Employee Misconduct: What Should Employers Do?

Written by: Izz Murtada

Every workplace will face a staff problem at some point. An employee may come in late again and again, take things that are not theirs, or shout at a colleague. When this happens, many employers do not know what to do first. Some act too fast and get into trouble. Others wait too long and the problem grows.

This article explains what misconduct is, how to handle it, when to give a warning, and what mistakes to avoid. It is based on the Employment Act 1955 (Act 265).

What Is Misconduct? Some Common Examples

Misconduct means bad behaviour at work that goes against the terms of a person’s job. Section 14 of the Act says this in simple terms: misconduct is behaviour that does not fit with what the employee agreed to do in their service, whether the terms were written down or understood.

The Act does not give a full list of examples. What counts as misconduct also depends on the employment contract and company rules. Here are some common examples seen in Malaysian workplaces:

• Being absent from work for more than two working days in a row without permission or a good reason. The Act (Section 15) says the employee is then seen as having broken the contract.
• Coming late or leaving early again and again
• Stealing or cheating the company
• Fighting, threatening, or harassing others
• Refusing to follow fair and lawful instructions
• Damaging company property
• Lying, for example giving a fake medical certificate

Remember that a small mistake is not always misconduct. Poor work quality is also a different matter. Each case should be looked at on its own.

How Should Employers Handle Misconduct?

The most important step in the Act is the due inquiry. Section 14 says an employer can only punish an employee for misconduct after holding a due inquiry. In simple words, the employer must find out the facts and be fair before deciding.

Here is a simple way to do it:

1. Write down what happened. Note the date, time, place, and who saw it.
2. Give the employee a chance to explain. Tell them clearly what they are accused of. Let them give their side, in writing or in a meeting.
3. Check the facts. Talk to witnesses and look at proof such as attendance records, messages, or CCTV.
4. Decide on a fair action. The punishment should match how serious the misconduct is.
5. Keep proper records. Write down every step and keep the papers safe.

The Act also allows the employer to suspend the employee while the inquiry is going on. This can be for up to two weeks, but the employer must still pay at least half of the employee’s wages during this time. If the inquiry finds no misconduct, the employer must return the full wages that were held back straight away.

When Should an Employer Give a Warning?

The Act does not use the word “warning”. But Section 14 says that after a due inquiry, the employer may do one of three things:

• Dismiss the employee without notice
• Lower the employee’s position (downgrade)
• Give any other lesser punishment that is fair, such as a warning letter. If the punishment is suspension without wages, it cannot be more than two weeks.

So a warning fits under the “lesser punishment” part. As a general guide:

• For small or first-time issues, such as being late a few times, a verbal or written warning is usually fair.
• For repeated issues, a stronger written warning is suitable, especially if the employee was warned before and did not change.
• For very serious acts, such as theft or violence, the employer may go straight to the due inquiry and consider stronger action, including dismissal.

The right choice depends on the facts of each case. When in doubt, ask for advice before acting.

Common Mistakes Employers Should Avoid

Even employers with good reasons can get into trouble if they handle things the wrong way. Here are the mistakes we see most:

• Skipping the due inquiry. Firing someone on the spot out of anger is risky. The Act clearly says “after due inquiry”.
• Suspending for too long. The limit is two weeks.
• Not paying half wages during suspension. This is not allowed.
• Giving a punishment that is too heavy. Dismissing someone for a small mistake can be seen as unfair.
• Treating staff differently. If one person is warned and another is not for the same act, it looks unfair.
• Having no records. Without proof, it is hard to defend your decision.
• Having unclear rules. Staff cannot follow rules they have never seen. Put your rules in the contract or staff handbook.

Employers should also know that an employee can take their case further. Under Section 69 of the Act, the Director General of Labour can look into a decision made under Section 14(1) and confirm it or set it aside. If a dismissal is set aside, the employer may have to pay the employee what they would have received if there had been no misconduct, including pay in place of notice.

Be extra careful with pregnant employees. Section 41A says an employer can end the service of a pregnant employee for misconduct, but if there is a dispute, it is the employer who must prove the reason was not the pregnancy.

Final Thoughts

Handling misconduct is not easy, and small mistakes in the process can become big problems later. If you are a small business owner or manager who is not sure where to start, you do not have to do it alone. At Kita Strategies, we are an HR company that helps Malaysian businesses with HR matters, including staff discipline and payroll. Whether you need help setting clear company rules, preparing the right letters, or understanding your duties under the law, our team is happy to guide you. Feel free to reach out to us for a friendly chat.