The Story

Aziz was employed as a marketing officer in a medium-sized company. His role included preparing leaflets, advertisements, and online campaigns for the company’s products. Initially, his manager valued him for his creativity. But over time, the company noticed a troubling pattern.

On more than ten occasions in a single month, Aziz made errors in key marketing materials. Sometimes he typed the wrong product price, sometimes the wrong specifications, and at other times the wrong promotional dates. Each mistake forced the company to reprint leaflets, withdraw advertisements, or deal with angry customers.

The losses piled up. In just a few months, the company calculated that it had lost millions of ringgit due to errors in marketing campaigns.

Aziz’s manager warned him verbally, but the mistakes continued. Finally, management asked: Can we terminate Aziz for repeated mistakes? What does the law say about employees who cause serious losses through negligence?

The Law

The answer lies in two key laws:

1. Employment Act 1955 (Act 265)
   • Section 14 allows an employer to dismiss an employee without notice if the employee is guilty of misconduct, after a due inquiry.
   • Misconduct can include habitual neglect of duties, gross negligence, dishonesty, or any act inconsistent with employment obligations.
   • However, dismissal cannot be arbitrary; a proper inquiry must be carried out.
2. Industrial Relations Act 1967
   • Under Section 20, an employee who believes they were dismissed “without just cause or excuse” can file a complaint to the Industrial Relations Department.
   • The Industrial Court will then examine whether the termination was justified and whether the employer followed fair procedures.

One-Off Mistake vs. Repeated Negligence

The law draws a distinction between:

• Ordinary human error: A single typo, a one-time misjudgment, or an isolated oversight. These are part of working life and should be addressed through guidance, training, or minor warnings.
• Repeated mistakes: When errors happen again and again despite reminders, this suggests incompetence, negligence, or lack of diligence. At this point, it moves beyond ordinary error and becomes a pattern of misconduct.

If repeated mistakes cause substantial financial loss—such as millions in reprinting, refunds, or lost contracts—the employer has strong grounds to argue that trust has been broken. The employment relationship is based on mutual confidence, and persistent errors undermine that confidence.

Employer’s Duty: Due Process

Even if the company believes termination is justified, Malaysian law requires employers to follow due process. The Industrial Court has consistently ruled that dismissals must not only have “just cause” but also follow fair procedure.

The correct steps are:

1. Record and Document Mistakes
   • Keep evidence of each mistake, such as the incorrect leaflet, advertisement, or email.
   • Note the dates and the impact (e.g., financial loss, customer complaints).
2. Verbal Warning
   • The first step is often a verbal warning, making clear that the behaviour is unacceptable.
3. Written Warning
   • If mistakes continue, issue a formal written warning. State the errors, the consequences, and the expectation of improvement.
4. Show-Cause Letter
   • If there is no improvement, issue a show-cause letter asking the employee to explain why disciplinary action should not be taken.
   • The employee has the right to respond in writing.
5. Domestic Inquiry (DI)
   • If the response is unsatisfactory, conduct a domestic inquiry.
   • This is a formal hearing where the employee is given a fair chance to defend themselves.
   • Evidence and witnesses can be presented.
6. Decision
   • If misconduct (e.g., habitual negligence) is proven, the employer may dismiss the employee, demote them, or impose a lesser penalty.

By following this process, the employer ensures fairness and protects itself from claims of unfair dismissal.

Industrial Court View

The Industrial Court has heard many cases of dismissal due to negligence or repeated mistakes. The principles are clear:

• Dismissal may be justified if the mistakes are serious, repeated, and cause financial loss.
• The Court will ask whether the employer gave the employee reasonable opportunities to improve (warnings, training).
• If the employer dismissed without warning or inquiry, the Court may rule it as unfair dismissal—even if the mistakes were real.
• If the company followed due process, dismissal is usually upheld.

Lessons

For Employers:

• Document everything. Keep proof of errors, losses, and warnings. This evidence is crucial if the case goes to Industrial Court.
• Follow proper procedure. Do not fire employees on the spot. Always issue warnings, show-cause letters, and hold a domestic inquiry.
• Be fair but firm. Give employees a chance to improve. But if they fail repeatedly, termination may be the only option to protect the business.
• Consider alternatives. If the employee has strengths in other areas, redeployment may be an option before termination.

For Employees:

• Mistakes happen, but learn from them. A single error is forgivable, but repeated errors signal carelessness.
• Take warnings seriously. When your employer gives feedback, act on it quickly. Ignoring it can be used against you later.
• Communicate honestly. If you are overwhelmed with workload or lack training, raise it formally. Otherwise, repeated mistakes will be blamed on negligence.
• Understand that trust is key. Employment is a relationship of confidence. If your actions repeatedly cause loss, your employer may lose confidence in you.

For HR Practitioners:

• Train managers. Many dismissals are overturned in court because managers skip proper procedure. HR must ensure compliance with the law.
• Standardise policies. Clearly define what counts as negligence, how many warnings are given, and the steps before termination.
• Balance discipline and compassion. Repeated mistakes may be due to genuine stress or lack of training. HR should investigate root causes, not just punish.

Conclusion

So, can a company terminate an employee who repeats mistakes more than 10 times a month and causes millions in losses? The legal answer is: Yes, termination can be justified—but only if due process is followed.

The Employment Act 1955 (Section 14) allows dismissal for misconduct, and habitual negligence qualifies as misconduct. But the employer must prove it through a fair domestic inquiry. The Industrial Court will uphold termination if it sees that the mistakes were serious, repeated, and financially damaging, and that the employer acted fairly.

For employees, the lesson is to take responsibility for repeated mistakes. Employers can forgive occasional errors, but not patterns that harm the company. For employers, the lesson is to act lawfully: document, warn, and inquire before dismissing.

At its heart, employment is built on trust. A single mistake may be tolerated, but repeated negligence that causes heavy losses breaks the foundation of trust. In such cases, the law allows employers to protect their business—but only when they do so fairly, transparently, and within the boundaries of justice.