Unfairly Dismissed in Malaysia? Here's What the Law Actually Lets You Do
- Gandhi Palanisamy
- 4 days ago
- 10 min read
You were called into a room, handed a letter, and told that today is your last day. Or you came back from medical leave to find your access card already deactivated and your desk cleared. The first feeling is shock. The second, usually within the hour, is the quiet panic about the loan instalment, the kids' school fees, and what you are supposed to tell your family tonight.
Here is the part most people in that room do not know: in Malaysia, being dismissed is not the end of the story. The law gives a dismissed employee a real and specific remedy, and when the matter reaches the Industrial Court, the burden is not on you to prove you were wronged. It is on your employer to prove they had a good reason to let you go.
By the end of this guide you will know what actually counts as unfair dismissal, the 60-day deadline that quietly defeats more claims than any weak case ever does, how the process works after the law changed in 2021, what you can realistically recover, and the point at which you should stop reading and call a lawyer.
Quick answer:
Unfair dismissal in Malaysia is governed by Section 20 of the Industrial Relations Act 1967.
You have only 60 days from your dismissal to file. The deadline is strict.
You file with the Director General of Industrial Relations, not in court.
If conciliation fails, your case now goes to the Industrial Court automatically.
Remedies are reinstatement, or compensation plus back wages of up to 24 months.
What Counts as Unfair Dismissal in Malaysia?
In Malaysia, unfair dismissal is the termination of an employee's contract "without just cause or excuse", which gives the employee the right to seek reinstatement under Section 20 of the Industrial Relations Act 1967. In plain terms, your employer must have both a valid reason to dismiss you and a fair process for doing it.
A valid reason usually falls into one of three categories: misconduct, poor performance, or genuine redundancy. A fair process means your employer actually investigated, gave you a chance to explain yourself, and did not simply act on a grudge or a rumour.
When both of those are missing, the dismissal is open to challenge. The label your employer puts on the letter does not decide the question. A "termination", a "non-renewal", a "mutual separation" that was anything but mutual, all of these can be examined for what really happened underneath.
Who Can Make an Unfair Dismissal Claim?
Any "workman" in Malaysia can bring an unfair dismissal claim, regardless of how much they earn. Under Section 2 of the Industrial Relations Act 1967, a workman is any person employed under a contract of employment, which covers the overwhelming majority of employees, from a factory operator to a senior manager.
This is the single most useful thing to understand early, because it corrects a common and costly assumption. The salary thresholds people half-remember, the ones tied to figures like RM4,000 a month, belong to certain provisions of the Employment Act 1955. They do not limit your right to claim unfair dismissal. Section 20 protection is not capped by your pay grade.
Probationers are covered too. So are employees on fixed-term contracts, in the right circumstances. Being new, or being on a contract rather than a permanent letter, does not automatically strip you of protection.
What Does "Without Just Cause or Excuse" Mean?
The phrase "without just cause or excuse" is the heart of the law, and the Industrial Relations Act 1967 deliberately does not define it. The Industrial Court decides it case by case, looking at whether the reason given was genuine and whether the employer behaved fairly in acting on it.
In practice, two things get tested. The first is substance: was the reason real and serious enough to justify dismissal? An employee dismissed for a single minor lateness, with a clean record otherwise, sits very differently from one dismissed after repeated documented warnings.
The second is procedure: did the employer follow a fair process before deciding? In misconduct cases this often means a proper inquiry where the employee is told the allegation and given a real chance to respond. Skipping that step can turn an otherwise defensible dismissal into an unfair one.
You Have 60 Days. The Clock Starts the Day You Are Dismissed.
You have 60 days from the date of your dismissal to file your representation, and this deadline is strict. Section 20(1A) of the Industrial Relations Act 1967 sets the limit, and a claim filed even one day late is almost always shut out, no matter how strong it would have been.
The "date of dismissal" is the termination date stated in your letter. It is not the date your employer rejected your internal appeal, and it is not the date you finally accepted what had happened. If you were dismissed with notice, the 60 days run from the date your notice period expires.
This is the rule that quietly ends more claims than any weak argument ever does. People spend the first weeks angry, then hopeful that the company will reconsider, then busy looking for new work, and by the time they think about legal options the window has closed. If you think you were dismissed unfairly, treat the 60-day clock as the most urgent fact in this entire article.
