When you serve your employee termination letter, the next 60 days are always the hot waiting period because you’ll be waiting for an indication from the Industrial Relations (IR) Department whereby each time ‘Abang POS Laju’ comes by and delivers parcels, you’d wonder if there are any “love-letters” included!
Why are employers concerned about unlawful dismissal claims? This is because the liability of terminating an employee is an expected outcome right after the termination happens. The financial aspect is the main concern behind an occurrence of termination. This is because if the court finds the termination unjust, the employer then needs to pay up to a maximum of 24 months’ salary as back wages to that particular employee. If the employee is in a high- position, then this amount will balloon as compared to an employee who earns much lesser than him.
What are back wages? Back wages refer to orders by the Industrial Court to compensate the losses that the claimant has suffered due to termination. The intention lying behind this order is to put the claimant back in position that he/she would have been, if he/she had not been dismissed. The maximum amount of back wages that can be awarded to a confirmed employee is 24 months of their last drawn salary. Meanwhile, probationers are entitled to an amount up to 12 months of their last salary.
Besides back wages, another remedy for employers to look at is reinstatement – which is a chance for the employer to get the employee back on board, if possible. Otherwise, the employer needs to pay compensation in lieu of reinstatement where the Court will order 1 month’s salary for each year of service.
The total amount that an employee is entitled to receive is up to 24 months of back wages and 1 month / year of service as compensation in lieu of reinstatement. This is clearly a huge amount especially for employees who were in high-ranking positions or have served the Company for a long time. This monetary loss suffered would have been avoidable if the termination at the earlier stage was done rightfully.