Guide to Domestic Inquiries in Malaysia
Domestic inquiries in Malaysia play a pivotal role in ensuring fair and just employment practices, especially in cases of alleged employee misconduct. These internal investigations are not only a statutory obligation but also serve as a mechanism to maintain transparency and accountability in the workplace. To fully comprehend the significance and process of domestic inquiries, it is crucial to explore their purpose, the steps involved, and the potential ramifications for both employers and employees. Find out more topics related to payroll from RS36 Solutions.
What is a Domestic Inquiry?
A Domestic Inquiry (DI) is an internal investigative procedure carried out by an Employer to examine an employee’s behavior in the workplace, particularly in cases of alleged misconduct. This process provides the accused employee with an opportunity to defend themselves against the charges brought against them.
The Guide to Domestic Inquiries in Malaysia
In Malaysia, the process of conducting a domestic inquiry holds significant legal importance, particularly for employees falling under the purview of the Employment Act 1955. According to this law, it is mandatory for employers to carry out a thorough investigation to establish an employee’s guilt regarding misconduct before considering dismissal or the imposition of any major penalties.
A domestic inquiry is essentially an internal investigative procedure initiated by employers to assess whether an employee has engaged in acts of misconduct. Under section 14 of Malaysia’s Employment Act 1955, employers bear a statutory responsibility to conduct a ‘due inquiry’ to determine an employee’s culpability in cases of misconduct before taking any punitive actions such as dismissal or the imposition of substantial penalties.
Why Are Domestic Inquiries Important?
Domestic inquiries hold crucial significance beyond their statutory requirement, as they serve as tangible evidence that employers have taken the necessary steps to ensure fairness when addressing allegations of employee misconduct. In the event an employee initiates legal action against their employer, alleging wrongful or unfair dismissal, the domestic inquiry serves as a pivotal element for demonstrating that the employer’s actions were just and comprehensive.
It is important to note that while launching a domestic inquiry is mandated by the Employment Act 1955, the Act does not explicitly outline the specific procedures or criteria for conducting a satisfactory “due inquiry” as required by the law. Consequently, the process of conducting a domestic inquiry often involves a certain degree of interpretation and adaptation, influenced by the unique circumstances of the case and the severity of the alleged employee misconduct.
This legal ambiguity might present challenges for employers and Human Resource (HR) professionals. Nevertheless, it should not dissuade them from conducting a thorough domestic inquiry, as the consequences of failing to do so can be severe, particularly if an employee opts to file a claim for wrongful or unfair dismissal.
Steps to A Domestic Inquiry
A domestic inquiry should always be considered a last resort. If issues can be resolved through discussion and appropriate measures, there may be no need to initiate a domestic inquiry.
1. Issuance of a “Show Cause” Letter
The “show cause” letter, as the name suggests, outlines the specific reasons and causes for concern, detailing allegations of misconduct and providing a deadline for the employee to respond in writing. It is a critical and delicate process that must be conducted professionally. The key components of a show cause letter include:
- Clear, direct, and easily understandable language
- References to relevant clauses of company policies or the employment contract
- A precise explanation of the alleged misconduct (e.g., assault, sexual harassment, insubordination)
- A strict requirement and deadline for the employee to provide a written response
- A defined suspension period for the employee during the domestic inquiry, which may restrict access to company premises and activities
2. Suspension of the Employee
Suspension may be issued simultaneously with the show cause letter or before the domestic inquiry if deemed necessary for further investigation. The maximum suspension period is typically not more than two weeks, during which the employee receives half their wages. However, if the employee is later found not guilty, the remaining wages must be reimbursed.
Suspension is warranted if it prevents interference with the investigation process or further misconduct. Under the Employment Act, this suspension should not exceed two weeks, with the employee receiving half their wages during this period.
3. Preparing for the Domestic Inquiry Hearing
If the employee’s written response to the show cause letter is unsatisfactory, preparation for a domestic inquiry hearing begins.
Appointment of Panel Members
The panel should consist of impartial individuals with no direct or indirect connections to the matter. These individuals should be senior to the alleged employee and preferably from different departments. They should have no prior knowledge of the charges against the employee and should not have been involved in the investigation.
Assistance for the Employee
The accused employee should be provided with information and assistance to understand the inquiry procedures, including:
- A notice of inquiry specifying charges and hearing details
- Adequate time to prepare for the hearing
- Supervised access to documents and witnesses for their defense
Hearing of the Domestic Inquiry
a. The prosecution presents its case by producing witnesses with direct knowledge and documentary evidence supporting the charges.
b. The accused employee has the opportunity to question witnesses during cross-examination.
c. The accused employee can present their defense, including witnesses and evidence. Both the accused employee and their witnesses are subject to cross-examination by the prosecutor.
d. The chairman records the proceedings and the evidence presented.
e. After the hearing concludes, the panel discusses and studies the evidence presented by both parties.
f. The chairman submits the panel’s findings and recommendations to the Management for their decision.