Just Been Dismissed? Here Is What to Do
If you have just been dismissed and you believe it was unfair, the most important thing is to act quickly and keep everything in writing. The steps below protect your position while you decide whether to pursue a claim.
Keep every document. Save your appointment letter, your dismissal letter, your payslips, your performance reviews, and any emails or WhatsApp messages about the situation. These build your case.
Note the exact date of dismissal. Write it down and count 60 days forward. That date is your deadline to file.
Do not sign anything under pressure. A "mutual separation" or settlement you sign on the spot can be treated as your agreement to leave. If you are unsure, ask for time to consider it.
File your representation with the Director General of Industrial Relations. This is done at the Industrial Relations Department, and you must ask for reinstatement as your remedy.
Get legal advice early if the stakes are high. You do not need a lawyer to file, but advice before conciliation can shape the entire outcome.
If you have just been dismissed and you are not sure what your next move should be, you can speak to one of our lawyers in Penang on 04-505 0420 before the 60-day deadline runs out.
How the Process Works: From Representation to the Industrial Court
An unfair dismissal claim in Malaysia starts not in a courtroom but at a conciliation meeting run by the Director General of Industrial Relations. You file your representation, and the Department arranges a meeting where you and your former employer try to settle the matter directly. Lawyers are not allowed to represent either side at this conciliation stage, so you attend in person or through a non-legal representative.
If conciliation produces a settlement, the matter ends there. If it does not, what happens next changed in an important way on 1 January 2021.
Before then, the Minister of Human Resources decided whether a dismissal case was worth sending to the Industrial Court, and many cases were filtered out at that point. The Industrial Relations (Amendment) Act 2020 removed that filter. Today, if conciliation fails, the Director General refers the case to the Industrial Court directly. If you read an older guide that still tells you the Minister will decide your fate, that guide is out of date.
At the Industrial Court, the case is heard properly, with evidence and witnesses. This is where legal representation matters, and where the burden of proof sits squarely on your employer.
What Can You Actually Get? Reinstatement, Compensation and Back Wages
If the Industrial Court finds you were dismissed without just cause or excuse, it can order one of two outcomes: reinstatement to your old job, or compensation in lieu of reinstatement together with back wages. Reinstatement is the primary remedy in law, which is why you must ask for it when you file, but in practice it is rarely ordered once trust between the parties has broken down.
The more common outcome is money. Compensation in lieu of reinstatement is awarded, by long-standing Industrial Court practice, at roughly one month's last-drawn salary for every completed year of service.
Back wages are awarded on top of that, and they are capped by the Second Schedule to the Industrial Relations Act 1967. The maximum is 24 months' pay for a confirmed employee and 12 months' pay for a probationer. Back wages are calculated on your last-drawn basic salary and fixed allowances, and the Court can reduce the figure to account for income you earned elsewhere after the dismissal, or for any conduct on your part that contributed to the situation.
For a confirmed employee with several years of service, these two figures together can add up to a substantial award. The recent direction of the courts reflects this. In Ooi Mei Chien v Osram Opto Semiconductors Sdn Bhd, the Federal Court in June 2025 ordered the reinstatement of a senior employee, a reminder that the remedy, though uncommon, is real.
Unfair Dismissal vs Constructive Dismissal: What Is the Difference?
Unfair dismissal is when your employer ends your employment without just cause; constructive dismissal is when you resign because your employer's conduct made staying impossible. Both are pursued under Section 20, but they work differently, and the difference decides who has to prove what.
The quickest way to tell them apart is to ask who ended the employment, and who has to prove the case.
Unfair dismissal:
Your employer ended your employment.
Your employer must prove they had just cause or excuse.
The court applies the "just cause or excuse" test.
Constructive dismissal:
You resigned because of your employer's conduct.
You must prove a fundamental breach of your contract.
The court applies the stricter "contract test".
Both are brought under Section 20 and both must be filed within 60 days. The real difference is who carries the burden of proof.
Constructive dismissal is harder to win, because the burden is on you. You must show that your employer committed a fundamental breach of your contract, something serious like a unilateral demotion, an unjustified pay cut, or being sidelined out of your role, and that you resigned in response to it rather than simply because you were unhappy. In Tan Lay Peng v RHB Bank Bhd, decided in 2024, the Federal Court confirmed that the correct test remains the strict "contract test", not a looser question of whether the employer behaved unreasonably.
