How To Handle Domestic Inquiries (DI) In Malaysia

One day, you might face a situation where an employee in your company is accused of serious wrongdoing, such as being caught stealing or absent from work without permission.

As an employer, you cannot make decisions based on emotions or guesses.

If you fire an employee without following the right process, it could lead to legal problems.

This is why a domestic inquiry is important. It is an internal process that helps employers investigate misconduct before deciding on any disciplinary action.

It allows both the company and the employee to have a fair chance to present their side.

How does domestic inquiry work? How to handle them correctly? Read this article and you will find the answer.

What is a Domestic Inquiry?

A domestic inquiry is an internal process that an employer carries out when an employee is suspected of wrongdoing.

It helps the employer investigate the issue, listen to both sides and make a fair decision on what to do next.

Before any disciplinary action is taken, the employee gets a chance to explain their side of the story.

This step is important because acting without a proper inquiry can lead to claims of unfair dismissal, which may result in legal problems for the company.

Domestic inquiries are not only for serious misconduct. They can also be used to handle various workplace matters, such as:

Employee concerns about salary, benefits, or how they are treated at work.
Questions about company policies, including leave entitlements, working hours, or other workplace rules.
Disciplinary cases, where employees are accused of breaking company policies, such as being absent without notice, stealing, harassment, or refusing to follow instructions.

Understanding the Legal Framework

Domestic inquiries in Malaysia are guided by the Employment Act 1955 and the Industrial Relations Act 1967.

These laws help protect both employers and employees by making sure that any investigation into workplace misconduct is handled in a fair and proper way.

In detail, the key legal considerations are below:

Section 14(1) of the Employment Act 1955 says that before an employer can punish an employee for misconduct, they must first carry out a proper investigation. This means the employer cannot fire or suspend an employee without looking into the case fairly.
Section 20(1) of the Industrial Relations Act 1967 gives employees the right to challenge their dismissal if they believe they were fired unfairly. They can file a complaint, and if necessary, the case may be brought to the Industrial Court.
If an employer skips the proper steps, such as not holding a fair inquiry before firing an employee, the employee can take legal action. If the Industrial Court finds the dismissal unfair, the employer may have to reinstate the employee or pay compensation.

Types of Domestic Inquiries

Domestic inquiries can be grouped into three categories based on the nature of the issue:

1. Employee-Related Inquiries

These are inquiries related to an employee’s work conditions, such as:

Salary delays or discrepancies.
Performance evaluations and promotions.
Contract terms and working conditions.

2. Policy and Procedure Inquiries

Employees may ask about company policies, workplace behavior rules, or specific entitlements, including:

Leave policies (annual leave, medical leave, emergency leave).
Benefits such as SOCSO, EPF, or allowances.
Dress codes, working hours, and overtime pay.

3. Disciplinary or Conduct-Related Inquiries

These involve serious workplace issues, such as:

Theft or fraud.
Sexual harassment or violence.
Breach of company policies (e.g., using office resources for personal gain).

How to Handle Domestic Inquiries Effectively in Malaysia

Handling domestic inquiries takes time and a proper process.

Whether an employee has a question about company rules or is involved in a misconduct case, following a clear step-by-step approach helps avoid confusion and misunderstandings.

Step 1: Listen Carefully and Document the Inquiry

Pay close attention to the employee’s concerns, whether it is a complaint, a question about company policies, or a report of misconduct.

Active listening is important to understand the issue clearly.

Always keep a record of the inquiry. Proper documentation is useful if the matter needs further investigation or escalates later.

Step 2: Acknowledge the Inquiry

Let the employee know their concern has been received. For minor issues, a quick response may be enough.

If the matter is serious, let them know that further investigation will take place.

Acknowledging the inquiry helps the employee feel heard and assures them that the issue is being taken seriously.

Step 3: Investigate and Gather Information

Before giving a response, collect all relevant information, including:

Reviewing company policies and past records.
Speaking with employees involved to understand the situation.
Checking available evidence, such as CCTV footage or emails.

For misconduct cases, employers should assign an independent panel to review the case and conduct a fair investigation.

Step 4: Provide a Clear and Transparent Response

After gathering all the needed information, respond to the employee clearly and straightforwardly.

If the inquiry is about company policies, explain the rules in simple terms.

For misconduct cases, inform the employee about the next steps, whether it involves a warning, temporary suspension, or a formal domestic inquiry hearing.

Step 5: Offer Solutions or Alternatives

When handling inquiries about benefits, policies, or salary concerns, it is important to find practical solutions.

For example, when an employee raises a complaint about unpaid overtime, check the records and arrange for the correct payment.

When there is disagreement about a performance review, schedule a follow-up discussion with the manager to clarify the evaluation.

Offering solutions like these helps address concerns early and prevents small issues from turning into bigger problems.

