Friday, 21 August 2026
From legal right to practical risk
In Part 1, I looked at why getting the employment contract right is not enough.
An employer may have a contractual right to terminate. It may give the correct notice. It may pay in lieu. Yet the dismissal can still be challenged as unfair.
That takes us to the practical question.
If the contract is only the starting point, what should HR actually be thinking about before a termination decision is made?
For me, the answer begins with a change in perspective.
Do not look only at whether the decision feels justified today. Think about whether the company will still be able to explain and prove that decision much later.
A decision today may need to be defended much later
One of the biggest mistakes in termination cases is focusing only on whether management is comfortable making the decision now.
That is not the real test.
The better question is: can we still explain this decision clearly, consistently and fairly 12 to 18 months from now?
Because that may be when the decision is truly tested.
Once an employee is dismissed, the employee may challenge the dismissal under Section 20 of the Industrial Relations Act 1967.
The dispute may begin with conciliation and later proceed to the Industrial Court.
By then, the people who made the decision may barely remember the discussions that took place. Managers may have moved on. Witnesses may have left. Emails may be difficult to locate. Informal conversations may have disappeared completely.
What remains is the evidence. And the explanation.
This is why a termination that feels completely justified in a meeting room can become surprisingly difficult to defend later.
The real risk often lies in the explanation
Employers frequently believe termination risk is managed when the decision is approved.
The grounds exist. Legal has reviewed it. Senior management agrees. The contract permits termination. Notice will be paid.
Everyone around the table is comfortable.
But comfort inside the company is not the same as justification outside it.
Months later, someone who was never in that room may ask very simple questions.
What exactly did the employee do wrong? When did the problem begin? Were expectations made clear? Was the employee given an opportunity to respond? Was there a reasonable opportunity to improve? Why was termination necessary? Why was a lesser response not sufficient? Was the same standard applied to others? What documents existed at the time?
If the answers become complicated, inconsistent or heavily dependent on recollection, the case becomes weaker.
Good termination advice is therefore not simply about deciding whether the company can dismiss.
It is about making sure the company can later explain why it was fair to dismiss.
The burden of proving the dismissal changes the way HR should think
In an ordinary unjust dismissal claim, the employer will generally have to establish that there was just cause or excuse for the dismissal.
That shapes the entire strategy.
The company made the decision. The company usually controls the documents. The company has access to the managers involved.
The company therefore needs to be able to demonstrate why the dismissal occurred.
This makes evidentiary gaps dangerous.
A manager may genuinely believe an employee has been underperforming for two years.
But if the appraisal records are good, there are no meaningful warnings and the alleged shortcomings were never properly recorded, the belief and the evidence may tell two very different stories.
The same principle applies to misconduct. And retrenchment. And almost every other form of termination.
What the company believes happened matters.
What the company can prove happened matters more.
Fairness is not softness
HR practitioners sometimes worry that focusing heavily on fairness means employers cannot make difficult decisions.
That is not the point.
Employment law does not require companies to tolerate misconduct indefinitely. It does not require them to retain employees who genuinely cannot perform. It does not prevent organisations from restructuring or eliminating roles.
Businesses must be able to make difficult decisions.
The issue is how those decisions are reached and implemented.
A strong employer position is one where the company can say: there was a genuine problem. We identified it properly. We investigated or assessed it fairly. We gave the employee a reasonable opportunity to respond where appropriate. We considered the alternatives. We reached a rational conclusion. And the evidence supports what we did.
That is a very different position from simply saying: “The contract allowed us to terminate.”
Do not ignore the human element
Dismissal is a legal event. But before it becomes a legal event, it is a human one.
From management’s perspective, the termination may be a business decision, the end of a performance process or the consequence of misconduct.
The employee may experience the same event very differently.
It may feel like rejection. A loss of dignity. A judgment on competence. A threat to financial security. Or simply profound unfairness.
That does not mean the employee is legally right.
But it matters.
Many dismissal disputes begin not because an employee has carried out a sophisticated legal analysis, but because the employee believes they were treated badly.
That perception can determine whether a dismissal quietly ends an employment relationship or becomes a dispute.
How the company communicates matters. How the employee is treated during the process matters. Whether the employee understands what happened matters.
Respect does not eliminate legal risk. But unnecessary humiliation can create it.
Prevention matters more than winning
Employers sometimes approach termination disputes by asking: “What are our chances of winning?”
That is an important question. But it is not the best first question.
The better question is: how do we avoid creating the dispute in the first place?
Industrial Court proceedings consume management time. They require witnesses. They involve legal costs. They keep old workplace disputes alive. They may continue long after the managers involved have moved on.
Even a case the employer eventually wins may have been avoidable with better handling much earlier.
Good employment law advice therefore begins before dismissal. Sometimes long before dismissal.
It begins when performance problems first appear. When misconduct is first suspected. When restructuring is first discussed. When managers begin documenting concerns.
That is when HR should start asking whether the organisation is building a position that will still make sense if it is challenged later.
The question HR should ask before every termination
Before any dismissal, there is one question I believe every HR practitioner should ask.
Not: “Can we terminate?”
But: “If this employee challenges the dismissal tomorrow, can we explain our decision clearly, consistently and fairly to someone who knows nothing about what happened?”
Then go one step further.
Can we prove it?
Can the documents tell the same story? Will the witnesses still be around? Does the sequence of events make sense? Was the employee treated fairly? Was termination genuinely necessary? Would an independent person looking at the same facts understand why the company reached this decision?
If the answers are strong, the termination is likely being approached properly.
If the answers require long explanations, assumptions or reconstruction of events, there is work to be done.
Because in employment law, the question is rarely just whether the employer had the power to terminate.
The harder question is whether the employer exercised that power fairly.
And that is where many termination cases are really won or lost.
Want to explore this further?
Dharmen will be discussing these issues and more at the *MECA IR Convention 2026*, alongside leading voices in Industrial Relations, Employment Law and workplace management.
7–8 October 2026 | Bangsar South
Discover the MECA IR Convention 2026 →(https://convention.meca.com.my/meca)
