As an employer, there may come a time when you need to deal with a serious workplace issue — such as an employee caught stealing, refusing instructions, or being absent without permission.

It’s natural to feel frustrated, but making a termination decision based on emotion or assumptions can lead to serious consequences.
Under Malaysian labour law, you must conduct a fair and proper investigation before taking disciplinary action.

That’s where the Domestic Inquiry (DI) process comes in. It protects both the company and the employee — ensuring fairness, transparency, and compliance with the law.

What is a Domestic Inquiry?

A Domestic Inquiry (DI) is an internal investigation process carried out when an employee is suspected of misconduct. It allows the employer to gather facts, hear both sides of the story, and make a fair decision before taking any disciplinary action.

This process helps prevent unfair dismissal claims, supports just decision-making, and maintains trust between management and staff.

Common cases that may require a Domestic Inquiry include:

• Theft or fraud at the workplace

• Repeated absenteeism or insubordination

• Harassment or violence at work

• Violation of company policies or ethical rules

Legal Framework for Domestic Inquiries in Malaysia

The Employment Act 1955 and the Industrial Relations Act 1967 set out the legal foundation for handling misconduct cases:

• Section 14(1) of the Employment Act 1955 – Employers must conduct a proper inquiry before punishing or dismissing an employee.

• Section 20(1) of the Industrial Relations Act 1967 – Employees who feel they were unfairly dismissed can file a complaint with the Industrial Relations Department.

Failure to conduct a fair inquiry can result in the Industrial Court ordering reinstatement or compensation for the employee — even if misconduct actually occurred.

Types of Domestic Inquiries

Employers may face different types of inquiries depending on the situation:

1. Employee-Related Inquiries

For issues related to work performance or employment conditions, such as:

• Salary disputes or delays

• Performance review disagreements

• Employment contract or benefits issues

2. Policy or Procedure Inquiries

For clarifying or enforcing company rules and regulations, including:

• Leave, working hours, and overtime policies

• Workplace conduct and dress code

• Compliance with SOCSO, EPF, and statutory contributions

3. Disciplinary or Misconduct Inquiries

For serious violations such as:

• Theft, fraud, or corruption

• Harassment or workplace violence

• Repeated absenteeism or refusal to follow orders

Step-by-Step Guide to Handling Domestic Inquiries

Step 1: Issue a Show Cause Letter

When misconduct is suspected, the first step is to issue a Show Cause Letter explaining the allegation and giving the employee a chance to respond in writing (usually within 48–72 hours).

Step 2: Consider Suspension (If Necessary)

If the case involves serious allegations, the employer may suspend the employee for up to two weeks with half pay, to prevent interference with the investigation.
If the employee is later found not guilty, full pay must be restored.

Step 3: Form a Neutral Inquiry Panel

Appoint a panel that is impartial and not directly involved in the case. Members should be senior to the employee and from different departments.

Step 4: Conduct the Inquiry Hearing

During the hearing:

• The employer (prosecutor) presents evidence and witnesses.

• The employee has the right to cross-examine witnesses and present their own defense.

• The chairman records the entire process and ensures fairness.

• Once completed, the panel reviews the findings and submits a recommendation to management.

Step 5: Decide on Disciplinary Action

After reviewing all evidence, management decides on an appropriate action — such as warning, suspension, demotion, or dismissal.
For serious misconduct (e.g., theft or fraud), immediate termination may be justified under “summary dismissal.”

Why Domestic Inquiries Are Important

Conducting a DI protects employers from unfair dismissal claims and shows that your organisation values fairness and due process. It also helps maintain:

• Legal compliance with the Employment Act

• Transparency in decision-making

• Employee trust and organisational integrity

Failing to conduct one may expose your company to unnecessary legal and financial risks.

Common Challenges in Conducting a DI

• Time-consuming process – Organising hearings, reviewing evidence, and documenting everything takes time.

• Panel independence – Ensuring impartiality is crucial; otherwise, the process may be challenged later.

• Documentation gaps – Missing or incomplete records can weaken your case if the matter reaches the Industrial Court.

How Pandahrms Helps Employers Stay Compliant

While the DI process itself involves human decision-making, Pandahrms helps HR teams manage all supporting documentation efficiently.

With Pandahrms, you can:

• Keep a secure record of employee misconduct reports, show cause letters, and inquiry findings

• Track disciplinary actions alongside attendance, performance, and leave data

• Centralise all HR documentation for better transparency and audit readiness

By digitalising HR records, Pandahrms ensures that your documentation is always complete and accessible when needed — helping employers maintain compliance and make informed decisions with confidence.

Key Takeaway

A Domestic Inquiry is not just a formality — it’s an essential process that ensures fairness and legal compliance in disciplinary actions.

By following proper procedures and using Pandahrms to manage your HR records efficiently, employers can handle misconduct cases confidently, protect their organisation, and uphold workplace integrity.