4. Carrying out the Domestic Inquiry Hearing
Domestic inquiries typically follow a court-like procedure with prosecution and defense sides. Both parties may call witnesses to testify and provide evidence. To ensure objectivity, the accused employee should have a fair opportunity to present their case.
Employers may choose to record the entire domestic inquiry to preserve evidence for potential future needs. If the panel finds the employee guilty of misconduct, the company must determine the appropriate punishment.
Circumstances Where an Employer Can Terminate an Employee Immediately
Employers have the authority to terminate an employee without notice or payment in lieu of notice, a form of termination known as summary dismissal, in situations where the employee’s misconduct is of such a grave nature that immediate termination is justified.
Certain categories of misconduct that may warrant a summary dismissal include:
Committing a criminal act while at work, such as theft or fraud.
Engaging in the giving or taking of bribes.
Being under the influence of intoxicants at the workplace, posing a risk of injury or even fatality.
How Unfair Dismissal Complaints Affect the Employer When a Domestic Inquiry (DI) Is Not Conducted
In Malaysia, when an employee files a complaint of unfair dismissal against their employer due to the non-conduction of a Domestic Inquiry (DI), it’s important to note that under the law, the absence of a DI does not necessarily lead to an automatic advantage for the employee’s case at the Industrial Court.
It has been established by the Court that a flawed inquiry or the failure to conduct a DI is not a terminal setback. Instead, it is regarded as an irregularity that can be remedied through de novo proceedings before the Industrial Court.
Recommended Punishments and Sentences for Guilty Employees
When an employee is found guilty of misconduct, management typically considers several options for the appropriate punishment. These options typically fall into the following categories:
Dismissing the employee without notice, which entails immediate termination.
Downgrading the employee, involving a reduction in their job position or responsibilities.
Imposing any other suitable and equitable lesser punishment, such as a two-week suspension with half wages, denial of salary increases or bonuses, or other measures deemed appropriate for the specific case.
Disadvantages of Conducting a Domestic Inquiry (DI)
While Domestic Inquiries serve an important purpose, there are certain drawbacks associated with them:
Time-Consuming Process: Conducting a thorough Domestic Inquiry can be a time-consuming endeavor, which may lead to operational disruptions and delays in resolving employee misconduct issues.
Independence of the Panel: The requirement for the DI panel to be independent introduces the possibility that they may determine the employee is innocent. In such cases, it can be challenging for the Employer to justify termination if their own Domestic Inquiry found the employee innocent of the charges, potentially leading to conflicts and legal complications.
Conclusion
In conclusion, domestic inquiries serve as a critical instrument for upholding employee rights and employer responsibilities in Malaysia’s labor landscape. By providing a fair and systematic approach to addressing misconduct allegations, these inquiries aim to maintain a balanced and just working environment. However, understanding their intricacies and adhering to the relevant legal requirements is paramount to avoid potential pitfalls. Employers and employees alike must be aware of the roles, responsibilities, and potential outcomes associated with domestic inquiries to ensure that justice is served and workplace harmony is maintained.
Frequently Asked Questions (FAQs)
What is a Domestic Inquiry (DI)?
A Domestic Inquiry is an internal investigation process conducted by an employer to assess allegations of employee misconduct.
Why is a Domestic Inquiry important in Malaysia?
It is essential to ensure fair treatment and compliance with legal obligations in cases of alleged employee misconduct.
When should a Domestic Inquiry be conducted?
It should be considered when other means of resolving the issue have been exhausted.
What are common grounds for immediate employee termination?
Immediate termination may be justified for serious misconduct, such as theft, bribery, or workplace intoxication.
What are the key steps in conducting a Domestic Inquiry?
They include issuing a “show cause” letter, suspending the employee if necessary, preparing for the inquiry hearing, and carrying out the hearing.
Can an employee challenge an unfair dismissal due to a missing Domestic Inquiry?
Yes, an employee can file a complaint, but it doesn’t guarantee an automatic advantage for their case.
What are recommended punishments for guilty employees?
Punishments can range from dismissal without notice to downgrading the employee or imposing other suitable penalties.
How long does a suspension last for an employee facing a Domestic Inquiry?
Typically, not more than two weeks, with half wages, and the remaining wages are reimbursed if the employee is found not guilty.
Who should be part of the DI panel?
The panel members should be impartial and not have prior knowledge of the charges against the employee.
What are the disadvantages of conducting a Domestic Inquiry?
It can be time-consuming, and if the panel finds the employee innocent, it may be challenging for the employer to justify termination, potentially leading to conflicts and legal complications.