Did you know that you cannot fire your employees for no reason in Malaysia?
It’s shocking to know that not all employers understand how to handle employees’ termination legally.
But, rest assured as we provide details about termination letters and a template at the end of this post for your guidance.
What is a job termination letter?
A job termination letter is a formal notice to let an employee know that they are being dismissed from their job.
This document explains the reason for the termination, their last date of employment and any compensation they will receive.
When to issue a job termination letter?
In Malaysia, you cannot simply terminate your employees as you wish or “at-will”.
You’re required to provide valid reasons as an employer when conducting an employee termination.
This refers to “termination with just cause and excuse”.
Thus, if you dismiss an employee without just cause and excuse (unfairly dismissed), they might be able to bring you to court.
According to Section 20(3) of the Industrial Relations Act 1967 (“IRA 1967”), any employee that believes they were unfairly dismissed can write to the Director General or Industrial Relations in order to get his job back.
However, this law only applies to employers.
Employees don’t have to provide any reason for their resignation.
When it comes to reasonable causes to fire an employee, it can range from employee misconduct such as theft, fighting in the workplace and drunkenness.
The take-home message here is that, whatever your reasons may be you need to provide valid causes for your employee dismissal.
To help you with your decision in issuing the termination letter, take a look at the checklist below:
What is a domestic inquiry?
A domestic inquiry (DI) refers to an internal process to investigate whether the employee has committed the alleged misconduct.
If the employee is found guilty, the company will then need to decide what kind of punishment should be given.
Why is domestic inquiry important?
A domestic inquiry is solid proof that can protect your company from any unfair dismissal claim.
It shows that you’ve taken proper steps and efforts before making a final decision when terminating the employee.
In situations where an employee files a case of unfair dismissal against their employer, the judge will certainly look for evidence like a domestic inquiry.
This document proves that your action as an employer was fair and reasonable.
To initiate a proper domestic inquiry, find out more here.
How to write a job termination letter?
1. Mention their final date of employment
We suggest mentioning their final employment date at the beginning of your letter.
This helps to provide clarity and prepares the employee for their termination.
2. State the reason(s) for termination
It’s crucial to include your reasons for their dismissal to eliminate future misunderstanding.
Make sure to provide a clear and direct explanation.
If relevant, attach some documents to support your statement.
3. Describe their compensation and benefits
Next, you may want to explain their compensation and benefits once their dismissal takes place.
This may include compensation for their unused vacation days, healthcare benefits and life insurance.
4. Inform them to return any company property
Let the employees know if there’s any company property that needs to be returned by a certain date.
It could be a company mobile phone, laptop, keys or access card.
5. Include HR contact details
It’s best to include the HR contact details at the end of the letter.
Doing so allows them to directly reach out if they have any questions about your termination letter.
Job termination letter template
LETTER OF TERMINATION
Dear [EMPLOYEE NAME],
We are sorry to inform you that your employment with [COMPANY NAME] will end as of [TERMINATION DATE]. As discussed, your termination is due to [REASON OF TERMINATION].
Starting from [TERMINATION DATE] onwards, you will no longer be eligible for any compensation or benefits related to your position. Your final salary will be issued on [DATE], including the compensation for your unused vacation days.
Please return [COMPANY PROPERTY] to the HR Department by [DATE]. If you have any questions regarding your termination, please contact [NAME] at [EMAIL ADDRESS/ PHONE NUMBER].
Thank you for your service at [COMPANY NAME].