Where an employee is subject to the Employment Act 1955 (“Act”), it is a statutory obligation imposed on the employer to conduct a “due inquiry” to find out whether an employee is guilty of misconduct before an employee can be dismissed or before any other major penalty is imposed according to Section 14(1) of the Act. "It is important to give employee an opportunity to defend and to be heard in domestic inquiry!"
The consequence can be serious as a failure to properly conduct an inquiry and these usually lead to an unfavourable finding from the Industrial Court in the event of unfair dismissal claim and to compensate the employee!
Below are the 6 basic steps in holding a domestic inquiry:
"It is important to give employee an opportunity to defend and to be heard in domestic inquiry!"
1. Issuance of a Show Cause Letter
It is important to state the allegations of the misconduct clearly and precisely to the employee. This letter is to call for an explanation for the alleged misconduct and to allow the employee to defend or explain the situation, as well as to state why the employee believes disciplinary should not be taken. A timeline to respond to such letter must be stipulated in the letter. Also, the show cause letter should be drafted in a clear and unambiguous language. Whenever possible, the relevant clause of the company’s policy and/or employment contract should be cited.
Example of a badly drafted show cause letter:
“You have breached Company policy and procedure relating to the approval of payment vouchers.”What would be better:
“On 23 January 2015, you had approved payment voucher no. 12455 dated 21 January 2015 (“Voucher”). The Voucher was for payment of the sum of RM10,000.00 to ABC Sdn Bhd for purchase of stationery. As set out in the Company’s Approval Authority Matrix, you are only authorised to approve payments up to RM5,000.00 only and any payment exceeding this amount must be referred to and approved by the General Manager. Your approval of the Voucher in excess of your approval authority limit is in breach of the Company’s policies and procedures relating to the approval of payment vouchers as set out in Clause 3.5 of the Controller’s Handbook.”
2. Response to the Show Cause Letter
The employee should respond the show cause letter within the stipulated timeframe. If the explanation is acceptable or satisfactory, no punishment should be imposed. However, if the explanation is unacceptable, the Company can either (a) take disciplinary action; or (b) if the employee fails to respond; or if the employee does not admit his offence, issue a notice of domestic inquiry.
3. Issuance of Notice of Domestic Inquiry
The Notice of Domestic Inquiry should comprise of the following: -
- Specific charge which states the type of offence, the date, the time and place where the offence took place
- Details of the domestic inquiry (ie: date, time and place)
- Inform the employee his/her right to bring along witnesses or any documentary evidence, if any.
If it is necessary, the employer may place the employee on suspension pending further investigation of the allegation in respect of the misconduct. The suspension can be issued together with the show cause letter, or before the domestic inquiry. A suspension may be granted if the employer feels that it would prevent interference into the investigation or further misconduct.
Under the Act, the maximum period of suspension is not more than 2 weeks with half wages. However, the employer must pay back the remaining wages to the employee if he is later found to be not guilty. This maximum period of suspension only applies to employees subject to the Act.
5. Appointment of the Panel of Domestic Inquiry
The panel (odd number of persons) must consists of people who are neither directly nor indirectly connected to the matter. Panel members should be employees who are of a higher rank or seniority than the accused employee. Ideally, the employee’s direct manager should not sit on the panel as it could give the appearance of bias.
- Chairman (should be a person not involved in the investigation of the offence, also should have some knowledge of the domestic inquiry process, procedures and regulations relating to employment law)
- Two independent panel members (may be employees from another department)
- A prosecutor (may be a personnel officer in the HR department)
6. Hearing of Domestic Inquiry
- The prosecutor (company) will begin by make out a case against the accused employee. He will present documentary evidence which supports the charges, and call witnesses who can testify about the accused employee’s misconduct.
- The accused will then be allowed to question each of the witnesses on the evidence they have given.
- After that, the accused should be given an opportunity to present his defence and produce his own witnesses and documentary evidence.
- The accused as well as his/her witnesses will be questioned by the prosecutor.
- Ideally, proceedings should be record and notes taken. Where there is a tape-recording and a transcript is prepared, the accused should be given an opportunity to examine and approve the transcript for accuracy.
- At the conclusion of the hearing, the panel will discuss and study the evidence given by both parties. Thereafter, the panel will make a finding as to whether the employee is guilty of the misconduct. If the employee is guilty, the panel may also make recommendations to the management of the company regarding what disciplinary action should be taken.
Conducting a domestic inquiry will naturally be a time-consuming affair for all involved. It may not be necessary for all cases especially where the misconduct is minor. However, where allegations are serious and/or numerous, it is preferable for the company to invest the time and effort in getting the domestic inquiry right.
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