The jurisprudence surrounding the need for a domestic inquiry prior to dismissing an employee has traversed a complex and evolving path. The question of how the Industrial Court should address an employer’s failure to hold a domestic inquiry or to conduct one that is free from any procedural defect remains an unresolved issue. Domestic inquiry serves as a cornerstone of procedural fairness in the workplace, ensuring accountability and adherence to the principles of natural justice. For employers, the challenge lies in navigating the balance between ensuring compliance with all the procedural requirements while managing operational priorities.
Domestic inquiry is a formal, structured process conducted by the employer to investigate and evaluate allegations of misconduct against an employee. It involves the presentation of evidence by a prosecuting officer, while the accused employee is afforded the right to defend themselves, often with representation if permitted by company policy or collective agreement. The inquiry ought to be overseen by a neutral panel consisting of senior and members of staff that are tasked with impartially assessing all evidence and testimonies against the accused employee. Based on its findings, the panel issues a decision that guides the employer in determining appropriate disciplinary actions, if any.
The Position Under The Employment Act 1955
It is pertinent to note that the under Section 14(1) of the Employment Act 1955, an employer may dismiss an employee or impose disciplinary measures including demotion or suspension — after due inquiry, provided the misconduct in question is in contradiction with the express or implied terms of employment. This principle is further fortified by Section 20(1) of the Industrial Relations Act 1967, which underscores that dismissals must not occur without just cause or excuse.
However, the issue arises when judicial interpretations of this requirement are inconsistent.
In Dreamland Corporation (M) Sdn Bhd v Choong Chin Sooi & Anor [1988] 1 MLJ 111, the Supreme Court clarified that the absence of a domestic inquiry or the presence of defected inquiry was a procedural irregularity that can be cured during the Industrial Court proceedings. This ruling drew upon the Indian Supreme Court’s decision in Workmen of the Motipur Sugar Factory Private Limited v The Motipur Sugar Factory Private Limited [1965 AIR SC 1803], which allowed procedural deficiencies to be remedied through substantive evidence presented before a tribunal.
Additionally, the Federal Court in Wong Yuen Hock v Syarikat Hong Leong Assurance Sdn Bhd [1995] 2 MLJ 753 emphasised that procedural lapses should not obstruct the Industrial Court from evaluating the dismissals on their substantive merits. The court commented:
“Failure on the part of the employer to hold a proper domestic inquiry should not deprive the Industrial Court of jurisdiction nor excuse it from the obligation to hear the reference on its merits”
The decisions of the apex court in Dreamland and Hong Leong Assurance seems to suggest that employers may terminate the employment of their employees without needing to first discharge of its obligation to conduct a domestic inquiry. However, it raised significant concerns as to the erosion of procedural safeguards for employees facing allegations of misconduct. Such safeguards are particularly critical when the livelihoods of individuals are at stake, as dismissals or disciplinary actions have far-reaching consequences on their professional and personal lives.
The Said Dharmalingam Case
The Federal Court revisited this matter in Said Dharmalingam bin Abdullah v. Malayan Breweries [1997] 1 MLJ 352. Here, the court emphasised that the statutory requirement for a pre-dismissal inquiry under Section 14(1) of the Employment Act 1955 was mandatory for employees covered under the Act. It was held that procedural flaws in the absence of a domestic inquiry was fatal and could not be remedied through Industrial Court proceedings. The court clarified that the statutory right to a “due inquiry” included the opportunity to present a plea in mitigation. However, the court cautioned that this right might not invalidate dismissals in cases where dismissal was the only logical outcome, such as in instances of severe misconduct such as theft.
This decision marked a significant departure from earlier rulings, highlighting the importance of procedural rigor for employees protected by the Employment Act 1955. From an employee's perspective, the Said Dharmalingam case serves as an important safeguard against arbitrary dismissals.
Clear Boundaries for Justifications
Recent judicial developments have established firm boundaries regarding the justifications that employers may rely upon for dismissing employees. In Maritime Intelligence Sdn Bhd v Tan Ah Gek [2021] MLJU 2189, the Federal Court held that the Industrial Court’s evaluation was strictly limited to the reasons for dismissal that were known to the employer at the “time of termination”. Employers cannot rely on reasons or evidence discovered post-dismissal to justify their actions, as the phrase "just cause or excuse" pertains exclusively to the considerations that influenced the employer’s decision at the time of dismissal.
However, it should be noted that while post-dismissal evidence cannot validate a dismissal, it may still be relevant when determining remedies at the Industrial Court. For instance, such evidence can influence whether reinstatement is appropriate or help to assess the quantum of compensation.
The Court of Appeal in Lini Feinita binti Muhammad Feisol v. Indah Water Konsortium Sdn Bhd [2021] 3 AMR 375 has further refined the approach to domestic inquiries by highlighting that when a domestic inquiry has been conducted, its findings bind the employer and the Industrial Court’s role was limited to evaluating charges substantiated during the domestic inquiry.
Together, these decision marks a significant shift, aligning the role of the domestic inquiry panel more closely with that of a quasi-judicial body. Employers now encounter increased scrutiny regarding their reliance on domestic inquiry findings, with limited scope to introduce new justifications during the inquiry process. While post-dismissal discoveries may influence remedies, they cannot retroactively substantiate the dismissal. These principles highlight the critical importance of conducting thorough and impartial domestic inquiry to uphold procedural and substantive fairness.
Conclusion
Domestic inquiry is in essence the cornerstone of procedural fairness in Malaysian labour law. While landmark judgments such as Dreamland and Wong Yuen Hock emphasise substantive justice, the erosion of procedural rigour risks undermining employee rights. Conversely, decisions like Said Dharmalingam, Lini Feinita and Maritime Intelligence reaffirm the importance of upholding procedural fairness to protect employees from arbitrary dismissals. To restore balance, a unified legal framework that harmonises procedural and substantive fairness is imperative.
Employers must balance operational exigencies with their obligations to ensure procedural fairness, while employees must remain vigilant in safeguarding their rights. By bridging the gap between procedural rigor and substantive justice, Malaysia’s labour jurisprudence can evolve to meet the needs of both employers and employees in a rapidly developing labour industry
21st March 2025