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2025 MarsdenLR 4737
INDUSTRIAL COURT MALAYSIA
Tamil Selvam a/l Subramaniam – Appellant
Versus
DHL Express (Malaysia) Sdn. Bhd. – Respondent
9/4-1036/23
The dismissal of an employee based on a proven conflict of interest, arising from the non-disclosure of personal business ventures that compete with or intersect with the employer's interests, constitutes a just cause for termination due to the breach of the implied duty of fidelity and the loss of trust.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Dismissal - Unjust dismissal - Conflict of interest - Duty of fidelity and fiduciary duty - Employee engaged in competing business without disclosure - Whether dismissal for just cause or excuse.
(B) The role of the Industrial Court is to determine if the dismissal was with just cause or excuse. The burden of proof lies on the employer to establish the alleged misconduct on a balance of probabilities. An employee owes a duty of fidelity and good faith to their employer, which includes the obligation to disclose any potential conflict of interest arising from personal business ventures, especially those in direct competition with the employer. Failure to disclose such interests constitutes a breach of the trust and confidence fundamental to the employment relationship, justifying termination. (Paras 7-10, 39-40, 46-49)
Facts of the case:
The claimant, a long-serving employee, was dismissed following investigations into undisclosed business interests. It was alleged that the claimant acted as a sole proprietor of a business in direct competition with the employer’s industry. Furthermore, the claimant failed to disclose that family members were proprietors of a former vendor for the employer. The claimant also maintained other undisclosed income-generating activities and held assets disproportionate to known sources of income. The claimant challenged the dismissal as lacking just cause or excuse, citing a long record of service without previous misconduct.
Findings of Court:
The court found that the evidence of non-disclosure regarding competing business interests and familial commercial dealings was substantiated. The claimant's admission of failure to declare these interests in required annual filings proved a deliberate concealment. The court determined that the breach of the duty of fidelity and the resulting loss of trust and confidence rendered the employment relationship untenable, despite the claimant's length of service.
Issues: Whether the misconduct complained of had been established, and whether such proven misconduct constituted just cause or excuse for dismissal.
Ratio Decidendi: An employee’s non-disclosure of interests in businesses that compete with or have a commercial nexus to the employer represents a fundamental breach of the implied duty of fidelity. Once the trust and confidence inherent in the employer-employee relationship are irrevocably destroyed by such dishonest conduct, the employer is entitled to terminate the employment, regardless of the employee's tenure.
Result: Claimant's claim dismissed.
| Table of Content |
|---|
| 1. overview of industrial reference and employment background. (Para 1 , 2 , 3 , 4) |
| 2. parties' contentions regarding dismissal and misconduct. (Para 5 , 6) |
| 3. legal framework, burden of proof, and industrial court's role. (Para 7 , 8 , 9 , 10 , 11) |
| 4. evaluation of misconduct through undisclosed conflict of interest. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31) |
| 5. assessment of assets and financial allegations. (Para 32 , 33 , 34) |
| 6. fiduciary duty breach and overall integrity assessment. (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 7. justification of dismissal based on broken trust and breach of contract. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 51 , 52) |
| 8. final order dismissing the unfair dismissal claim. (Para 53 , 54) |
AWARD
[1] This is a reference dated 29 May 2023 by the Director General of Industrial Relations Malaysia to the Industrial Court of Malaysia under Section 20(3) of the Industrial Relations Act 1967 (hereinafter referred to as “the IRA”). This reference is in respect of the dismissal of Tamil Selvam a/l Subramaniam (hereinafter referred to as “the Claimant”) by his employer, DHL Express (Malaysia) Sdn. Bhd. (from now on referred to as “the Company”) effective 10 November 2022.
[2] This Court has considered the following cause papers and documents in handing down this Award, namely:
(a) the Claimant’s Statement of Case dated 23 July 2023;
(b) The Company’s Statement in Reply dated 23 October 2023;
(c) the Claimant’s witness statement (Tamil Selvam a/l Subramaniam) is marked as “CLWS-1”;
(d) The Company’s witness statement (Sukhvinder Singh Rolla Singh) is marked as “COWS-1”;
(e) the Company’s witness statement (Thushan Sanjeewa Gooneratne) is marked as “COWS-2”;
(f) the Claimant’s Bundle of Documents marked as “CLB-1”;
(g) the Claimant’s Bundle of Documents marked as “CLB-2”;
(h) the Company’s Bundle of Documents marked as “COB-1”;
(i) the Company’s Bundle of Documents marked as “COB-2”;
(j) the Company’s Bundle of Documents marked as “COB-3”.
A. Brief Facts of the Case
[3] The Claimant commenced his employment with the company on 8 December 2003 as an Operations Assistant.
[4] At the time of the dismissal, the Claimant was holding the position of Lead of Operations Agent and his last drawn basic salary was RM 4278.00 per month.
B. The Claimant’s Case
[5] In his Statement of Case, the Claimant avers that–
(a) During his tenure of employment for more than Nineteen (19) years of unblemished record of service, he had carried out his duties in accordance with the company's requirements, rules and
regulations without committing any misconduct;
(b) By way of the company's letter dated 1.11.2022, he was issued a show cause on four (4) non-work-related allegations levelled against him;
(c) By way of his letter dated 2.11.2022, he had replied to the Company's show cause letter and had briefly explained all the Company's allegations;
(d) By way of the Company's letter dated 10.11.2022, the Claimant was notified of the company's decision to terminate his employment with immediate effect;
(e) The Claimant had proceeded to file a claim of unfair dismissal under Section 20(1) of the Industrial Relations Act, 1967;
(f) The Company's allegations are actuated by mala fide, an abuse of management rights to hire and fire, and in complete breach of his right to livelihood.
C. The Company’s Case
[6] In its Statement in Reply, the Company avers that–
(a) The Claimant's obligation to serve the Company in good faith, which includes exclusivity and fidelity;
(b) The Claimant failed to disclose his family members' involvement in Key Master Enterprise (KME) which was appointed as the Company's vendor;
(c) The Claimant should not make a profit out of his employment with the Company;
(d) The Claimant had committed serious misconduct which led to his dismissal on 10 November 2022 from the Company;
(e) The Company contends that the dismissal of the Claimant
