Case examines whether the delegation of verification tasks absolves senior employees from exercising due diligence before payment approvals
The Industrial Court of Malaysia recently dealt with a case involving a head of health, safety and environment who was dismissed for allegedly approving false attendance claims submitted by an external subcontractor without proper verification.
The worker argued that verification was not his responsibility and that charges lacked proper particulars. The company maintained that as a senior manager, he failed to exercise due diligence in approving claims.
The court examined whether the company had proven misconduct charges and whether dismissal was justified.
Employment background and company subsidiaries
According to the case’s records (no. 10/4-1177/22), the worker commenced employment in 2012 following a merger between two petroleum companies. He was redesignated as head of health, safety and environment with a subsidiary company.
The worker was transferred between subsidiaries, ultimately joining a wholly owned subsidiary of the holding company in mid-2021. He remained employed until his dismissal in early 2022 with a last drawn monthly salary of RM31,893.
The worker's scope of work involved ensuring the company complied with health, safety and environmental policies and procedures.
He was responsible for the overall safety and wellbeing of employees within the company. The worker developed and implemented safety programmes to minimise accidents and health hazards at the workplace. His role required providing technical support for safe project deliverables.
The disciplinary proceedings were conducted by the holding company for alleged misconduct occurring between early 2019 and late 2021.
The misconduct occurred whilst the worker was employed with a different subsidiary. However, disciplinary proceedings were initiated only after the worker's transfer to the current subsidiary.
An interim award had previously determined that the holding company was the worker's true employer.
Subcontractor claims and discovery of irregularities
The matter began when the worker received a call seeking clarification regarding work-related incidents. One incident related to purported fraudulent claims made by an external subcontractor from an independent service provider.
However, the worker was not informed that the call was part of any investigation into him. The subcontractor was a lead trainer who provided health, safety and environment training services to workers.
The subcontractor's services were remunerated at a daily rate of RM300 based on his attendance. A human resources executive received an email from a department executive reporting that the subcontractor's timesheet was inconsistent with his biometric eye scan records.
The subcontractor had allegedly fabricated his own daily attendance. The executive requested the subcontractor's invoice claims and attendance records for cross-checking against biometric eye scan records.
Upon comparison between the subcontractor's attendance sheets and his biometric eye scan, the executive revealed discrepancies and inconsistencies. The subcontractor's claims were suspected of being falsified or forged to obtain payment after approval by the worker.
An investigating officer was appointed to further investigate the forged attendance claims. The investigation aimed to verify allegations and determine the extent of impact.
Investigation findings and charges levelled
The investigation revealed that the subcontractor created and submitted his own eye scan records. He did not use official records from HR when submitting claims.
The subcontractor had altered five training attendance forms by striking off original trainer names and writing his own. In his written statement, he admitted to submitting false claims by including dates when he was not present.
A total of 31 eye scan records were found to have been forged. The forgery covered 316 days of false claims, resulting in a loss of RM94,800, including RM7,500 pending payment. The worker, in his capacity as head of department, had been approving the subcontractor's false claims for processing payments.
The investigation also identified that the worker's subordinates failed to review and verify the claims submitted.
The worker received a show-cause letter requiring him to respond to charges. The first charge stated he had approved the subcontractor's attendance record, which was found to be a false claim. His failure to check or verify the false attendance record caused losses to the company.
The worker responded and denied both charges on the grounds that verification was carried out by his subordinates. He maintained he only approved claims after confirming that the double verification process had been carried out.
Worker's defence and procedural objections
The worker contended that the domestic inquiry was fundamentally flawed and should be deemed invalid. The charges were vague and failed to specify particulars such as dates, amounts or specific acts alleged.
The minutes of the domestic inquiry were never provided despite his written request. The worker argued that key documents were introduced during the domestic inquiry without prior disclosure to him.
The worker's primary defence was that verifying attendance records was not his responsibility. The task of verifying and checking claims fell to his subordinates. The worker's stance was that his role as head of department was to approve claims, not verify them.
He explained that the standard operating procedure he initiated for processing claims involved subordinates conducting verification before documents reached him.
However, during testimony, the worker admitted he had a duty to ensure all documents were genuine before granting approval. When questioned whether verifying the subcontractor's claim was part of his responsibility, the worker responded affirmatively.
The worker also admitted he was not denying that the subcontractor falsified documents. The subcontractor had admitted this himself during the investigation.
Court's evaluation of managerial responsibilities
The court found that the worker's role as head of department was not merely operational but managerial. His job required active oversight and leadership with authority to approve necessary resources.
The worker's role involved not just technical know-how but active leadership, ethical conduct and accountability. The level of responsibility was heightened when it involved approval of payments directly impacting financial integrity.
The court stated that the worker's role required him to exercise independent judgment and oversight over all claims. Even if subordinates performed initial verification and checks, the ultimate responsibility rested with the worker.
The court emphasised that delegation does not discharge a senior employee from the duty of oversight. This principle applies especially when payments and potential financial exposure are involved.
The court found that persons in senior management should already know the standard of job performance required. Such persons should be fully aware of what was required and expected without any need for warning.
The court noted the worker was clearly expected and aware of his role to lead by example. These responsibilities required a proactive approach to governance and compliance rather than blind reliance on subordinates alone.
Final determination and dismissal upheld
The court concluded that the company had proven on the balance of probabilities that the worker had approved false claims. His failure to check or verify the false attendance record caused losses to the company.
The undisputed existence of false attendance records evidenced the worker's failure to properly supervise his subordinates. The worker's failure to take proactive steps over an extended period constituted a fundamental dereliction of managerial responsibilities.
The court found the worker could not claim ignorance or shift the burden to his subordinates to evade accountability. The worker's conduct irrevocably damaged the relationship of trust and confidence between him and the company.
This rendered the termination of his services one with just cause and excuse. The court emphasised that the worker held a position of significant trust and accountability requiring due diligence.
The court stated that the company had shown to its satisfaction that the worker was terminated with just cause. The company had proven on the balance of probabilities that dismissal was justified. The worker's case was dismissed accordingly.
The court found no merit in the worker's arguments regarding procedural irregularities or delegation of duties.
