Who is covered by section 20 IRA 1967?

After the 2020 amendments, almost all employees in Malaysia are covered regardless of salary. Coverage includes:

• Confirmed employees in the private sector
• Probationary employees
• Fixed-term contract employees (where a permanent role is in substance)
• Employees on commission, daily wages, or piece-rate

Coverage does not typically extend to: independent contractors (genuine freelancers), federal/state government employees (covered separately under the Public Services Tribunal), or domestic workers in some categories.

What does “without just cause or excuse” mean?

The Industrial Court applies a two-stage test from Wong Chee Hong v Cathay Organisation [1988] 1 MLJ 92:

1. Did the employer prove the misconduct or other reason? — burden on the employer.
2. Was the punishment of dismissal proportionate? — even where misconduct is proved, dismissal must be proportionate. A first-time minor offence is rarely just cause for dismissal; a final written warning or demotion may be more appropriate.

Common examples of dismissals later found unfair:

• Termination for poor performance without proper performance-improvement plan
• Dismissal during medical leave / pregnancy
• Dismissal in retaliation for raising legitimate grievances
• Dismissal under “constructive dismissal” — sustained employer breach forcing resignation
• Dismissal disguised as retrenchment when no genuine redundancy exists

The 60-day deadline — strict and unforgiving

Section 20(1A) requires representations to be lodged within 60 days from the date of dismissal. The clock starts when:

• The dismissal letter is issued (not received), OR
• The employer takes definitive action that signals dismissal, e.g., revoking access cards, telling colleagues “X is no longer with us”

If the 60th day falls on a weekend or public holiday, the deadline extends to the next working day. Otherwise, late filings are rarely accepted — the Director-General may extend only in exceptional circumstances.

Step-by-step procedure

1. Step 1: Lodge representation (Form 1) at the Department of Industrial Relations, citing the dismissal and the relief sought (reinstatement and/or compensation). Free to file.
2. Step 2: Conciliation — Department officer schedules conciliation within 30 to 90 days. Both you and the employer (with optional lawyers) attend. Most cases settle here.
3. Step 3: Reference to Industrial Court — if conciliation fails, the Director-General refers the matter to the Industrial Court (typically 3 to 12 months later).
4. Step 4: Mention dates and pleadings exchange — Statement of Case (you), Statement in Reply (employer), Rejoinder, witness statements.
5. Step 5: Trial — usually 1 to 3 days, before a Chairman of the Industrial Court. Both sides present witnesses and arguments.
6. Step 6: Award — written award issued 3 to 12 months after trial. The Court orders reinstatement, compensation, or dismissal of the claim.
7. Step 7 (optional): Judicial review — either party can apply to the High Court for judicial review of the award within 90 days, on limited grounds (Wednesbury unreasonableness, error of law, breach of natural justice).

What can the Industrial Court award?

Reinstatement

Section 30(6A) IRA 1967 allows the Court to order reinstatement to the former position. In practice, reinstatement is rare — typically less than 5% of awards — because by the time the case is heard, mutual trust has eroded. Reinstatement is more common where there has been only a short delay or the employer has acted egregiously.

Backwages

The Industrial Court (Award) Rules 2007 cap backwages at:

• 24 months for confirmed employees
• 12 months for probationary employees

Backwages are reduced by mitigation income (any salary you earned post-dismissal) and contributory conduct.

Compensation in lieu of reinstatement

Where reinstatement is not ordered, the Court awards compensation typically calculated as one month’s wages per year of service. Some awards apply a sliding scale up to 1.5 months per year for long-service employees.

Indicative total awards

• Junior employee, 2-3 years’ service: RM 30,000 to RM 60,000 total
• Mid-level employee, 5-10 years’ service: RM 80,000 to RM 200,000
• Senior management, 10+ years: RM 200,000 to RM 800,000+

Constructive dismissal

Constructive dismissal occurs where the employer’s conduct so fundamentally breaches the employment contract that the employee is forced to resign. The employee can then sue under section 20 as if dismissed. Examples:

• Unilateral salary reduction or demotion without consent
• Sustained harassment or victimisation
• Forced relocation outside the contract
• Removal of benefits, parking, office, or staff
• Persistent failure to pay statutory wages

The threshold is high — the employee must show the breach was fundamental and went to the root of the contract. Courts often dismiss constructive dismissal claims as ordinary resignations.

How much does it cost to file a section 20 claim?

• Filing the representation: free
• Conciliation only (legal representation): RM 3,000 to RM 8,000
• Industrial Court trial (full representation): RM 8,000 to RM 30,000 depending on complexity and length
• Judicial review of the award: RM 10,000 to RM 30,000 additional

Many lawyers (including ours) offer fixed-fee or staged-fee arrangements for unfair dismissal claims. Some operate on a partial contingency basis where the lawyer is paid a percentage of any award secured.

For employers — defending a section 20 claim

If you are an employer facing a section 20 claim, the key principles are:

• Document everything — performance reviews, written warnings, incident reports, signed disciplinary inquiry minutes.
• Conduct a domestic inquiry for misconduct dismissals — failure to do so is often fatal.
• Apply natural justice — give the employee notice of the charge, opportunity to respond, opportunity to call witnesses, an unbiased decision-maker.
• Prove proportionality — even where misconduct is proved, the punishment must fit the offence.

We act for both employees and employers. (One firm acts for one party per dispute — no conflict of interest.)

Free 30-minute consultation

The 60-day clock runs fast. If you’ve just been dismissed, contact us today:

• WhatsApp +60 17-702 2800
• Phone +60 18-662 8866
• Email [email protected]

For more, see our Employment Law practice page.

Related

• Employment Lawyer Malaysia (practice page)
• Are You Experiencing Unfair Dismissal? (article)
• Understanding Sexual Harassment (article)
• Letter of Demand Malaysia (template)