Introduction
The dismissal of an employee would usually be based on specific reasons bearing in mind that the dismissal must be with just cause or excuse.
Typically, the dismissal of an employee would be based on the grounds of misconduct or poor performance. For example, in the case of misconduct, an employee could be dismissed due to inter alia insubordination, absenteeism, habitually turning up late at work, misappropriation or dishonesty.
The reason(s) for the dismissal of the employee would be identified by the employer leading up to the dismissal and in most situations, the reason(s) for the dismissal would be specified in the termination notice.
An employer could however discover other reasons subsequent to the dismissal of the employee which in the eyes of the employer further justifies the termination of the employee.
For example, an employee is dismissed by an employer due to insubordination. However, based on an audit exercise carried out by the employer subsequent to the dismissal of the employee, the employer discovers that the dismissed employee had submitted several false medical leave claims. The employer then relies on these false medical leave claims submitted by the dismissed employee as further proof that the dismissal of the employee was with just cause or excuse.
The question therefore arises can an employer rely on post-dismissal discoveries as reasons justifying the dismissal of an employee in an unfair dismissal claim. This issue was considered and decided by the Federal Court recently in the case of Maritime Intelligence Sdn Bhd v Tan Ah Gek [2021] 4 ILR 417.
Salient Facts
In this case, Tan Ah Gek (“Employee”) was employed as Vice President – Services & Registrar by Maritime Intelligence Sdn Bhd (“Company”). There was a petition signed by more than half of the employees of the Company alleging that the Employee had abused her power and conducted herself unethically and unprofessionally.
An independent investigation was then carried out by the Company based on the investigation carried out, the Company was convinced that the Employee had committed a misconduct and the Company therefore proceeded to issue her a show cause letter.
The Company subsequently conducted a domestic inquiry as they found the Employee’s explanation in response to the show cause letter to be unacceptable. The domestic inquiry panel then found there was cogent evidence to show that the allegations of misconduct against the Employee were established. The Employee was then dismissed from her employment.
The Employee, being dissatisfied with her dismissal, lodged a representation in writing for unfair dismissal pursuant to Section 20(1) of the Industrial Relations Act 1967 which then led to a reference to the Industrial Court.
Proceedings in the Industrial Court
During the proceedings in the Industrial Court, the Company raised for the first time in its pleadings the allegation that the dismissal was justified because the Employee was never qualified for her position from the beginning as her Master’s Degree was from an unaccredited university in Malaysia.
In essence, the Company sought to justify the decision to terminate the Employee by raising a new allegation in the Industrial Court, which was long after the Employee had been dismissed.
The Industrial Court found the Employee’s dismissal to be unfair but rejected reinstatement. Instead, the Employee was awarded compensation in the sum of RM288,000.
Proceedings in the High Court
The Company filed judicial review proceedings in the High Court, challenging the decision of the Industrial Court.
The High Court dismissed the judicial review application by the Company. The High Court held that the Industrial Court did not have to consider the submissions on the Employee’s lack of qualification as this was not one of the reasons for her dismissal. The High Court also found that there was no procedural impropriety, irrationality or illegality in the decision-making process of the Industrial Court.
Proceedings in the Court of Appeal
The Company appealed to the Court of Appeal but the Company’s appeal was dismissed. The Court of Appeal upheld the Industrial Court’s rejection of the new allegation raised by the Company.
The Court of Appeal however held that the Industrial Court is entitled to inquire into the grounds relied on by an employer which were different from the reasons for the dismissal. In this regard, the Court of Appeal opined that if the employer raised new grounds in its pleadings to justify the dismissal of an employee, the Industrial Court had the discretion whether to consider these grounds and if it did, the Industrial Court would then have to determine the weight to be attached to such grounds.
The Decision by the Federal Court
The Company was granted leave to appeal to the Federal Court and one of the questions of law for which leave was granted and which is relevant for the purposes of this write-up is “Whether the Industrial Court has the right to enquire into reasons subsequently put up by the employer via pleading to justify the dismissal, even if such reasons were not given at the time of the dismissal.”
In dealing with this question of the law, the Federal Court looked into the provisions of Section 20 of the Industrial Relations Act 1967, particularly Section 20(1) and Section 20(3). Pursuant to Section 20(1), an employee is entitled to lodge a representation in writing to the Director General of the Industrial Relations Department for unfair dismissal if he/she is of the view that the termination of his/her employment is without valid reasons. In this regard, the Federal Court was of the view that by virtue of Section 20(3), the focus of the enquiry by the Industrial Court on the unfair dismissal complaint should be premised on matters and events which occurred at the time of the dismissal. The Industrial Court should only consider and adjudicate on the reasons, factors or events operating in the mind of the employer prior to the decision to terminate the employment of the employee. This is because it is those reasons, factors or events which form the basis of the dismissal and it is based on those reasons, factors or events which the employee makes the representation for unfair dismissal.
The Federal Court opined that the term ‘just cause or excuse’ used in Section 20(1) do not envisage an investigation of matters or reasons which the employer discovers subsequent to the dismissal or which operates in the mind of the employer post-dismissal. In essence, natters or reasons discovered post-dismissal cannot be relied upon to justify the dismissal.
It was the Federal Court’s considered view that if matters or reasons post-dismissal were to be considered when adjudicating an unfair dismissal complaint, it would then provide an employer with the opportunity to re-think and add further reasons to justify the dismissal.
In connection to the above, the Federal Court enunciated that even in cases where the employer failed to hold on inquiry prior to the dismissal of the employee or where the inquiry conducted was found to be defective, whilst the employer is at liberty to establish the reasons for dismissing the employee during the proceedings in the Industrial Court, the employer does not have liberty introduce fresh matters or events or occurrences which only came to the attention of the employer post-dismissal.
Notwithstanding the above, the Federal Court however went on to hold that events discovered by an employer post-dismissal can be considered by the Industrial Court when determining the remedy/relief to be granted to the dismissed employee. If there are compelling new facts on the conduct of the employee during his/her employment, then the employer is open to adduce such evidence during the course of the proceedings in the Industrial Court to address the remedy/relief to be afforded to the dismissed employee. In dealing with such evidence, the Industrial Court may conclude that reinstatement is not a suitable remedy or that no compensation in lieu of reinstatement should be awarded because of the employee’s contributory conduct.
Based on the matters set forth above, the question of law on whether the Industrial Court has the right to enquire into reasons subsequently advanced by the employer via pleadings at the hearing stage of the inquiry before the Industrial Court to justify the dismissal was answered in the negative by the Federal Court.
Key Takeaways
The following are the key takeaways of the decision by the Federal Court in this case:
- An employer can only rely on facts, events or occurrences operating in its mind prior or at the time of the decision to terminate the employment of an employee as reasons for the dismissal.
- An employer cannot rely on matters which are discovered post-dismissal as reason(s) to justify the termination of an employee’s employment.
- The Industrial Court can still consider compelling post-dismissal evidence adduced by an employer during the course of the proceedings of the Industrial Court when determining the remedy/relief to be afforded to the dismissed employee. Such evidence can be relied upon to counter an employee’s claim for reinstatement or compensation in lieu of reinstatement.
Written by:
Rohan Arasoo Jeyabalah
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