Was Your Retrenchment Done Properly?
You were retrenched and want to know how the employer should have chosen you.
In a retrenchment, the process is examined as closely as the reason. This guidance explains what that process should look like.
What does this Code set out?
The Code of Conduct for Industrial Harmony gives guidance on how employers should handle workplace relations, including responsible steps before and during a retrenchment.
It describes the process an employer is expected to follow. It does not fix any payment figure.
Is this Code binding law?
No. It is persuasive guidance, not a binding statute, so it is not enforced the way a section of an Act is.
That does not make it irrelevant. It still reflects what is widely accepted as reasonable employer behaviour in a retrenchment.
What does LIFO mean, and when can it change?
LIFO, letting the most recently hired staff in the affected category go first, is the conventional, objective way to select who is retrenched.1
An employer may depart from it, but needs sound, specific reasons. Any retrenchment must also be for a genuine redundancy in the first place.1
Why does the process matter as much as the reason?
An employer who skipped basic steps, such as notice of the exercise or consultation with affected staff, may find that gap used against them later.
You can challenge a retrenchment on whether the redundancy was genuine. You can also challenge whether the selection and process around it were fair.
What should you do if your retrenchment looks irregular?
Read about retrenchment and redundancy for how selection and process are normally expected to work. Note anything that deviated from it, such as how you were told and who else was chosen.
Whatever the process looked like, your 60-day window to challenge it still applies, so check it on the deadline calculator.
If you were retrenched and doubt the process was responsible, an independent employment lawyer can review how you were selected. They can act on a claim if you have grounds.
For people seeking legal representation. For general information, please use our guides and tools.
First contact: general facts only, such as date, location, employment status and a short summary. Keep documents private until an identified independent lawyer contacts you and specifically requests them.
Common questions
Is this Code an actual binding law?
No. It is treated as persuasive guidance rather than a binding statute, so it is not enforced word for word the way a specific section of an Act is.
What is LIFO, and does my employer have to follow it?
LIFO means letting the most recently hired staff in the affected category go first. An employer can depart from it, but needs sound reasons for doing so.
Does ignoring this guidance make my retrenchment automatically unfair?
Not automatically, but a process that clearly ignores widely accepted fair practice can support an argument that the process, not just the reason, was unfair.
What does genuine redundancy actually mean here?
It means the position itself is genuinely no longer needed, rather than retrenchment being used as a convenient way to remove a particular individual.
Sources
- LIFO, letting the most recently hired staff in the affected category go first, is the conventional, objective selection principle for retrenchment; an employer may depart from it but must justify the departure with sound reasons, and any retrenchment must be for a genuine redundancy. Richard Wee Chambers, 5 Points On The Law Of Retrenchment In Malaysia
Keep reading
If you were retrenched and doubt the process was responsible, an independent employment lawyer can review how you were selected. They can act on a claim if you have grounds.
For people seeking legal representation. For general information, please use our guides and tools.
First contact: general facts only, such as date, location, employment status and a short summary. Keep documents private until an identified independent lawyer contacts you and specifically requests them.