I was retrenched. Was it genuine, and can I go to the Industrial Court?

Your employer says your position no longer exists. You are given a letter, a termination payment and told to leave by the end of the month. Months later, you see your job advertised under a new title. Retrenchment is a recognised reason for ending employment, but only when it is genuine and carried out fairly.

Retrenchment is still a dismissal

For the purposes of the Industrial Relations Act 1967, a retrenched workman has been dismissed. If you consider you were dismissed without just cause or excuse, you may make written representations to the Director General of Industrial Relations to be reinstated (s.20(1)).

The 60-day deadline

Representations must be filed within 60 days of the dismissal. If you were dismissed with notice, you may file during the notice period, but not later than 60 days after it expires (s.20(1A)). This deadline is strict.

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What the Industrial Court looks at

If the matter does not settle at conciliation, the Director General may refer it to the Industrial Court (s.20(3)). The Court acts according to equity, good conscience and the substantial merits of the case without regard to technicalities (s.30(5)). It may also consider an approved code on employment practices (s.30(5A)). In retrenchment cases, questions usually include:

• Was there a genuine redundancy? Was there a real reduction in the work, or a reorganisation, restructuring or closure, rather than a pretext to remove a particular person?
• Was the selection fair? Did the employer use objective criteria, and apply them consistently?
• Was there consultation and notice? Were employees told in advance and given a chance to respond?
• Were alternatives considered? Transfers, reduced hours or redeployment.

The employer must prove the redundancy and the fairness of the process.

What you can get

The Court may order reinstatement, or compensation in lieu of reinstatement, and backwages. The Second Schedule limits backwages to 24 months from the date of dismissal, based on last-drawn salary, with a deduction for post-dismissal earnings, no compensation for future earnings, and account taken of any contributory misconduct.

Separately, employees covered by the Employment Act 1955 may be entitled to termination benefits under the regulations made under that Act.

What should I do first?

1. Keep the retrenchment letter and any notice of restructuring.
2. Note the 60-day deadline from the date of dismissal or end of notice.
3. Gather evidence: organisation charts, job adverts, emails about restructuring, who else was retained.
4. Do not sign a release you do not understand before taking advice.
5. File representations with the Industrial Relations Department.

Example

A company retrenches a senior executive, citing a downturn. Three months later it hires a new person to do the same job under a different title. The executive files representations within 60 days. At the Industrial Court, the employer cannot show a genuine reduction in work, and the Court finds the dismissal was without just cause.

Common mistakes

• Missing the 60-day deadline while negotiating.
• Signing a full and final settlement without advice.
• Assuming a termination payment means the retrenchment is valid.
• Not collecting evidence of the replacement or redeployment of others.

When to speak to a lawyer

Speak to a lawyer soon after you receive the retrenchment notice, before signing any settlement, and before the 60-day deadline. See our employment page; you can also contact us.

Frequently asked questions

I accepted the retrenchment payment. Can I still claim?

Accepting a payment does not automatically bar a claim, but signing a release can. Take advice on what you signed.

Can my employer retrench me and keep foreign workers?

The order in which employees are selected is one of the matters the Court looks at. The Employment Act 1955 also has rules on terminating local employees while foreign employees are retained.

Can I sue in the civil court instead?

Once the Industrial Court makes an award, it bars a court action for damages for wrongful dismissal (s.20(4)).

Sources & fact check

Legal points in this article were checked against the primary sources below. The law can change; this is general information, not legal advice.

1. Industrial Relations Act 1967 (Act 177), including section 20, AGC Laws of Malaysia
2. Employment Act 1955 (Act 265), including sections 19 and 69, AGC Laws of Malaysia
3. Industrial Court of Malaysia (Mahkamah Perusahaan), official portal

Fact-checked on 18 Oct 2026