By The employee only took some of the company’s Free-of-Charge (FOC) gifts. It wasn’t cash, and it wasn’t merchandise worth thousands or tens of thousands of ringgit.
So is it really serious enough for the company to dismiss the employee outright? Many employees’ first reaction might be:
“These things were free anyway, and they’re hardly worth anything.”
The boss, on the other hand, might think:
“Taking without asking is dishonest, no matter how much it’s worth.”
Which view is correct? In September 2026, the Industrial Court dealt with exactly this question in R.H. v GCH Retail (Malaysia) Sdn Bhd, Award No. 1592/2026. In the end, the company won.
The Industrial Court found that the misconduct had been proven on the balance of probabilities, and held that the dismissal was with just cause and excuse.
But what bosses and HR should really learn from this case is not that “an employee taking company items = automatic grounds to sack”. What they should really understand is this:
When an employee takes items within the company’s control without authorisation, the issue can escalate from “what is the item worth?” to “can integrity and trust still be maintained?”
What happened?
The Claimant was an employee of GCH Retail (Malaysia) Sdn Bhd. The company dismissed the employee on the grounds that the employee had allegedly taken Free-of-Charge (FOC) items from the Customer Service Counter without authorisation.
In other words, the items in dispute were not ordinary merchandise sold at a retail price, but the company’s FOC items / free gifts. That is what makes the case so interesting: if something is “free”, can an employee simply help themselves?
The answer clearly cannot turn on a Retail Price of RM0 alone. The real question is: was the employee entitled to take it? Did the employee have the company’s authorisation?
The core issue: Unauthorised Taking
Based on the Industrial Court’s case summary, the core questions the Court had to decide included:
- Did the employee take the FOC items without authorisation?
- If so, was this misconduct sufficient to justify the company’s dismissal?
Assessing the evidence on the Balance of Probabilities, the Industrial Court found that the company had succeeded in proving the misconduct. The Claimant’s claim was therefore dismissed, and the dismissal was upheld by the Industrial Court.
JP Asia HR & Employment Law Analysis
This case is ideal for correcting a common misconception: “The item isn’t worth much, so it isn’t serious.” In Employment Law and workplace discipline, Monetary Value and Misconduct Severity are not necessarily the same thing.
Take a simple example: an employee takes RM10. The issue may be about more than the company losing RM10. What the company may really be worried about is:
“If an employee knowingly takes something under the company’s control without authorisation, can I still trust them to handle the company’s cash, stock, gifts or other assets in future?”
For some misconduct, the core issue is not Loss, but Trust.
Lesson 1 | “Free” does not mean “without an Owner”
This is where many employees get it wrong. All of the following items may have no normal retail value:
- FOC Sample
- Promotional Gift
- Supplier Free Gift
- Damaged Stock
- Expired Stock
- Display Unit
- Rejected Item
- Items due for disposal
But that does not automatically mean “the company doesn’t want it anyway, so I can take it”. As long as the items are still within the company’s control, employees should in principle deal with them in accordance with the company’s policy and authorisation process.
So the real question is not “does this item have a price?”, but “does this employee have the authority to take it?”
Lesson 2 | A low-value item does not mean the company can never Dismiss
Suppose an employee takes an item worth RM5 without authorisation. Does the fact that it is only RM5 mean the company can at most issue a warning? It is not that simple a calculation. In dishonesty-related misconduct, the company may need to consider:
- Was the act deliberate?
- Did the employee know it was not authorised?
- Was there any concealment?
- Is this the first time, or has it happened before?
- Does the employee’s position involve cash / stock / assets?
- Does the company have a clear policy?
- How does the employee explain it?
- Has the trust and confidence between the parties been seriously affected?
An RM5 item does not mean the misconduct is only worth RM5.
Lesson 3 | But the company cannot say “taking an item = automatic Dismissal” either
Bosses should not read too much into this case either. The Industrial Court upheld the dismissal in this particular case; it did not establish a mechanical formula:
Employee takes company item = Gross Misconduct = Automatic Dismissal ✗
The company should still investigate, for example:
- Did the employee believe a Supervisor had already given permission?
- Are employees normally allowed to take such items freely?
- Is there a long-standing practice? Do other employees do the same?
- Has the company tacitly allowed it in the past?
- Is the Policy clearly written?
- Does the employee have a reasonable explanation?
All of these facts can affect the final outcome.
Lesson 4 | Company Policy must spell out how “Free Items” are handled
Many companies’ Employee Handbooks say: “Employees shall not steal Company property.” But real-life disputes are rarely that simple. An employee might say:
“This isn’t Company Property, the Supplier gave it.” “This is a Free Gift.” “These things were going to be thrown away.” “The Customer didn’t want it, so I took it.”
