COVID-19 Update: Unfair Dismissal in Malaysia.

The Malaysian Government has issued a Movement Control Order (“MCO”) to contain the spread of Coronavirus (Covid-19), taking effect from 18th March to 28th April. During this period, all government and private business premises are forced to shut down, save for essential services in areas such as utilities, telecommunications, transport, banking, health, and food supply.


This situation has severely impacted businesses, and many employees are concerned about losing their jobs due to retrenchment and dismissals. We have prepared this article as a general guide as to your rights as employees, and hope that it will assist you with some employment issues you may be facing during this period.

 person in black and brown long sleeve shirt and black pants sitting on brown couch

Employers cannot dismiss you without a genuine reason

Under the Malaysian law, employers must have “just cause and excuse” before terminating employees. In other words, there must be a valid and genuine reason when the employers want to dismiss you. The dismissal cannot be carried out at the employers’ own pleasure and will, or for a bad intention, for example discrimination or unfair labour practices.


Even when a retrenchment is necessary, it must be carried out for a legitimate reason, for example, to discharge surplus labour or staff. Employers cannot use retrenchment as an excuse to dismiss employees for an ulterior motive, for example to victimize an employee who have offended him in some way or to promote the interests of some favoured employees to the detriment of others.


Whether the particular retrenchment exercise was in good faith and reasonable will depend on the circumstances of the case.


You can bring the matter to the Industrial Court

If you believe that you have been unfairly terminated, you can submit your representations in writing to the Director General of Industrial Relations. Your case may be then referred to the Industrial Court.  In the event of a successful claim for unfair dismissal, the Industrial Court may award either:


  • Reinstatement and backwages (capped at 24 months); or
  • Backwages and compensation in lieu of reinstatement (1 month’s salary for each year of service).

That said, it is worth noting that reinstatement is rarely awarded unless it is agreed by both parties. In making a monetary award, the Court will take into account various factors, for example, whether the employee has any post-dismissal earnings, and the contributory misconduct of the employee.



Disclaimer: This article is intended for general informational and education purposes only and not for the purpose of providing legal and professional advice. The accuracy of the article is also subject to further regulations and guidelines that yet to be imposed by the relevant authorities. If you have further issues regarding your rights, you can contact members of Chern & Co. at



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