By An employee takes Ketum while on leave. A few days later he returns to work and tests positive in the company's urine test.
Can the company dismiss him for it?
The employee may well think:
"I didn't take it at work, and it wasn't even a working day. What business is it of the company's?"
Yet in a recent Industrial Court case, the Court sided with the company. It is a case Malaysian employers and HR practitioners should pay close attention to.
What happened?
On 12 October 2023, Elektrisola (Malaysia) Sdn Bhd carried out random urine tests on 27 employees, including the claimant.
The test screened for a range of prohibited or controlled substances, including mitragynine / kratom, commonly known as Ketum.
The employee tested positive for Ketum. According to the published case materials, after being informed of the result, he admitted that he had taken Ketum.
However, one of his main explanations was that he had taken it on 8 October 2023, while on leave and outside company premises. In other words, he had not taken it during working hours or at the workplace.
Which raises the question: does a company have any right to act on what an employee does in his own time?
The company did not dismiss him on the spot
HR teams should take particular note of this. On receiving the test result, the company did not simply say:
"Positive. Don't bother coming in tomorrow."
Instead, it followed a disciplinary process:
- 12 Oct 2023Random urine test; result positive for Ketum
- SuspensionEmployee placed on suspension
- 22 Nov 2023Company issues a Show Cause Letter
- 20 May 2024Domestic Inquiry (DI) held
- 12 Jun 2024Company issues a dismissal letter
At the DI, the employee again admitted taking Ketum but maintained that he had done so while on leave and outside company premises. The Domestic Inquiry Panel ultimately found the charges against him proven.
What was the employee charged with?
The case turned on two charges.
Charge 1: Reporting to work under the influence of a prohibited substance
That is, returning to work while under the influence of a prohibited substance. The Industrial Court accepted the evidence and found that the company had proven the first charge.
Although the employee insisted he had taken Ketum several days earlier while on leave, the urine test result and the other evidence in the case ultimately supported the company's charge.
Charge 2: Acting in a manner prejudicial to the interests or reputation of the Company
The company also contended that the employee's conduct was prejudicial to its interests or reputation. The evidence showed that the company had previously come to the attention of the relevant enforcement authorities because of drug-related incidents involving its employees.
This was therefore not merely a matter of an employee's private life; it potentially affected the company's operations, its reputation and its exposure to regulatory action. The Industrial Court found that the company had also proven the second charge on the balance of probabilities.
How did the Industrial Court decide?
The Industrial Court ultimately upheld the company's dismissal. In other words, this was not a case of "employee tests positive for Ketum, company dismisses him, company loses". On the contrary, the company proved the misconduct and the dismissal was upheld.
But employers and HR should not draw the wrong conclusion: "From now on, if an employee fails a drug test, we can just sack him." That is not the real lesson of this case.
JP Asia HR & Employment Law Analysis
What really matters in this case goes beyond Ketum. The lessons for employers and HR are these:
1. Conduct outside working hours is not always the company's business, but it is not always beyond it either
Many employees believe: "This is my private time; the company can't interfere." In principle, an employer certainly cannot intrude into an employee's private life without limit.
However, where conduct outside work has a sufficient link to the employee's job performance, workplace safety, the company's legitimate interests or its reputation, the position may be different.
So HR should not stop at asking "Did it happen at the workplace?" The better question is: "Does this conduct have a sufficient connection with the employment relationship?"
2. A positive drug test ≠ automatic grounds for dismissal
This is the mistake companies most often make. Even with a positive result, the company should still consider:
- Was the testing procedure reliable?
- Who carried out the test?
- Were those involved properly trained?
- Are the samples and results fully documented?
- Did the employee admit to it?
- Does the company Policy clearly prohibit the conduct?
- Was the employee given an opportunity to explain?
- Is the misconduct serious enough to justify dismissal?
If none of this is in place and the company terminates on the strength of a test result alone, it may face evidential and procedural problems when the matter reaches the Industrial Court.
3. A Show Cause Letter is not a letter "informing you that you are guilty"
The real purpose of a Show Cause Letter is to tell the employee: this is the misconduct the company believes you may have committed; please explain.
The charge must therefore be as clear as possible: What happened? When? Which rule was breached? What facts is the company relying on? The employee must then be given a reasonable opportunity to respond.
If, before issuing the Show Cause Letter, the company has already decided "whatever you say, you're fired", the integrity of the entire disciplinary process may be called into question.
4. The value of a Domestic Inquiry lies in creating a process that can withstand scrutiny
Many employers ask: "Do we have to hold a DI every time an employee does something wrong?"
The real question is not simply "Was a DI held?" but: did the company ultimately have a fair, complete disciplinary process that can withstand scrutiny by the Industrial Court?
In this case, the company did not dismiss the employee the moment it discovered the problem. From the test, through suspension, the Show Cause Letter and the Domestic Inquiry, to the final dismissal, every stage left a proper record. When a case reaches the Industrial Court years later, those documents and that evidence become crucial.
5 Key Takeaways for Employers and HR
- Don't jump to termination the moment you see misconduct. Investigate first, then decide.
- Preserve the evidence. Test reports, CCTV, WhatsApp messages, emails, witness statements, attendance records and the like may all become key evidence in a future case.
- Draft the charge clearly. Don't just write "Your conduct is unacceptable." What conduct? What did it breach? When did it happen? Be specific.
- Give the employee a genuine opportunity to explain. A Show Cause Letter is not a formality; the employee's explanation must be genuinely considered.
- The penalty must be proportionate to the seriousness of the misconduct. Not every act of misconduct automatically justifies dismissal. The company must still weigh the nature of the misconduct, the employee's position, the risks involved, his past record and other relevant factors.
A Reminder from JP Asia
In many Industrial Court cases, companies lose not because the employee did nothing wrong. Often the real problem is that the company knew the employee had done wrong but could not prove it.
An employer believing an employee is at fault and a company being able to prove that fault before the Industrial Court are two very different things.
What a business really needs is not just an Employment Agreement or an Employee Handbook, but a complete, workable process:
- Policy
- Investigation
- Show Cause
- Domestic Inquiry
- Decision
- Documentation
- Termination Process
Managing people cannot rely on gut feeling. When a company takes disciplinary action, let alone terminates an employee, every step may become evidence examined by the Industrial Court years later.
JP Asia's legal advisory team helps businesses build a complete process covering Policy, Show Cause, Domestic Inquiry and Termination.
Disclaimer: This article is based on publicly available Industrial Court case materials and is provided for business management, HR and Employment Law educational purposes only. It does not constitute legal advice on any particular case. Every employee disciplinary and termination matter should be assessed independently on its own facts, documents, company policies and the applicable law.