Handling Employee Misconduct: Your First Step Is a Fair Investigation

Employers Dealing with Employee Misconduct

If you’re an employer and one of your staff has committed a serious workplace offence, such as theft, harassment, insubordination, or absenteeism, you’re likely facing a difficult decision. Before making any move, you must properly understand how to conduct a preliminary investigation.

Misconduct Has Been Alleged — What Happens Now?

Let’s say one of your team members is reported for harassing a colleague, falsifying records, or being absent without leave. Perhaps your HR team has received a complaint, or a supervisor has flagged serious concerns. In that moment, the pressure to “act fast” can feel intense, but rushing into termination without evidence or procedure can put your business at legal risk.

The correct first step is not dismissal. It’s an investigation.

A preliminary investigation helps you answer the key question: Is there enough basis to move forward with disciplinary action? This stage is about fact-finding, to avoid making a well-intentioned decision appear biased or unjust.

Legal Duties in the Preliminary Investigation Stage

Under Malaysian employment law, employers must follow natural justice principles: fairness, neutrality, and respecting employee’s right to be heard and defend himself. Here’s what you need to know:

Employment Act 1955
- Requires termination based on “just cause or excuse.” Investigations help establish this cause.
Industrial Relations Act 1967
- This act protects employees from unfair dismissal. If an employee claims they were dismissed without due process, the case can escalate to the Industrial Court.
Code of Conduct for Industrial Harmony 1975
- This code is not legally binding but is often used by the Industrial Court as a benchmark for fair procedures, including the expectation of a preliminary investigation before a Domestic Inquiry.

The law does not mandate a specific investigation format but must be fair, well-documented, and impartial. Anything less can be challenged.

How Legal Help Can Strengthen Your Process

A lawyer with experience in employment law can guide you through this sensitive stage. Here’s how legal support can assist you:

Reviewing internal policies to ensure alignment with the law
Drafting investigation plans to clarify what evidence to gather
Advising on employee interviews and record-keeping practices
Ensuring procedural fairness to minimise the risk of unfair dismissal claims
Preparing templates for Show Cause Letters, if the investigation warrants escalation

Legal counsel ensures you don’t overlook critical details that may later be used against you in court.

Step-by-Step Guidance for a Proper Investigation

Here’s how to approach a preliminary investigation the right way:

1. Pause Before Acting

Do not suspend, dismiss, or accuse the employee publicly.
Keep matters confidential to avoid workplace disruption or defamation risk.

2. Identify the Allegation Clearly

Understand exactly the misconduct alleged (e.g. theft, harassment).
Review all complaints, witness reports, and supporting documentation.

3. Assign a Neutral Investigator

Appoint a person (preferably not from the same department) to conduct the fact-finding.
Avoid any individual with bias or direct involvement in the incident.

4. Gather Evidence

Collect written records (emails, logs, CCTV footage, attendance data).
Conduct interviews with relevant witnesses.
Always document findings in a clear and dated manner.

5. Invite the Employee for an Informal Clarification

This is not yet a formal disciplinary hearing.
Give the employee a chance to share their side informally before proceeding.

6. Evaluate the Findings Objectively

Ask: Is there enough credible evidence to justify further action?
If yes, proceed to the next stage (typically, a Show Cause Letter).
If not, the matter may be closed, or a warning may be issued instead.

7. Maintain a Clear Record

All findings, notes, and communications should be confidential but accessible.
A well-kept record will help defend your decision if challenged.

Case Law

Case	Citation	Court	Short Summary
Surinder Singh Kanda v Federation of Malaya	[1962] 1 MLJ 169	Privy Council	Held that natural justice requires that charges and evidence be disclosed, and employee given fair hearing before dismissal.
Tan Tek Seng v SP Perkhidmatan Pendidikan	[1996] 1 MLJ 261	Court of Appeal	Found wrongful dismissal for lack of fair hearing, requiring full disclosure of allegations.
Lee Kwan Woh v Public Prosecutor	[2009] 5 MLJ 301	Federal Court	Reaffirmed right to respond to allegations and evidence; fair trial rights analogously apply in disciplinary contexts.
HR Investigations Guide	Chambers Practice Guides (2025)	Industry Practice	Employer must gather prima facie evidence before issuing show cause notice; burden of proof is on employer (Global Practice Guides).

Speak to a Lawyer Before Taking Action

Handling misconduct is never easy, but your first step shouldn’t be termination. A preliminary investigation protects both your company and your employees. It shows the Industrial Court (and your staff) that you took a fair, lawful approach.

If you’re facing a misconduct issue and are unsure how to begin your investigation, speak to a legal professional. The right early advice can prevent reputational harm, minimise costly disputes, and give you the confidence to take the next step lawfully.

FAQ

1. Why is a preliminary investigation necessary before disciplinary action?

A preliminary investigation ensures that there is a valid basis to proceed. It protects the company from wrongful dismissal claims and upholds fairness by allowing employees to be heard.

2. What counts as employee misconduct?

Common examples include theft, harassment, insubordination, dishonesty, absenteeism, or breach of company policies. The misconduct must be severe enough to justify disciplinary action or dismissal.

3. Do I need a lawyer to conduct an investigation?

Not necessarily, but legal advice is helpful to ensure compliance with the law, especially in complex cases. A lawyer can help you avoid mistakes in procedure and documentation.

4. Can I suspend an employee during the investigation?

Suspension with pay is allowed if it prevents interference with witnesses or evidence. It is a neutral measure and must be communicated clearly.

5. What should I document during the investigation?

Keep records of complaints, interview notes, evidence collected, your findings, and all communication with the employee. This documentation is crucial if the case is later brought to court.

6. What is the next step after a preliminary investigation?

If evidence supports further action, issue a Show Cause Letter to the employee. This allows them to respond before a formal Domestic Inquiry is considered.

7. How long should the investigation process take?

It depends on the case’s complexity, but it should be done promptly. Delays may be seen as neglect or bad faith, especially if they affect employees’ ability to defend themselves.

8. Can I dismiss the employee immediately if the misconduct seems obvious?

No. Even in clear cases, you must follow due process. Skipping steps like investigation and allowing a defence may lead to unfair dismissal claims.

9. What if the employee denies the misconduct during the investigation?

That’s why evidence collection and impartial assessment are critical. You may proceed with further disciplinary steps, such as a Domestic Inquiry, if the response is inconsistent or unconvincing.

10. What happens if I don’t conduct a proper investigation?

You risk breaching the principles of natural justice. If your termination decision against the employee is challenged in the Industrial Court, it could be overturned, and the employee may be reinstated or awarded compensation.