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How back wages are calculated in Malaysian wrongful dismissal cases

Deep Dive: How Telekom Malaysia Berhad v Ramli bin Akim Impacts Malaysian Employment Law

A crucial High Court ruling changes how back wages are calculated in wrongful dismissal cases. This case impacts how legal practitioners argue statutory limits, how HR professionals assess termination risks, and how employees are protected during long court delays.
1. Statutory Law Overrules Practice Notes
The central conflict in this case was whether a court-issued guideline can restrict a right granted by Parliament.
  • The Law: Section 30 of the Industrial Relations Act 1967 (IRA 1967) governs the Industrial Court’s power to grant monetary awards.
  • The Gap: The written Act does not set a maximum cap on the months of back wages a court can award.
  • The Ruling: The High Court ruled that statutory law reigns supreme over administrative guidelines.
  • The Takeaway: Judges can legally award back wages beyond the standard 24-month limit outlined in Industrial Court Practice Notes.
2. Who Pays for Court Delays?
Industrial court disputes can take years to resolve. This judgment sets a clear precedent for who carries the financial burden of these systemic delays.
  • For Employees: If you did not cause the court delay, you should not penalised for it.
  • For Employers & HR: Because the employer's initial wrongful dismissal triggered the lawsuit, the employer must bear the financial consequences of any lengthy legal process.
3. Business Failures and Post-Dismissal Income
When an employee is wrongfully dismissed, they are required to mitigate their losses by looking for alternative income. The court clarified how failed business attempts affect final payouts:
  • Unemployment Status: If an employee attempts to start a business after being fired and it fails, they are still legally considered unemployed during that period.
  • Deduction Rules: Only actual profits from a successful new venture are deducted from back wages. A failed venture results in zero deductions.
  • Industry Disconnection: If an employee loses touch with their specialized field during a long trial, making them harder to hire, courts may award higher back wages to reflect this setback.
Actionable Checklist for All Stakeholders
For HR ProfessionalsFor Legal PractitionersFor General Employees
Audit Payout Risks: Calculate worst-case back wage liabilities beyond 24 months before terminating staff.Leverage Section 30: Argue statutory supremacy over practice notes when claiming full back wages.Document Job Hunts: Keep strict records of all job applications and business attempts post-dismissal.
Expedite Trials: Avoid delaying tactics in court, as prolonged cases directly increase your financial liability.Analyze Professional Decay: Present evidence of a client's diminishing employability due to time away from tech/industry.Understand Your Rights: Note that court delays do not automatically reduce your potential compensation.

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