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  • Writer's pictureSara Sia

Employer loses over RM3.5million for an unlawful dismissal case in 2023 – Here’s what we gathered

Updated: Jan 12



Winning @ Losing

Mr. Syed Hizam, the Claimant, served the Company for over 16 years under a fixed term contract of employment. Prior to his dismissal, he was accused of misconduct but the Company chose to terminate this contract purely on grounds of expiration. His salary prior to dismissal was RM81,244.00 per month. He won his case and was awarded over RM3.5million for backwages, unutilized annual leave days and compensation in lieu of reinstatement.

 

The key takeaways from this case are as follows:

  • Nature of Contract - All senior management employees were hired under a fixed term contract in order to motivate their performance and productivity. While this is a common practice, especially in larger companies, it is important to take note that the Industrial Court, examined and awarded their decision based on the permanency and nature of this position rather than the content of the contract.

  • Renewals – In this case, the Claimant’s contract was renewed successively without any intermittent breaks or re-application in between. Every renewal was automatic for the entire period of 15+ years. This continuity was a clear indication that the Company had treated the Claimant as a permanent employee all throughout.

  • Effect – When a fixed term contract is treated as non-genuine, the next step for the Industrial Court is to consider whether the dismissal was done with just cause and excuse. Here, the Claimant was terminated on grounds of expiration. Since the fixed-term contract was not genuine, expiration would no longer form a valid ground for termination.

  • Proving Misconduct – This case reported that the Claimant was allegedly accused of several counts of misconduct. However, this was never proven nor was it relied upon as a reason or cause for termination. Since this was not established, the Court found that the misconduct was never proven and could not be used to justify dismissal.

 

Conclusion

 

This case suggests that employers should not engage or place employees on a fixed term contract for reasons of convenience. It may also bring about concerns for companies placing their Senior Management team on fixed term contracts. Many HR practitioners may be wondering if this practice can still be continued and what are the risks associated to this practice? There isn’t a conclusive answer to this question, but what’s certain here is that HR practitioners must be in a position to prove the temporal nature of a particular role and the legal principles adopted above.

 

In closing, if there are any other instances which might be relied upon to justify dismissal, HR practitioners are encouraged to establish them accordingly. In this case, the allegations on misconduct were serious as the employee was accused of financial mismanagement. Had it been proven and if the termination was done on grounds of misconduct instead; this case might’ve been interpreted differently and the Company could’ve saved a substantial amount of money. Update: 11.01.2024 It was reported that the employers in this case have filed for an appeal - https://www.freemalaysiatoday.com/amp/category/nation/2024/01/11/cahya-mata-sarawak-appeals-rm3-5m-award-for-wrongful-dismissal/

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