Was Your Retrenchment At Closure Handled Fairly?
Your company is closing down, and you are not sure your retrenchment was handled the right way.
Your company is shutting down, and a retrenchment letter has landed on your desk. A genuine closure is a real reason to end your job, but how it was carried out still matters.
Can my employer retrench everyone when the company closes?
A genuine closure or winding up is generally accepted as a real reason for retrenchment, since the business itself is ending. That does not mean every detail of how it was handled is automatically fair.
Selection, notice and any promised entitlements still matter, even when the underlying reason for letting staff go is not in question.
What is LIFO, and when can my employer depart from it?
Last In First Out (LIFO) is the conventional principle for choosing who goes first within an affected group. The most junior by service usually leaves first, though an employer may depart from LIFO if it has sound reasons.1
If you were retrenched out of turn with no explanation, that gap is worth raising.
What if I am not sure who my real employer was?
Group structures can make this unclear, especially if you moved between related companies or your payslip changed names over time. Your actual employer of record affects who a claim is made against, so this is worth checking early.
Keep every payslip and contract you have, since the company name on each one may differ.
Can I get government support while I sort this out?
Yes. PERKESO runs the Employment Insurance System (EIS), which gives temporary financial help to employees who lose their jobs involuntarily. That includes retrenchment or closure, along with a Job Search Allowance for three to six months. You must apply within 60 days of your termination.2
EIS is a separate government scheme, not a substitute for an unfair dismissal claim. You can pursue both.
What is the deadline if I think the process was unfair?
If you believe the selection or the closure itself was not genuine, that is worth raising. You still have 60 days from your dismissal to lodge a written claim with the Director General of Industrial Relations.3
That claim is a Section 20 representation, and you can work out your exact deadline once you have your last working date.
What to do this week
Apply for EIS as soon as you can, since that window runs alongside everything else. Save your retrenchment letter, payslips and any message about how staff were selected.
If the selection or the closure itself looks doubtful, get a read on your situation before the 60 days runs down.
If your job is ending because the company is closing, it helps to check both your income support and whether the process itself was fair. Tell us what you were told, and we can help you see your options.
Common questions
Is my company allowed to retrench everyone when it closes?
A genuine closure is generally accepted as a real reason to retrench staff, since the business itself is ending. That does not make every detail of how it was carried out automatically fair.
What is LIFO and does my employer have to follow it?
Last In First Out is the usual principle for deciding who leaves first within an affected group. An employer can depart from it, but needs a sound reason, not just a preference.
Can I claim EIS and pursue an unfair dismissal claim at the same time?
Yes. The Employment Insurance System is a separate government scheme from an unfair dismissal claim, so pursuing one does not stop you from pursuing the other.
What if I am not sure who my actual employer was?
Group companies sometimes move staff between related entities, so your payslip name may not match who you expect. Keep every payslip and contract, since this affects who any claim is made against.
How long do I have to apply for EIS or lodge a claim?
Both run on a 60-day window, but they are separate processes with separate applications. Handling them close together, rather than one after the other, uses your time better.
Sources
- Last In First Out (LIFO) is the conventional, objective principle for selecting employees for retrenchment; an employer may depart from LIFO but must justify doing so with sound reasons, and any retrenchment must be for a genuine redundancy. Richard Wee Chambers, Points on the Law of Retrenchment in Malaysia
- Under the Employment Insurance System Act 2017, PERKESO's Employment Insurance System gives temporary financial help, including a Job Search Allowance for three to six months, to employees who lose their jobs involuntarily through retrenchment or closure, provided they apply within 60 days of termination. malaysia.gov.my, Employment Insurance Scheme (EIS)
- An employee who considers they were dismissed without just cause or excuse may make a written representation to the Director General of Industrial Relations within 60 days of the dismissal (Section 20, Industrial Relations Act 1967). Mah Weng Kwai & Associates, Unfair Dismissal
Keep reading
If your job is ending because the company is closing, it helps to check both your income support and whether the process itself was fair. Tell us what you were told, and we can help you see your options.