In the case of Dreamland Corporation v. Choong Chin Sooi, the employer dismissed the employee for alleged misconduct without conducting a domestic inquiry. The employee believed he was unfairly dismissed and brought the case to the Industrial Court, which ruled in his favour and awarded compensation. Since no domestic inquiry was held, many assume that this failure was fatal to the employer's case. However, the court's reasoning showed otherwise. The dismissal was found to be unjustified because the employer failed to present credible evidence. The absence of a domestic inquiry was noted, but it was not the deciding factor. This leads to an important question for HR practitioners. Is the absence of a domestic inquiry truly fatal?

Legal Requirements under the Employment Act 1955

Under Section 14 of the Employment Act 1955, an employer must carry out a due inquiry before dismissing an employee for misconduct. However, the Act does not define what amounts to a due inquiry, nor does it require a formal domestic inquiry. What matters is that the employee is informed of the allegation, given a fair chance to respond, and that the employer investigates the matter properly before making a decision. The process must reflect the principles of natural justice, particularly the right to be heard, the right to a fair and impartial process, and the obligation to decide based on facts, not assumptions.

Over the years, the Industrial Court has consistently held that a domestic inquiry is not legally mandatory. Its absence is not fatal in itself. But if the employer fails to show that the dismissal was fair, properly investigated, and based on reliable evidence, the case is likely to collapse. In practice, the absence of a domestic inquiry often becomes fatal when there is no supporting documentation or when the disciplinary process appears rushed or biased.

The Critical Role of a Domestic Inquiry in Fair Dismissal

On the other hand, a properly conducted domestic inquiry remains one of the strongest tools an employer can rely on. In Hong Leong Equipment Sdn Bhd v. Liew Fook Chuan, the Court of Appeal gave weight to the employer’s decision to conduct a domestic inquiry and noted that it demonstrated procedural fairness. While the findings of the domestic inquiry are not binding on the Industrial Court, they can serve as a solid defence when the employer is required to prove just cause and excuse for dismissal.

As a HR practitioner, you are not just managing misconduct, but you are also managing risk. A domestic inquiry may not be legally required, but when a dismissal is challenged, it is often your strongest defence. It demonstrates that the company acted fairly, gave the employee a proper opportunity to be heard, and made a decision based on facts. Where the process is weak, undocumented, or poorly handled, the absence of a domestic inquiry can prove costly.