Step 6: Follow-up and Close the Inquiry

After giving a solution, check with the employee to see if the problem is solved. If they are happy with the outcome, the inquiry can be closed.

If more action is needed, continue discussing until everything is sorted out.

Steps to Conduct a Domestic Inquiry for Difficult or Escalated Inquiries

A domestic inquiry should be the final step after attempting to resolve issues through conversation or other appropriate actions.

If the problem can be addressed without going down this path, a domestic inquiry might not be necessary.

1. Sending a “Show Cause” Letter

The “show cause” letter explains the reasons for concern, listing allegations of misconduct, and sets a deadline for the employee to respond in writing. It is a sensitive step that must be done with care. Key elements of the letter include:

Simple and clear language
References to relevant company policies or the employee's contract
A specific description of the misconduct (e.g., insubordination, harassment)
A clear deadline for the employee to submit their response
A possible suspension period while the inquiry takes place, which may limit the employee’s access to company resources

2. Employee Suspension

Suspension may occur alongside the “show cause” letter or before the inquiry if necessary.

The maximum suspension is usually two weeks, during which the employee gets half their pay.

If the employee is later found not guilty, they should receive their full pay for the suspended period.

Suspension is used when it is necessary to prevent interference with the investigation or further misconduct.

According to the Employment Act, this suspension should last no longer than two weeks, with the employee receiving half their salary.

3. Preparing for the Domestic Inquiry Hearing

If the employee’s response to the letter is not satisfactory, preparations for a formal hearing begin.

Appointment of Panel Members

The panel should be unbiased and have no connection to the case.

The members should be senior to the employee and ideally come from different departments, with no prior knowledge of the matter.

Supporting the Employee

The employee should receive help to understand the inquiry process, including:

A notice of the inquiry that outlines the charges and hearing details
Enough time to prepare for the hearing
Access to necessary documents and witnesses for their defense

Conducting the Inquiry

Prosecution presents its case: The prosecution presents witnesses and evidence supporting the charges.
Employee’s chance to cross-examine: The employee can cross-examine the witnesses.
Employee’s defense: The employee can present their defense, call witnesses, and provide evidence, all of which can be cross-examined.
Chairman’s role: The chairman records everything that happens during the inquiry.
Panel’s review: Once the hearing is over, the panel reviews the evidence and discusses it.
Submission to management: The chairman sends the panel’s findings and recommendations to management for a final decision.

4. Carrying Out the Domestic Inquiry Hearing

Domestic inquiries are similar to legal proceedings, with both the prosecution and defense sides. Both can bring in witnesses and evidence.

The employee must have a fair chance to present their case.

The employer may choose to record the inquiry for future reference. If the employee is found guilty, the employer will decide on the appropriate punishment.

Immediate Termination for Serious Misconduct

An employer can terminate an employee immediately, without notice or pay, in cases of serious misconduct.

This is known as "summary dismissal." Serious misconduct includes:

Committing a crime at work, like theft or fraud
Giving or accepting bribes
Being intoxicated at work, putting others at risk

Impact of Not Conducting a Domestic Inquiry

In Malaysia, if an employee complains about unfair dismissal due to the lack of a domestic inquiry, it does not automatically help the employee’s case in the Industrial Court.

The court views the absence of an inquiry as a mistake that can be fixed through a new hearing.

Recommended Penalties for Employees Found Guilty

When an employee is guilty of misconduct, management has several options for punishment, including:

Immediate dismissal without notice
Demotion, reducing their role or responsibilities
A lighter punishment, such as a two-week suspension with half pay or denial of bonuses or salary increases

Challenges of Conducting a Domestic Inquiry

Although domestic inquiries are essential, there are some drawbacks:

Time-Consuming Process

Domestic inquiries can take a long time, disrupting operations and delaying resolutions.

Panel Independence

The independent nature of the panel may lead to the employee being found innocent.

If this happens, it can be difficult for the employer to justify termination, which may lead to legal issues.

FAQ

What is the best way to respond to an inquiry about an employee’s termination?

When answering questions about termination, employers should follow company policies and legal rules. Clearly explain why the employee was terminated and refer to the results of the domestic inquiry.

How should I handle a complaint regarding workplace discrimination?

Workplace discrimination complaints must be handled carefully. Employers should:

Conduct a thorough investigation to understand the issue.
Keep all information confidential to protect those involved.
Take the right action based on company policies and labor laws.

Can I refuse to answer an employee’s inquiry?

In most situations, employers should give clear and honest answers. However, if the inquiry involves sensitive company information or an ongoing investigation, they may only share limited details.

What should I do if the inquiry is about an ongoing investigation?

If an inquiry is about an ongoing case, inform the employee that specific details cannot be shared at the moment. However, reassure them that the issue is being addressed appropriately.

Whether the inquiry is about company policies or serious misconduct, following the right steps helps protect both the company and its employees.

Clear communication and a structured process create a fair, transparent, and productive workplace.

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