Malaysia's employment law is primarily governed by two foundational statutes: the Employment Act 1955 and the Industrial Relations Act 1967. These laws work in tandem, with the Employment Act establishing statutory minimum benefits and procedures, while the Industrial Relations Act provides mechanisms for dispute resolution and protection against unfair dismissal. A critical principle underlying Malaysian employment law is that employers cannot simply terminate "at will" merely by invoking a contractual termination clause. Instead, both substantive justification and procedural fairness are mandatory—a principle reinforced by case law establishing that "termination simpliciter" (termination by notice alone without just cause) is not recognized.
While these terms are often used interchangeably in casual conversation, Malaysian employment law makes a critical distinction that directly affects legal rights and remedies.
Dismissal refers to employer-initiated termination of employment, whether for cause or without cause, and is the only form of termination subject to the “just cause or excuse” test under Section 20 of the Industrial Relations Act, allowing employees to challenge unfair dismissals in the Industrial Court. It may occur through direct dismissal, where termination is expressly communicated, or constructive dismissal, where the employer creates intolerable working conditions...
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