Employee Misconduct & Disciplinary Procedures

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Misconduct in employment and disciplinary procedures are long topics but I will try to capture the essential points in simple Q&A format.

Q: What is the meaning of employee misconduct?

Case laws have defined the meaning of misconduct to be any conduct on the part of employee which is inconsistent with the faithful discharge of his duties, or any breach of the express or implied duties of an employee towards his employer. It is also known as a form of improper behaviour or an intentional wrongdoing or a deliberate violation of a rule or standard of behaviour.

Q: Which section of the Employment Act 1955 deals with employee misconduct?

S14 of the Employment Act 1955 provides that an employer may punish an employee on grounds of misconduct after due inquiry. Due inquiry here means the Company must investigate the case and provide the employee an opportunity to defend himself before an independent panel before judgment is put on him. S14 goes on to provide that while investigating a matter, the Company has the right to suspend an employee from work if his presence at the workplace would affect investigations, i.e. by tempering with evidence or by threatening witnesses, etc.

Q: Why is it important for employers to act on misconduct cases?

An employer who continues to keep an employee in employment with full knowledge that the employee has committed a breach of duty/misconduct condones the breach, and such wairver of retroactive permission prevents the employer from later punishing the employee for it.

Many HR practitioners in Malaysia will be guilty of this. It is however dangerous to condone actions because it will almost be impossible to act on it in eventuality. Employers are encouraged to be tactful and always have document trails in every single matter, even if it makes you a bad guy!

Q: How to differentiate between major misconduct and minor misconduct?

There is no hard and fast rule on what constitutes major misconduct or minor misconduct. The Employment Act 1955 does not make reference to the words major and minor. Companies generally like to differentiate major and minor misconduct by identifying different types of punishments for both categories of misconduct.

In fact, the list of minor and major misconduct is subjective and might vary depending on the nature of each business. For example, the act of smoking might not be a major misconduct in a legal firm but it might be deemed as major misconduct in an oil and gas plant.

To answer this question, it really boils down to the nature of your industry. I would put misconduct that is serious enough to warrant termination as major misconduct and the others as minor misconduct. However, an employee who habitually commits acts of minor misconduct will be deemed to have committed a major act of misconduct. i.e. Late-coming is minor misconduct but habitual late-coming would then be major misconduct.

Q: How to terminate employees who have committed acts of misconduct? Can an employer just terminate by serving notice as per the employment contract?

Employees in Malaysia are granted security of tenure from the day they are employed. S20 of the Industrial Relations Act 1967 provides that any employee who feels that he has been dismissed without just cause and excuse may file an action for reinstatement at the IR Dept. As such, the contractual notice of termination cannot be served before the employer establishes a ground for termination to happen. Examples of grounds for termination would include misconduct, poor performance, redundancy, etc.

In matters concerning employee misconduct, it is well settled that due process must be followed, i.e. the adherence to the principles of natural justice. In simple terms, the employee must be given an opportunity to defend his case before an independent panel. The first step to this is the issuance of a show cause letter. If admission is obtained, there is no need to proceed further but if the employee denies the charges meted out against him, then the employer will have to investigate further through a domestic inquiry. Once that is done and if the employee is subsequently found guilty, punishments may then be imposed and the nature of punishments varies according to the severity of misconduct committed.

Q: What if the employee refuses to sign the show cause letter?

It is alright if the employee refuses to sign the show cause letter. Have someone to accompany you during the delivery process so this person can sign off as a witness that this letter was served on the employee. To take it one step further, the letter can thereafter be couriered to the employee’s residence, in which case the slip can be used as proof of receipt.

Also, make sure that your show cause letter would cover for a situation where the employee fails to reply the letter within the stipulated time. Failure to reply should allow you to proceed with punishments on the assumption that no explanation could be offered.

Q: Can an employee be suspended in misconduct cases?

Yes, an employee may be suspended for a maximum of 14 days on half pay. Any subsequent extension of the suspension period shall be on full pay.

However, if the employee is found not guilty, the 14 days held during the first period of suspension will have to be reinstated in full.

Q: What are the factors to be taken into account before punishing employees for misconduct?

Before deciding on punishments, employers should take into account past records, performance indicators, years of service, general behaviour of an employee, level of seniority, etc. These are mitigating factors that should be taken into account before punishing an employee.

Q: Is notice required for terminating an employee for misconduct?

No, once an employee is found guilty of misconduct and the company decides to punish an employee, he is not entitled to notice and can be terminated immediately. Any unutilised annual leave will also be forfeited.