Domestic Inquiries: Best practices

1. What is a domestic inquiry?

1.1 A domestic inquiry is an internal disciplinary proceeding conducted by an employer to make a finding as to whether a given employee has committed an act (or acts, as the case may also be) of misconduct in breach of his terms of employment. Misconduct is not defined under the Employment Act 1955 (“EA 1955”), but it has been said that section 14 “implies that it is conduct by an employee that is inconsistent with the fulfilment of the express or implied condition of his service”.¹

2. Is a domestic inquiry mandatory?

2.1 No. In fact, the findings of the domestic inquiry are not binding upon the Industrial Court which hears the matter afresh.²

3. If domestic inquiries are neither mandatory nor binding, why conduct them at all?

3.1 The Industrial Court recommends the usefulness of due inquiries for practical reasons:³

A due inquiry properly conducted and well documented serves to ensure that a disciplinary authority has acted only after giving fair consideration to the matter. It also provides a reliable record for the employee to turn to when, due to the effluxion of time witnesses have become unavailable of memories have faded, the employer is fixed with difficulties in having to prove his case before an industrial tribunal. Confronted with such forensic difficulties, an employer might well have to make extensive references to the records of the domestic inquiry.

4. How is a domestic inquiry to be conducted?

4.1 A domestic inquiry should be conducted in accordance with the principles of fairness and transparency, and the employee under investigation should be afforded the opportunity to speak in his own defence, and even to call witnesses in support of his defence. The proceedings should be recorded diligently in the interests of accuracy and sufficient time should be allotted to the employee under investigation to prepare his defence, especially if there are multiple allegations of misconduct.

4.1.1 The show cause letter

As a preliminary step before the commencement of disciplinary proceedings, the employee should be given a show cause letter, which states, in precise terms, the particulars of the misconduct the employee is alleged to have committed. The letter should be drafted the same way one might prepare a list of charges, with dates, times, and where relevant, the exact details of any property stolen. The employee should then be granted sufficient time to provide a written reply as to why disciplinary action should not be taken against him.

4.1.2 Composition of the panel of inquiry

The board sitting in judgment of the employee should be as independent as possible so as to avoid the perception of unfairness towards the latter. In practical terms, the members of the panel of inquiry should comprise senior management who are objective, impartial arbiters of the matter at hand.

4.1.3 Prosecution, defence and the burden of proof

One officer (which may be the in-house legal advisor, see below) should speak on behalf of the company in the prosecution of the alleged act of misconduct committed by the employee, while another officer should act on behalf of the employee in his defence. The burden of proof lies on the employer to establish the act of misconduct.

4.1.3.1 Legal representation

It will be the prerogative of the company to decide if external legal representation will be allowed at the domestic inquiry. The company may be best served by using its own in-house legal advisor, who will represent them as its employee rather than an external lawyer, to represent its interests.

4.1.4 Audio-visual recording and transcription

As stated above, the proceedings should be scrupulously documented in the form of an audio-visual recording if a high-quality recording can be made. This will have the advantage of capturing not just what the employee, members of the panel, and prosecuting and defending officers say and do, but also physical demeanour, tone, and other information that may not be reflected in the written transcription of the proceedings.

4.2 For the purposes of an inquiry under section 14(1), the employee may also be suspended from work for a period of no longer than two weeks but shall be paid no less than half his wages by his employer during such period. In the event the inquiry does not disclose any misconduct on the part of the employee, the employer must restore the wages so withheld to the employee immediately.⁴

5. What are the legally prescribed penalties for misconduct?

5.1 Upon completion of the domestic inquiry, the employer must then decide on a suitable penalty to be meted out. The EA 1955⁵ provides in section 14 for several consequences to an employee found to have committed misconduct which must follow a due inquiry:⁶
a) Dismissal of the employee without notice;
b) Downgrading of the employee;
c) Imposition of such lesser punishment as the employer may deem fit and just. However, if the employer chooses to impose a suspension of wages, such suspension shall not exceed a period of two weeks.⁷

6. Is there a right of appeal against the decision of a domestic inquiry?

6.1 It is not mandatory for a company to implement an appeals process against the decision of a domestic inquiry, but if there is, the appeal process should be conducted in a way that is both objective and fair and any decision made in an appeal should be respected in the interests of transparency and fairness.

7. Conclusion

The act of conducting a disciplinary inquiry requires a company to be meticulous, honest, and objective in dealing with the alleged misconduct of its employees. The manner in which the disciplinary inquiry is conducted is equally as important as its findings. In the event the employee chooses to take his case further, the company will be in the best position possible to answer any claim made at the Industrial Court.

If you have any questions or require any additional information, please contact our lawyer that you usually deal with.

¹Per Gopal Sri Ram JCA (as he then was) in Hong Leong Equipment Sdn Bhd v Liew Fook Chuan & Other Appeals [1997] 1 CLJ 665.
²Hong Leong Equipment Sdn Bhd v Liew Fook Chuan & Other Appeals [1996] 1 MLJ 481.
³Syarikat Telekom Malaysia Berhad v Saidon bin Puteh (Award No 157 of 1996) [1996] 1 ILR 619.
⁴EA 1955, s 14(2).
⁵See the Employment (Amendment) Act 2022 (Act A1651) for the most recent amendments to the EA 1955.
⁶EA 1955, s 14(1).

This article is written by 

Ashley Ian Danker
Senior Associate, Low & Partners