An Analysis of Wrongful Dismissal in Malaysian Employment Cases: Court Approach Related to Reputational Harm

Abstract

Wrongful dismissal disputes in Malaysia are often analysed in terms of procedural fairness, yet the potential reputational impact of termination has received less attention. This paper examines whether dismissal without just cause can affect an employee’s standing or reputation, and under what circumstances the courts recognise such consequences. The analysis is based on two Malaysian court decisions in the cases of Mohd Sobri Che Hassan v Pihak Berkuasa Tatatertib Majlis Perbandaran Seberang Perai & Anor [2024] MLRHU 1721. The High Court assessed damages for wrongful dismissal, which had already been declared unlawful by the Federal Court. While the court awarded back wages, increments, allowances, and accumulated leave, it rejected the employee’s claims for humiliation and reputational loss. Referring to Milicent Rosalind Danker & Anor v Malaysia Europe Forum Berhad & Ors [2012] 5 MLRH 392; [2012] 2 CLJ 1076, the court held that damages for reputation are not recoverable in a contractual claim for wrongful dismissal, as such losses are too remote under section 74 of the Contracts Act 1950 and may only be pursued through a defamation action. In contrast, the case of Mohamed Fahamy v Iscada Net Sdn Bhd [2020] MLJU 1062 involved defamatory allegations linked to termination, where the court awarded damages to reflect the injury to reputation. By examining the reasoning in these judgments, the study identifies the factors that lead to reputational considerations being acknowledged in wrongful dismissal disputes. The objective is to determine whether, and in what circumstances, wrongful dismissal results in reputational consequences in Malaysian case law, and to situate these findings within established principles on remedies in employment law. The discussion also reflects on how the balance between employer authority and employee rights is maintained when reputational harm is in question.