Unfair dismissal in Malaysia: Section 20, the 60-day deadline & what the Industrial Court awards

The 60-day deadline is the whole ball game

Section 20(1A) gives you 60 days from the date of dismissal to file written representations with the Director General for Industrial Relations (JPPM, the industrial relations department). Miss it and the claim is gone — the courts have treated the limit as mandatory, and no amount of merit revives a late filing.

The clock runs from the date employment actually ended, not from the date you received the letter, finished your notice, or stopped negotiating. If you were paid in lieu and told to leave that afternoon, that afternoon is day one. Filing is free: Form BA at any JPPM office or online through the e-Perhubungan Perusahaan portal. You do not need a lawyer to file, and you do not need to have resigned under protest or sent any prior letter of demand.

What “just cause or excuse” means in practice

The burden sits on the employer, on the balance of probabilities, and it has two halves. First, the employer must prove the reason actually happened — the misconduct, the poor performance, the genuine redundancy. Second, it must show that dismissal was a proportionate response to it. Many employers prove the first and lose on the second: a first-time lateness or an unsigned expense claim rarely justifies termination where a warning would have done.

Procedure matters as much as substance. Section 14(1) of the Employment Act 1955 requires a due inquiry before dismissal for misconduct — in practice a domestic inquiry where the employee is told the charges in writing, given time to prepare, allowed to answer and to question witnesses. A dismissal that skips it can still be upheld if the misconduct is proven at the Industrial Court, but the employer starts badly and the award on remedy usually reflects it.

The three situations that generate most claims

• Misconduct dismissals with no inquiry — the employee is suspended, then sent a termination letter, with no charge sheet and no hearing.
• Poor performance with no paper trail — no documented standards, no PIP, no warnings. The Industrial Court expects the employer to show the employee knew the standard, was told they had fallen short, and was given a real chance to improve.
• Retrenchment that is not genuine — redundancy must be real, and the selection must be defensible. Hiring a replacement for the “redundant” role within months, or picking the oldest or most expensive staff rather than applying last-in-first-out within the affected category, both turn a retrenchment into an unfair dismissal.
• Constructive dismissal — you resign, but because the employer fundamentally breached the contract: a unilateral pay cut, a demotion in substance, a transfer no reasonable reading of the contract allows. You must act promptly rather than working on under the new terms, and the 60 days runs from the day you walk out.

What happens after you file

JPPM calls both sides to conciliation. Most claims end here, in a without-prejudice cash settlement that is usually a few months' salary and comes with a mutual release. Nothing obliges you to accept it.

If conciliation fails, the Director General refers the case to the Industrial Court. Since the Industrial Relations (Amendment) Act 2020 came into force on 1 January 2021, that referral is no longer at the Human Resources Minister's discretion — the Director General must refer where there is no likelihood of settlement. That removed the single biggest bottleneck in the old system, where meritorious cases could be refused a hearing.

The Industrial Court is not a civil court. It decides on equity and the substantial merits of the case without strict regard to technicalities, hearings are open, and either side may appeal the award to the High Court under Section 33C within 14 days.

What you can actually win

The primary remedy under Section 20 is reinstatement. In reality it is rarely ordered and rarely wanted; the Court almost always awards money instead — compensation in lieu of reinstatement plus backwages, computed on last-drawn monthly salary:

Why the headline number is usually cut down

• Post-dismissal earnings. What you earned in a new job during the backwages period is normally deducted, and the Court has discretion over how much. Being out of work for the whole period is not a bonus — but it does preserve the full award.
• Contributory conduct. If your own behaviour contributed to the dismissal, the Court can cut the award by a percentage even while finding the dismissal unfair. Reductions of 20–50% are common.
• The 24-month cap bites on long delays. A case heard three years after dismissal still yields at most 24 months of backwages, so a slow case does not pay better.
• “Salary” means last-drawn monthly salary, usually basic pay. Bonuses, overtime and most allowances are typically excluded unless the contract makes them fixed monthly wages.
• No general damages. The Industrial Court does not award for hurt feelings, reputational harm or the manner of dismissal — the statutory measures above are the ceiling.

The tax and payroll side everyone forgets

An Industrial Court award or a conciliation settlement is compensation for loss of employment, not salary. The Section 13(1)(e) treatment applies: the exemption of RM10,000 for each completed year of service with the same employer or group can shelter a large part of a settlement, with the balance taxable in the year of receipt. Backwages elements are more likely to be treated as employment income — confirm the split before you sign, because the net figure can differ by thousands.

EPF and SOCSO are not deducted from compensation for loss of employment. And a settlement does not reopen tax clearance: if you have already left, your employer's CP22A obligation ran at the time of departure.

What this is not

• Not a wages claim. Unpaid salary, unlawful deductions, untaken annual leave and short-paid overtime go to the Labour Department (JTK) under the Employment Act, not to Section 20. You can run both.
• Not retrenchment benefits. Termination and lay-off benefits are a separate statutory entitlement based on years of service, payable whether or not the dismissal was fair.
• Not available after a genuine resignation or a mutual separation you signed freely. A signed mutual separation agreement with a release clause is hard to unwind.
• Not limited by salary. Unlike parts of the Employment Act, Section 20 covers any “workman” regardless of how much they earn — a general manager on RM30,000 a month has the same right as a clerk.
• Not applicable to contracts for service. Genuine independent contractors and most gig platform workers fall outside it, though the Court looks at the real relationship rather than the label on the agreement.

Caveat

General information, not legal advice. The Industrial Relations Act 1967 applies throughout Malaysia, but outcomes turn heavily on facts, documents and the conduct of both sides, and awards vary widely between cases that look similar on paper. The one thing that is not discretionary is the 60-day deadline — if you think you have been dismissed unfairly, file the representation first and take advice second. Use the calculator below to work out the last-drawn monthly figure your claim would be computed on.