To terminate a staff in Malaysia can be costly especially if the staff is a long serving staff and the salary is high and the employer losses his case in Industrial Court. Before taking any action including termination, it is important that the employer follows certain basic procedures. If there is a written or verbal complaint against an employee, the company should investigate the matter. If there are sufficient evidence and witness, to issue a show cause letter to the employee.

Depending on the reply by the employee to the show cause letter or the outcome of the domestic inquiry (if it is conducted), the company may consider to take the following action as provided for under Section 14 of the Employment Act 1955 which reads as follows:

Section 14. (1) An employer may, on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his service, after due inquiry-

(a) dismiss without notice the employee.

(b) downgrade the employee; or

(c) impose any other lesser punishment as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks.

The misconduct must be sufficient serious enough before we can consider terminating the employee's service. The punishment to be inflicted must be in proportion to the misconduct. Section 14 (1) above talk about due inquiry. This means that some sort of investigation and inquiry must be undertaken. The giving of show cause letter is to ensure that the employee is given an opportunity to reply to the "misconduct". In any event, before terminating or taking any form of disciplinary action, it is advisable to consult a competent Human Resource Practitioner or an advocate & solicitor.