A Parent Company Issued the Show-Cause Letter: Why the Dismissal Ruling Remained in Force

About this guide: This explainer uses an incident reported on 2019-10-15 as a starting point. The legal rules below are general; they do not decide anyone's guilt, liability or individual case.

Decision tree and document pack

Who is acting as employer? A document check before answering a show-cause letter

1. Start with the sender: note the exact company name and registration number on the show-cause letter, then compare them with your appointment letter, latest contract, transfer letter and payslips.
2. Trace the employment history: list who hired you, who paid you, who assigned or transferred you, who supervised you and which board or officer approved each change.
3. Check authority instead of assuming: look for a group HR policy, secondment or transfer term, board resolution, delegation, reporting chart or prior correspondence showing who may investigate and discipline you.
4. If the sender’s authority is disputed: answer on time under protest, reserve your rights, request the authority documents and deal with the allegations without admitting that the sender is your employer.
5. Before resigning or refusing an inquiry: take Malaysian employment advice quickly and preserve the complete email, letter, attachment, delivery record and your response.

What happened

The employment history stretched across two companies in the same corporate group. Bernama and The Edge reported that the employee joined Seacera Group Berhad in 2005 and was transferred to its subsidiary, Seacera Properties Sdn Bhd, in 2014 as a project director and adviser. In March 2019, he entered into a fixed-term employment contract with the subsidiary. Those stages later became important because the dispute was not answered by looking only at the company name on the 2019 contract.

In September 2019, Seacera Group issued a show-cause letter and suspended him over alleged misconduct. He took the position that the parent company was not his employer and that he therefore did not have to respond. The reports say the group warned that disciplinary action would follow if he did not comply with the suspension order. After he declined to attend a domestic inquiry, the company found him guilty of misconduct and terminated his employment on 15 October 2019.

The Industrial Court initially found that he had been constructively dismissed and awarded RM340,000 as compensation in lieu of reinstatement. The High Court later dismissed Seacera Properties’ attempt to quash that award. On 9 February 2026, however, the Court of Appeal overturned those outcomes. According to both current reports, documentary evidence showed that Seacera Group had appointed him before assigning him to the subsidiary, and the appellate court held that the parent had authority to issue the show-cause letter and terminate the employment.

The fresh development came on 5 August 2026. A three-judge Federal Court panel unanimously dismissed the former project director’s application for leave to appeal and ordered him to pay RM50,000 in costs. Refusal of leave meant the Court of Appeal decision remained in force. It should not be described as a new full Federal Court judgment deciding every employment relationship within a corporate group; the reported order concerned permission to pursue the proposed appeal.

The legal insight: what law applies

Section 20 of the Industrial Relations Act 1967 gives a workman who considers that they were dismissed without just cause or excuse a route to seek reinstatement through a written representation. That process requires the Industrial Court to identify the true employment relationship and decide whether the dismissal was justified on the evidence. A company name on one document is important, but it may not be the only relevant evidence where an employee was appointed, assigned, transferred or managed across a group over many years.

A corporate group is not automatically one employer. A parent and a subsidiary are generally separate legal entities, and the ruling does not create a blanket power for a holding company to discipline anyone working for an affiliate. The reported result turned on this employee’s documentary history and the Court of Appeal’s finding about authority. Another worker’s result could differ if the appointment, transfer, payroll, reporting and delegation records point elsewhere.

A show-cause letter is an invitation to explain before a disciplinary decision. Ignoring it can remove the worker’s best opportunity to correct facts, challenge authority and put documents on record. A worker may dispute the sender’s legal capacity while still giving a careful response. For example, the response can state that it is provided without admitting the sender is the employer, request the document said to confer authority, and answer the allegations based on currently available information.

A domestic inquiry is not a criminal trial, but it can form a major part of the employer’s record. Before refusing to attend, check the contract and policies, request the charges and evidence, identify the inquiry officer and raise procedural objections in writing. Silence or non-attendance does not automatically prove misconduct, but it can make it harder to show that the employer never heard an explanation that was not actually provided.

There is also an appellate distinction. The Federal Court’s 5 August order was a refusal of leave. It left the Court of Appeal ruling intact, but the reports do not supply complete Federal Court grounds establishing a broad new test for all group-company cases. Readers should therefore use the decision as a record-keeping and response lesson, not as a shortcut that answers who the employer is in every corporate structure.

How does this impact me?

If you receive a letter from a related company, do not decide from the logo alone that it can be ignored. Compare the legal name, registration number and signatory against your full employment file. Check who signed the original appointment, who issued the transfer, who pays salary and statutory contributions, whose policies you accepted, and who has actually directed your work.

If the authority remains unclear, a protected response is usually safer than silence. Meet the stated deadline if reasonably possible, reserve your legal position, ask for the authority document and answer each factual allegation separately. Keep proof of delivery. Avoid emotional accusations about the group structure before you have seen the records.

For employers, group-wide HR administration needs written legal architecture. Appointment, transfer, secondment and shared-services documents should state which entity employs the worker, who pays, who controls daily work and who may investigate or dismiss. A central HR team should sign in a disclosed capacity rather than leaving the worker to guess which company is acting.

For anyone considering resignation and a constructive-dismissal claim, timing and wording are critical. Constructive dismissal is not simply a label for an unpleasant workplace, and a resignation can affect the available remedy. Obtain advice before resigning, because section 20 representations have a statutory filing window and the claim will turn on the contract, breach, response and chronology.

What this incident teaches us

The case shows why employment identity is a timeline rather than a single box. Corporate restructurings often leave workers with an old appointment letter, a later subsidiary contract, group email addresses, central payroll and instructions from several entities. Unless those records are reconciled when the change happens, the uncertainty appears at the worst moment: discipline, redundancy or litigation.

It also shows the cost of taking a threshold objection as permission not to engage. Authority can be challenged without abandoning the factual defence. A short written reservation, a request for documents and a paragraph-by-paragraph answer may preserve both positions while a flat refusal can leave the decision-maker with an incomplete record.

The verdict

The Federal Court’s refusal of leave left in force a Court of Appeal ruling that, on the reported documents, Seacera Group had authority to discipline and terminate a worker assigned to its subsidiary. It is not a universal parent-company power. Workers should trace the whole employment history and respond under reservation when authority is disputed; corporate groups should document exactly which entity employs, manages and disciplines each person.

What can I do if this happens to me?

• Gather your original appointment letter, every renewal, transfer or secondment document, payslips, EPF and SOCSO records, reporting charts, HR policies and disciplinary correspondence.
• Write a dated employment timeline naming the company that appointed, paid, supervised, transferred and evaluated you at each stage.
• Reply to the show-cause deadline in writing where possible, even if you dispute authority; reserve your rights and ask for the document empowering the sender to act.
• Answer each allegation separately, attach supporting records and avoid guessing about facts or motives you cannot prove.
• Ask for the domestic inquiry procedure, charges, available evidence, proposed panel and rules on representation before deciding whether and how to attend.
• Get Malaysian employment advice before resigning, refusing an inquiry or filing a section 20 representation, because strategy and statutory timing depend on the facts.