By Dr. Tahirah Manesah Abu Bakar
On 18 June 2026, the Industrial Court in Geoffrey Loh Thien Yu v. Dowell Schlumberger (Malaysia) Sdn Bhd (Award No. 950 of 2026) dismissed an unfair dismissal claim by an expatriate employee, holding that it lacked extra-territorial jurisdiction. The Claimant, an international mobile staff member employed by a Bermuda-registered parent company, was seconded to work at the group’s Malaysian subsidiary and when his employment was terminated following audit investigations, he lodged an unfair dismissal claim against the local Malaysian entity.
The Law
The Industrial Court dismissed the Claimant’s claim entirely on the grounds of a lack of jurisdiction. Because the threshold question of jurisdiction was decided against the Claimant, the court ruled that analysing whether the misconduct was proven or whether just cause existed was entirely unnecessary and legally ineffective.
As established by the Court of Appeal in the lsndmark case of Multicore Solders (M) Sdn Bhd v. Yeo Kuei Chwan Donny [2012] 1 LNS 935, once the Industrial Court determines that the true employer is a foreign entity outside of its territorial jurisdiction, proceedings must immediately halt. The Court of Appeal held that it would be a fatal jurisdictional flaw (an Anisminic error) for the Industrial Court to even ask “was there a dismissal” or evaluate its merits once the foreign nature of the true employer is revealed.
The Recurring Issue
Geoffrey Loh mirrors a pattern seen in historical precedents of expatriates who claim unfair or constructive dismissal against local subsidiaries, only to discover they have sued the wrong legal entity. These include cases such as :
- Geoffrey Alan William v. The University of Nottingham in Malaysia [2014] 3 ILR 99, where a UK secondee mistakenly sued the Malaysian host university after his secondment ended;
- Wong Yiang Siang v. Ghim Li Group Pte. Ltd [2014] 1 ILR 553, where foreign choice-of-law clauses successfully ousted domestic jurisdiction;
- Lars Kruse Thomsen v. Hot-Can Sdn Bhd [2018] 1 ILR 52, where an expatriate hired by a UK company unsuccessfully claimed constructive dismissal against the Malaysian entity;
- Niall Murray v. Baker Hughes (Malaysia) Sdn Bhd [2018] 3 ILR 126, where a local contract executed merely to satisfy immigration laws failed to override the foreign master contract; and
- Chin Siang Tean v. Great Pyramid Sdn Bhd [2024] ILRU 0763, where the court ruled it could not adjudicate a dismissal authorised by an unjoined foreign parent entity.
Why does this legal misstep keep recurring? The possible reasons make for an interesting analysis.
Probable Factors
In these disputes, the primary employment contract resides entirely with a foreign parent entity. A local secondment or assignment letter does not abrogate or replace this master contract unless explicitly stated in writing.
Claimants routinely argue that because a local host entity applied for, held, and renewed their official work permit, that host must be their de jure employer. The Industrial Court consistently rejects this argument, ruling that securing a work permit is a strictly administrative requirement to comply with local immigration laws, and does not imply a employer-employee relationship.
Another possibility is when expatriate employees are paid a salary in local currency from a local subsidiary’s bank account, it may lead to the perception of a nexus, which is legally misleading. The courts routinely pierce this facade, viewing local payroll routing and the issuance of local tax forms (like LHDN EA forms) as inter-company administrative conveniences rather than proof of a localised employment contract.
Therefore when an employment relationship breaks down, employees naturally look to Malaysia’s Industrial Relations Act 1967, which offers robust statutory remedies like backwages and reinstatement, rather than consider litigating across borders under restrictive foreign laws. When a corporate crisis occurs and the foreign parent terminates the assignment, the employee experiences a profound emotional breach. Because their relational expectations were built entirely with the local host, they instinctively file their statutory claims against that local host, attempting to legally enforce an unwritten psychological contract.
For Companies: Mitigating the HR Risk
Human Resources and Global Mobility teams play an indispensable role in preventing this psychological and legal misalignment. To protect local subsidiaries from being dragged into costly, cross-border litigation, HR must implement the following safeguards:
- Secondment or assignment letters must explicitly state that they are supplementary to, and governed by, the original foreign employment contract. The letter should specify that the terms of the master contract remain in full force and effect.
- Onboarding documentation should clearly articulate that the facilitation of local visas, work permits, and tax filings are statutory compliance measures, not the establishment of a local employment relationship.
- HR must actively manage the psychological contract from day one. During onboarding orientation, it must be explicitly communicated who the ultimate employing entity is, where the right of dismissal resides, and which jurisdiction governs the employee’s contract. Operational transparency prevents the relational psychological contract from eclipsing the transactional legal reality.
For Expatriate Employees: Pre-Litigation Checklist
Before lodging an unfair or constructive dismissal complaint at the Industrial Relations Department, expatriate employees must separate their daily operational reality from their legal standing. It is advisable to:
- Review contractual documentation and determine which specific corporate entity holds the explicit right of dismissal. If your termination letter was issued by a foreign parent, suing the local hosting subsidiary will likely result in a threshold dismissal for want of jurisdiction.
- Examine the dispute resolution terms in the primary contract. If the contract expressly submits to the exclusive jurisdiction of foreign courts, the Malaysian Industrial Court will look at that choice of law as a binding parameter that ousts domestic jurisdiction.
Conclusion
Geoffrey Loh is a reminder that for international mobile personnel, daily operational familiarity is an unreliable indicator of legal standing. While equity and good conscience are foundational to industrial jurisprudence, they cannot be used to manufacture jurisdiction where no employer-employee bond exists.
