Malaysia Dismissal Compensation Estimator

The Industrial Court (IC) handles claims for unfair dismissal (without just cause or excuse) under the Industrial Relations Act 1967. The main remedy is reinstatement or compensation in lieu of reinstatement and backwages (up to 24 months, or 12 months for probationary employees).

The Department of Labour (JTK) handles claims for standard termination/retrenchment benefits, unpaid wages, or statutory entitlements under the Employment Act 1955. This is the minimum required by law for legitimate terminations.

The calculation is based on your service length (Section 60J of the Employment Act 1955) and is only payable for completed years of service:

• Less than 2 years of service: 10 days' wages for each year.
• 2 years but less than 5 years of service: 15 days' wages for each year.
• 5 years of service or more: 20 days' wages for each year.

The 'daily wage' is calculated as your monthly salary divided by 26 days.

For a JTK claim (minimum benefits), legal representation is generally not required, and the process is designed to be straightforward for employees.

For an Industrial Court claim, while you can represent yourself, the proceedings are highly technical. It is strongly recommended to engage a lawyer, a trade union official (if applicable), or an Industrial Relations Consultant, as the stakes are higher and the employer will almost certainly be legally represented.

Underperformance is a valid reason for dismissal, but the burden of proof is heavily on the employer. The Industrial Court will scrutinize whether the company followed the proper procedure, including:

• Providing clear, measurable standards of performance.
• Giving the employee sufficient warning and documented notice of the deficiency.
• Providing adequate time and training/coaching (a Performance Improvement Plan or PIP) to address the performance gap.
• Holding a proper domestic inquiry (though not mandatory, it is strong evidence) or conducting a thorough investigation before termination.

If the employer fails to prove procedural fairness or substantive merit (i.e., that the underperformance was real and the employee was warned), the dismissal will likely be deemed unfair.

If you dispute a dismissal based on underperformance, poor conduct, or misconduct, the Industrial Court (IC) via the Industrial Relations Department (JPP) is your primary, and usually only, viable path.

The IC process challenges the fairness and legality of the dismissal itself (was there just cause?). If the employer cannot prove the misconduct or procedural fairness, the dismissal is deemed unfair, leading to the potential compensation calculated in the IC section above.

The JTK path is generally not appropriate in this scenario. JTK only deals with recovering minimum statutory benefits (like retrenchment pay) when the termination is considered legitimate and legal, but the benefits were unpaid. It does not have the power to rule on whether a performance or disciplinary dismissal was fair.

The Industrial Court (IC) does not publish formal success rates, but your likelihood of success heavily relies on the employer's ability to prove the dismissal was fair.

Crucial Point: The burden of proof is 100% on the employer, not the employee (claimant). The employer must succeed on both substantive and procedural fairness for the court to rule in their favor.

Scenario 1: Challenging Misconduct or Poor Performance

• Substantive Fairness: Employer must prove the reason for dismissal was genuine (e.g., real misconduct or actual failure to meet targets).
• Procedural Fairness: Employer must prove they followed proper steps (e.g., clear warnings, documented investigations, or a proper domestic inquiry).

If the employer fails to prove either the just cause or the proper procedure, the dismissal is deemed unfair, and your chances of winning are high.

Scenario 2: Challenging Retrenchment or Redundancy

When challenging a retrenchment at the IC, you are arguing it was not a bona fide (genuine) business necessity. The employer must prove two things:

• Existence of Redundancy: That there was a genuine surplus of labor or economic necessity for the retrenchment.
• Fair Selection Process: That they followed fair practice, typically the LIFO (Last-In, First-Out) principle among employees in similar roles, and consulted with the employee/union and JTK (via reporting).

Your chances of winning are strong if you can show the company is hiring replacements for your exact role, or if the company clearly violated the agreed-upon or implied LIFO selection criteria.