in proceedings under subsection
20(3)), appear himself personally or where he is a member of a trade union of
workmen, be represented by an officer or employee of the trade union;
Section 27 (d) IRA where the party is a trade union, or an employer, or a workman
(in proceedings under subsection 20(3)), be represented with the permission of the
President or the Chairman, by an advocate, or, notwithstanding anything to the
contrary contained in any written law relating to the registration of trade unions, by
any official of an organization (not being a trade union) of employers or of
workmen, as the case may be, registered in Malaysia.


Employee may claim for indemnity (compensation) for wrongful dismissal under Section
69(3) Employment Act 1955.
The Director General may inquire into and confirm or set aside any decision made by
employer under Section 14(1) and the Director General may make such consequential
orders as may be necessary to give effect to his decision.

If the decision of employer under S14(1) is set aside, the consequential order of the Director
General against such employer shall be confined to payment of indemnity in lieu of notice
and other payment that entitled by the employee as if no misconduct was committed by the
employee. According to Section 12(2), the length of notice for such terms and conditions of
employment shall not less than a) four weeks if the employee is employed less than two
years b) six weeks for the employee that employed for two years or more but less than five
years c) eight weeks if the employee is employed more than five years and more.
The DG shall not aside any decision made by employer under S14(1) if the decision has not
resulted any loss in wages or any payment payable to the employee under his contract of
The DG will not exercise his power under this section unless the employee reported to him
within 60 days from the date of decision under S14(1) either orally or writing.

Payment on Dismissal Without Notice

Section 20 Employment Act 1955 the wages less lawful
deductions, earned by but not yet paid to the employee whose
contract of service terminates under S12 shall be paid to such
employee not later than the day which contract of service so

Section 21(1)(a) Employment Act 1955 where an employer

terminates the contract of service of an employee without notice
accordance with S14(1)(a), pays wages, less any deductions
which the employer is entitled to make under S24, earned by
such employee up to and including the day immediately
preceding the day on which the termination of the contract of
service takes effect.

Constructive Dismissal
Definition indirect to dismissal, where, for example, the employer unilaterally
changes the terms of the relationship so that an employee has no choice but to
resign. This happens when an employee terminates the contract (resigns) without
notice by reason of the employers conduct which he considers so unreasonable
that he could not be expected to stay.
In the case of a constructive dismissal, although the employee has resigned, he
has the same right to make representation under S20 Industrial Relations Act 1967
as one who has been unfairly dismissed by his employer. In Western Excavation
(EEC) Ltd Vs Sharp (1978)IRLR 27 Lord Denning MR stated that an employee is
entitled to treat himself as constructively dismissed if the employer is guilty of
conduct which is a significant breach going to the root of the contract of
employment or which shows that the employer no longer intends to be bound by
one or more of the essential terms of the contract. (Reference case: Industrial
Court Award 282 of 2000)

Condition to represent constructive dismissal




The employee must make up his mind (leave the company) soon after
the conduct of which he complaints. If he continues for any length of
time without leaving, he will lose his right to treat himself as discharged
and will be regarded as agreeing with the contract.
The complaint must first referred to grievance procedure.
There must be a breach of contract by the employer . This may be
either an actual breach or an anticipatory breach.
The breach must be sufficiently important to justify the employee
resigning or else it must be the last in a series of incidents which justify
his leaving.
The employer must leave in response to the breach and not for some
other unconnected reason.

Burden of Proof
If in dismissal, the burden of proof is fall to employer but in claiming
constructive dismissal, the burden of proof is fall on the employee.
He should proof the following matters:
1. The company is guilty of conduct which is a significant breach of the
contract of employment.
2. The company is guilty of conduct which is a significant breach which shows
that the company no longer intends to be bound by one or more of the
essential terms of the contract.
3. The conduct must be sufficiently serious to entitle the claimant to leave at
4. The claimant left at an appropriate time soon after the breach complained

Example of Circumstances that may direct to claim for constructive dismissal.

1. Arbitrary reduction of wage, commission, allowance etc.
2. Withdrawal of contractual benefits, eg. Car, housing, entertainment expenses, free
meal, free laundry services etc provided that the benefit was stated in the terms and
conditions of employment.
3. Altering or taking away facilities reflective of the position and status of the
4. Demotion to a lower post with or without reduction of salary, fringe benefits etc.
5. Transfer to a different location if such transferability is not clearly stated in the letter
of appointment, often as in form of victimization.
6. Substantial changes in the job function especially if the employee is incapable of
performing those function.
7. Behavior of employer who intended to humiliate the employee.
8. Treats of dismissal if the employee does not resign from the job.
9. Cold-storage the employee by giving him no work to do or refusing to have anything
to do with him.
10. Sexual harassment.