Was your retrenchment fair?
Your role was cut, and you doubt the reason or how you were chosen.
Your role was cut, and the company called it business necessity. That label does not automatically make the retrenchment fair, and it is worth checking before you sign anything.
What counts as retrenchment or redundancy?
Retrenchment happens when your employer removes your role because the position itself is no longer needed, not because of anything you did. Redundancy is the same idea: fewer people are needed for the work that remains.
This differs from misconduct or performance-based dismissal, where the reason is about you personally. Retrenchment should be about the job, not the person doing it.
Is retrenchment always fair just because it is labelled that way?
No. The reason must be a genuine redundancy, not a convenient label for removing a particular employee.
The Code of Conduct for Industrial Harmony 1975 sets the guidance a responsible employer follows when choosing who to retrench.1
If your employer cannot show the role genuinely disappeared, or that selection was fair, the retrenchment can still be challenged as unfair dismissal.
What is LIFO, and when can an employer depart from it?
Last In First Out is the conventional starting point: the most junior employee in the affected category is let go first. An employer may depart from LIFO, but must have sound, justifiable reasons for doing so.1
Being retrenched out of turn, with no explanation for why you were chosen over someone more junior, is worth raising early.
What if the company keeps hiring after your role is cut?
Continued hiring in the same department, or for a similar role under a different title, undercuts the claim that the position disappeared. It does not prove bad faith on its own, but it is a pattern worth documenting.
Screenshots of job listings, posts about new hires, or a colleague still working there can matter later.
What about the package you were offered?
A severance offer can come with a short deadline to sign. If the case reaches the Industrial Court, it is your employer who has to prove just cause, not you.3
Read what the offer asks you to give up, and ask for more time if the deadline is tight.
Can I claim EIS as well?
Yes. The Employment Insurance System (EIS) is a government scheme separate from your unfair-dismissal claim.
It includes a Job Search Allowance, and you should apply within 60 days of losing your job.2
Pursuing EIS does not stop you from also questioning whether the retrenchment itself was fair.
What to do this week
Save your termination letter, the reason given, and anything about how you were selected. Note whether anyone junior to you in the same role was kept on.
Then check your exact 60-day deadline for a Section 20 representation. It runs alongside any EIS claim.4
If you want a lawyer to review the selection and act for you, request lawyer contact first; only after an identified independent lawyer has contacted you and specifically requested the material, send the letter and your timeline while the 60 days are still running.
If you are questioning how you were selected or whether a severance package is fair, an independent employment lawyer can review the details. They can act for you if there is something worth pursuing.
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 my employer allowed to choose who gets retrenched?
Yes, but not arbitrarily. The conventional starting point is Last In First Out, the most junior employee in the affected category first. An employer can depart from this, but needs a sound, justifiable reason for picking you over someone more junior.
Does business restructuring always make a retrenchment genuine?
Not automatically. The label has to match reality: the role itself must have genuinely disappeared, not just been handed to someone else under a new title. If the same work continues under a different name, that is worth questioning.
What if the company is hiring again soon after?
That pattern is worth documenting. Continued hiring in the same department, or for a similar role, undercuts the claim that your position was no longer needed. It does not prove bad faith by itself, but it is useful evidence.
Should I sign the separation agreement straight away?
There is usually no need to sign on the spot. Read what you are being asked to give up, and ask for time if the deadline feels rushed. A short check before signing costs little and protects your options.
Can I claim EIS and still question the retrenchment?
Yes. The Employment Insurance System is a separate government scheme from an unfair-dismissal claim, so pursuing one does not stop you pursuing the other.
Sources
- Last In First Out is the conventional basis for selecting employees for retrenchment; an employer may depart from it but must justify the departure with sound reasons, under the Code of Conduct for Industrial Harmony 1975. Richard Wee Chambers, 5 Points On The Law Of Retrenchment In Malaysia
- Under the Employment Insurance System Act 2017, PERKESO gives temporary financial help, including a Job Search Allowance, to employees who lose their jobs involuntarily, and applications should be made within 60 days of termination. malaysia.gov.my, Employment Insurance Scheme (EIS) Assistance Under PERKESO
- The burden of proving just cause or excuse for a dismissal, including a retrenchment, rests on the employer, not the employee, once a case reaches the Industrial Court. Mah Weng Kwai & Associates, Unfair Dismissal
- An employee who considers a retrenchment was without just cause or excuse may make a written representation to the Director General of Industrial Relations within 60 days of the dismissal. Mah Weng Kwai & Associates, Unfair Dismissal
Keep reading
If you are questioning how you were selected or whether a severance package is fair, an independent employment lawyer can review the details. They can act for you if there is something worth pursuing.
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.