So if your company deals with large volumes of Samples, Promotional Gifts, FOC Products, Returned Goods, Damaged Goods, Expired Goods, Scrap or Supplier Gifts, it is best to state clearly in your Employee Handbook / SOP how these items should be handled, and who can approve an employee taking them away.
Lesson 5 | In a Dishonesty Case, Evidence is especially important
If the company suspects an employee has taken something without authorisation, don’t immediately say: “CCTV caught you taking it. Don’t come in tomorrow.” The company should first preserve the evidence, for example:
- CCTV Footage
- Stock Records
- FOC Records
- Witness Statements
- WhatsApp / Messages
- Employee Explanation
- Company Policy
- Authorisation Records
Then establish: what actually happened? Did the employee have permission? Who can approve it? Did the employee know the rules?
“I saw him take it” is not enough: the Charge must be framed correctly too
Suppose CCTV shows an employee putting 3 gift items into their own bag. The Show Cause Letter should ideally not just say “You committed theft.” The company should first describe the facts accurately:
- When?
- Where?
- What was taken?
- How many?
- Why is it considered unauthorised?
- Which policy was breached?
This lets the employee know exactly what they need to answer. Especially with serious allegations such as Theft / Dishonesty, HR needs to be all the more careful with its wording.
What does the company really need to prove?
When handling cases like this, JP Asia recommends that HR break the issue down into several layers:
- Layer 1
- Who controls the item? Is it Company Property / a Company-controlled item?
- Layer 2
- Did the employee take it? What is the evidence?
- Layer 3
- Did the employee have Authority? Did a Supervisor approve it?
- Layer 4
- Did the employee know Approval was required? What do the Policy, SOP and past practice say?
- Layer 5
- How does the employee explain it? Was the explanation genuinely investigated?
- Layer 6
- Severity of the Misconduct: has trust and confidence been seriously damaged?
Only then decide on the Appropriate Punishment.
Why should Retail, Warehouse, F&B and Manufacturing pay particular attention?
This case is especially relevant to the following industries:
- Retail
- Supermarket
- Warehouse
- F&B
- Manufacturing
- Distribution
- Pharmacy
These industries deal every day with large volumes of Stock, Samples, Free Gifts, Damaged Items, Expired Products, Returns and Promotional Items. If the company has no clear rules, employees may think: “It can’t be sold anyway, so what’s wrong with taking it home?” while the Manager thinks: “Taking it without approval is dishonesty.”
In the end, an item worth less than RM10 can turn into an Industrial Court case.
JP Asia recommends: don’t wait until an employee takes something to create a Policy
Companies can put in place a simple, clear Company Property / FOC / Disposal Policy in advance that at least sets out:
- 1No Company / Supplier / Promotional Items may be removed from the premises without approval
- 2Damaged / Expired / Rejected / FOC Items must still be handled according to the SOP
- 3Which positions hold Approval Authority
- 4Whether a record must be kept once an employee is given approval
- 5Taking items without authorisation may constitute Misconduct
That way, when something actually happens, HR is not left with nothing more than: “Surely this is just common sense?” In Employment Law, writing things down clearly is usually safer than assuming everyone understands.
One thing every boss should remember
The real lesson of this case is not “you can sack someone for taking RM5”, but rather:
Integrity cannot be measured by the price of an item alone.
At the same time, a company cannot skip the investigation and the evidence just because it suspects an employee of being dishonest. The correct sequence should be:
- Incident
- Preserve Evidence
- Investigation
- Show Cause
- Employee Explanation
- Further disciplinary process (where applicable)
- Evaluate Misconduct
- Determine Proportionate Punishment
This is the disciplinary process a company should really have in place. For the further disciplinary process, see Domestic Inquiry (internal disciplinary hearing).
A reminder from JP Asia
For many bosses, the real problem is not “did the employee do something wrong?”, but: “I know he did something wrong, but how do I prove it and deal with it lawfully?”
JP Asia Capital helps Malaysia SMEs build a law-backed HR Management System that can actually be put into practice:
- Employee Handbook
- Code of Conduct
- Investigation
- Show Cause
- Domestic Inquiry
- Disciplinary Action
- Termination
Prevention always saves more time, and more money, than dealing with things after they happen.
JP Asia’s legal advisory team helps companies build a complete process covering the Code of Conduct, Company Property Policy, investigations and Domestic Inquiry.
Disclaimer: This article is based on publicly available Industrial Court Award materials and is intended solely for educational purposes in business management, HR and Employment Law. It does not constitute legal advice on any specific case. Whether an employee’s unauthorised taking of company items amounts to misconduct sufficient to justify dismissal must be assessed independently based on the actual facts, the nature of the items, company policy, authorisation, the employee’s explanation, the evidence and other relevant circumstances.