3 October 2025

Our Partner in the Employment and Industrial Relations Practice Group, Thavaselvi Pararajasingam, together with Senior Associate, Sareeka Balakrishnan, successfully represented Affin Bank Berhad (“the Bank”) in a notable appeal before the Court of Appeal. The appeal concerned the High Court’s decision to quash Industrial Court Award No. 2353 of 2022 which had previously upheld the former employee’s (“the Respondent”) termination of employment pursuant to Clause 25 of the Letter of Appointment. Clause 25 expressly made the Respondent’s continued employment conditional upon the Bank receiving satisfactory references covering the preceding seven (7) years from the Respondent’s previous employers, with such assessment to be determined at the sole discretion of the Bank. The Court of Appeal comprising of Justice Dato’ Lim Chong Fong, Justice Datuk Hayatul Akmal Binti Abdul Aziz and Justice Dato’ Nadzarin Bin Wok Nordin unanimously allowed the appeal and reinstated Industrial Court Award No. 2353 of 2022 on the following grounds:

(1) The Bank had lawfully exercised Clause 25 to terminate the Respondent’s employment with just cause and excuse, based on a negative reference. The Court affirmed this as part of the parties’ contractual bargain.

(2) On the issue of the alleged denial of the right to be heard, although the Respondent was not afforded an opportunity before termination, this was cured by the proceedings before the Industrial Court. Relying on Wong Yuen Hock v. Syarikat Hong Leong Assurance Sdn Bhd & Another Appeal [1995] 3 CLJ 344, the Court reiterated that a hearing before the Industrial Court satisfied the requirements of natural justice. Consequently, there was no need for the Industrial Court to explicitly state that the rules of natural justice had been observed, since such compliance is implicit in its adjudication.

(3) The High Court’s reliance on the Supreme Court case of Shamsiah Ahmad Shah v. Public Services Commission Malaysia [1991] 1 CLJ (Rep) 419 was found to be misplaced as that case involved dismissal for misconduct in the public service. In contrast, the present case involved a private sector contractually agreed termination arising from a negative reference linked to the Respondent’s prior employment.

Accordingly, the Court of Appeal concluded that the High Court erred in law and fact, warranting appellate intervention.

KEY TAKEAWAYS
Contractual termination clauses, such as Clause 25, are enforceable where parties have clearly agreed that continued employment is conditional upon satisfactory prior employment references especially, where the assessment is contractually reserved at the employer’s sole discretion. Industrial Court proceedings can cure lack of prior opportunity to be heard thereby fulfilling the requirements of natural justice, as affirmed by the Federal Court in Wong Yuen Hock. Courts will distinguish between public sector misconduct and private contractual disputes particularly, where the basis of termination is negative reference that stems from prior employment conduct rather than misconduct in current employment. Judicial intervention is justified when the lower court misapplies legal principles or overlook contractual framework agreed between parties.

For more insight into this area of law, please contact our Partners in our Employment & Industrial Relations Practice Group:
Wong Keat Ching
Thavaselvi Pararajasingam
Teoh Alvare

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