Can You Appeal the Industrial Court's Decision?
Yes. Since the 2021 amendment, a party who is unhappy with an Industrial Court Award can appeal to the High Court under Section 33C of the Industrial Relations Act 1967, and the appeal must be filed within 14 days of the award. The High Court hears it as it would an appeal from the Sessions Court.
This cuts both ways. If you lose, you have a route to challenge the decision. If you win, your former employer has the same right, so an award in your favour is not always the final word. For claims that were filed before 1 January 2021, the older route of judicial review still applies instead.
Common Misconceptions About Unfair Dismissal in Malaysia
Myth: Only confirmed, permanent staff can claim. Probationers and many contract employees are also protected under Section 20. A probationer dismissed without just cause can still claim, though back wages are capped at 12 months rather than 24.
Myth: The Minister decides whether your case goes to court. This stopped being true on 1 January 2021. The Director General of Industrial Relations now refers cases to the Industrial Court directly when conciliation fails.
Myth: You can only claim if your salary is below a certain amount. That threshold belongs to parts of the Employment Act 1955, not to unfair dismissal. Section 20 is open to any workman regardless of salary.
Myth: You can just ask for compensation and skip the rest. You must seek reinstatement when you file. A representation that asks for money alone can lead the Industrial Court to decline jurisdiction.
Frequently Asked Questions
How long do I have to file an unfair dismissal claim in Malaysia?
You have 60 days from the date of dismissal, under Section 20(1A) of the Industrial Relations Act 1967. The deadline is strict. If you were dismissed with notice, the 60 days run from the date the notice period expires.
Do I need a lawyer to file an unfair dismissal claim?
You do not need a lawyer to file your representation, and lawyers are not permitted to represent you at the conciliation stage. Once the case is referred to the Industrial Court, legal representation becomes valuable, because that is where evidence is tested and the law is argued.
Can I claim unfair dismissal if I was still on probation?
Yes. Probationers are protected under Section 20, and an employer must still show just cause or excuse to dismiss one. The main difference is that back wages for a probationer are capped at 12 months instead of 24.
What if I resigned because my employer made my position impossible?
That may amount to constructive dismissal, which is also pursued under Section 20. You would need to prove that your employer committed a fundamental breach of your contract and that you resigned in response to it. The burden of proof is on you, which makes these claims harder to win.
How much compensation can I receive?
Compensation in lieu of reinstatement is generally one month's last-drawn salary for each completed year of service, and back wages are added on top, capped at 24 months for a confirmed employee. The exact figure depends on your salary, your length of service, and any income you earned after the dismissal.
Is the conciliation meeting free?
Yes. Filing your representation with the Director General of Industrial Relations and attending the conciliation meeting do not carry a court fee. Costs usually arise only if the matter proceeds to the Industrial Court and you choose to be represented.
Can my employer appeal if I win?
Yes. Either party can appeal an Industrial Court Award to the High Court within 14 days, under Section 33C of the Industrial Relations Act 1967. An award in your favour can be challenged, just as you can challenge one against you.
Conclusion
A dismissal letter feels final when it lands in your hands, but in Malaysian law it is the opening of a process, not the closing of one. The system was built on the understanding that a person's job is worth protecting, and it puts the burden on the employer to justify taking it away.
If you remember one thing from this article, let it be the number 60. The strength of your case matters enormously once you are inside the process, but none of it counts if you miss the window to begin. Mark the date, keep your documents, and get advice while you still have room to act.
Need Help With an Unfair Dismissal Claim?
Gandhi Syahida & Associates is a litigation firm based in Penang that represents employees and employers in dismissal and Industrial Court matters across Malaysia. If you have been dismissed and you are worried about the deadline, the earlier you speak to us, the more we can do.
Gandhi Syahida & Associates
No. 5, 1st Floor, Taman Idaman, Jalan Idaman, 14100 Simpang Ampat, Pulau Pinang
Phone: 04-505 0420 | WhatsApp: 017-5190049
Email: admin@gandhisyahida.com.my
This article is for general information only and does not constitute legal advice. The law and procedure described may have changed since publication. For advice on your specific situation, please contact our firm or another qualified lawyer.
By Gandhi Palanisamy, Advocate and Solicitor of the High Court of Malaya. Last updated 2 June 2026.
Comments