Manager
Attorney at Law (Germany)
Malaysia: Liability of Third Parties for Unfair Termination Claims in the Industrial Court
- ASEAN Newsflash - Q2 2026
- Malaysia Employment Law
- No third party liability for unfair termination in Industrial Court claims
- Doctrine of separate legal entity
In the recent case Hubline Berhad v Intan Wazlin Binti Ab Wahab & 39 ORS the Court of Appeal made clear that third parties, such as related or parent companies, cannot be made liable for unfair termination claims in the Industrial Court when they are not the actual employer of the dismissed individual but the actual employers have become insolvent or have no assets.
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What employers need to know
Legal grounds
The doctrine of separate legal entity applies uniformly across all legal fora.
The mere fact that the actual employer has been wound up does not justify imposing liability on third parties who are legally distinct and not privy to the employment contract. To avoid confusion, this does not alter the general authority of the Industrial Court under s.29(a) of the Industrial Relations Act 1967 to order third parties to join the proceedings.
Exceptions
Claimants seeking to make third parties liable must show that these parties were responsible for the termination of employment.
What employers and relevant third parties should consider
Carefully manage contractual relations with employees to minimize the risk of a situation arising in which an employee seeks to hold a third party liable for a dismissal notwithstanding that the latter is not the employer:
- Ensure clear identification of the employer in employment contracts.
- Retain all correspondence throughout the course of employment.