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A FEW years back, a 42-year-old housewife, a mother of four was charged in court for stealing two packets of Milo valued at RM73 from a supermarket. The Magistrate’s Court sentenced her to 14 months in prison.The sentence sparked public outrage, with many arguing that it was disproportionately harsh given the low value of the items stolen. Former health minister Dzulkefly Ahmad, who urged the Attorney-General’s Chambers to show her mercy said he was exasperated by what he deemed to be “a decision barren of the concept of proportionality and reasonableness”. The public anger illustrates that people generally are touched by the concept of proportionality of punishment.

The concept requires punishment for a crime should be proportionate or suitable. In other words, the punishment must fit the crime. Lord Maugham in a 1937 Privy Council case famously said that when judging human behavior, courts must apply a realistic standard of “men, not angels “and understand that people may react emotionally, even showing temper, when reprimanded.

The concept of proportionality punishment is used widely in criminal law and in the workplace context, the punishment for a workplace misconduct must be proportionate. In modern Malaysian industrial law, even if the employee is caught red handed with plenty of evidence, it is not sufficient for an employer to just prove that an employee has committed an act of misconduct.

The employer bears a second, equally heavy burden: to prove that the decision to dismiss was, in all circumstances, was proportionate response to that misconduct. For a number of years, there was a question whether the Industrial Court can interfere with the employer’s decision to impose punishment especially when the employer imposes dismissals as a punishment.

Could the court “step into the shoes” of the employer? If an employer genuinely believed the misconduct warranted dismissal, could the court substitute its own view of what was the appropriate punishment? Industrial Courts were divided about this in the past.

The above question was answered emphatically by the Federal Court (FC) in the landmark case of Norizan Bakar v. Panzana Enterprise Sdn Bhd [2013] 4 ILR 477[2013] 9 CLJ 409. The employer here argued that once the misconduct was proven by the employer, the court had no right to interfere with the employer’s chosen punishment. The FC rejected the employer’s argument and settled the law. It decided that the Industrial Court, in exercising its functions under Section 20 of the Industrial Relations Act 1967(IRA) is not bound by the employer’s decision. The FC said that the Industrial Court has the power to decide that the dismissal of an employee was without just cause or excuse by using the doctrine of proportionality of punishment and also to decide whether the punishment of dismissal was too harsh in the circumstances when ascertaining the award under section 20(3) of the IRA We are further of the view that the Industrial Court in exercising the aforesaid functions can rely to its powers under section 30(5) of the IRA based on the principle of equity, good conscience and substantial merit of the case.

In most cases, a single act (depending on the facts) of misconduct would not justify dismissal. In Award No. 48/1974 it was a literally (and humorously) a tempest in a teacup. A fly, with no regard for a decent brew, dive-bombed into an employee’s cup. The employee, recoiling in horror, fumbled, and dropped the tea cup. Then came the accusation, dripping with managerial fury: “He refused to retrieve the pieces!” For this... this... heinous act of ceramic neglect, the employee was sacked. But the Court, acting as the rational voice of reason, stepped in by deciding that a single dropped cup, fly or no fly, was hardly a high crime. The sacking was declared as a “tad” over-the-top, to say the least. The Court found that this act did not warrant the harsh punishment of dismissal.

However, in Award No. 502 of 2012 a single act of misconduct was serious enough to warrant dismissal. Here an employee’s superior tried to give him a warning letter for having a bad attendance record.

Rather than accepting it, the employee became incredibly abusive, resorting to the grave insults of “babi” (pig) and “anjing” (dog) towards his superior. The Industrial Court, found the dismissal to be proportionate. It held that such conduct was “unbecoming, rude, derogatory and plainly abusive” and that “to retain the claimant in employment would be subversive of discipline and would have a detrimental effect on the other employees.”

In another case (Award No. 1227 of 2018), a Financial Assistant who worked with company for 10 years with a spotless record made a single mistake. Here, she forged an HR officer’s signature on an employment certification letter. The company found out and dismissed her. She pleaded with them, arguing that the punishment was far too harsh. “It was one mistake!” she claimed, “I’ve given ten years of perfect service, and I even admitted what I did!” The Industrial Court, upheld the dismissal. The Court said that the claimant’s position in the finance department was one of “trust and confidence.” Her act of forgery, regardless of the motive, “goes to the root of her contract of employment” and destroyed the employer’s confidence in her. This case demonstrates that the nature of the employee’s role is a key factor in the proportionality equation.

As we have seen from the above cases, proportionality of punishment in employment misconduct is based on the facts of each case. Termination is the most severe form of punishment. Employers should explore other forms of punishment such as warning letter, withholding salary increments and bonuses. Employers must consider mitigating and aggravating factors before imposing punishment for the misconduct. 

Mitigating Factors (Making dismissal less proportionate)

I. Long and unblemished work record II. Genuine Remorse by the employee

III. Lack of Intention: The act was an honest mistake, not a malicious or wilful act.

IV. Ambiguity in the employer’s policy: Employer’s policies were unclear V. Employee was provoked

VI. Nominal Damage: The misconduct caused no financial loss or minor, reparable harm

Aggravating Factors (Making dismissal more proportionate)

I. Position of Trust and Confidence: A senior manager, a security guard, or a finance employee is held to a higher standard.

II. Lack of Remorse

III. Wilful & Premeditated Act: The employee planned the misconduct (e.g., a sophisticated fraud, theft, cheating and bribery).

IV. Serious Disruption: Misconduct that halts operations, endangers other employees, or severely damages company reputation. For example, a clerk who was caught sleeping once hardly warrants a dismissal. But if a bus driver or a crane operator falls sleeps while operating the vehicle is a serious misconduct.

V. Repeated Offenses: A clear pattern of misconduct despite numerous warnings (progressive discipline).

VI. Substantial Damage: Employees act caused significant financial or reputational loss. VII. Nature of business: Certain businesses like financial institutions cannot tolerate the slightest of mistakes as they need comply with regulatory bodies. Misconduct by a bank employee can lead to customers losing confidence, particularly in cases involving dishonesty, data breaches, or fraud, as these actions erode the trust essential to the financial system

VIII. Danger or threat to others: Sexual Harassment or any form of violence against other employees or even customers/clients

Conclusion: A message to employers

The legal burden on the employer to justify dismissing an employee for misconduct is Two-Fold: They must prove the act (misconduct) and justify the reaction (punishment). 

Before dismissing, an employer must consider all circumstances (aggravating and mitigating factors). Failure to consider these factors is a failure to act as a reasonable employer. 

Ultimately, the law demands that an employer’s response to misconduct not be vindictive, but measured. The employer must, in essence, “make the punishment fit the crime.” 

Failure to do so exposes the employer to the full remedial powers of the Industrial Court, which, guided by “equity and good conscience,” will not hesitate to correct an injustice and deem the dismissal of the employee as unfair.