The Policy Exists. Nobody Follows It. Can HR Still Discipline?

Picture this: a supervisor approves overtime claims without the mandatory second sign-off - something the Employee Handbook explicitly prohibits. It's not a one-off. Staff have been doing it for months, maybe years, and everyone from the department head down knows it happens.

Then someone gets caught. HR moves to discipline that one employee. The response comes back almost predictably:

"Everyone does this. Nobody's ever been punished for it before."

It sounds like an excuse. Legally, it isn't. In Malaysian industrial relations law, this is a real and recognised defence, and if HR hasn't thought it through before issuing the show-cause letter, it can unravel an otherwise solid misconduct case at the Industrial Court. 

The uncomfortable truth for HR and IR practitioners is this: a valid policy plus inconsistent enforcement is not a paperwork technicality. It is a live legal risk. This article walks through why, using a common workplace scenario, and ends with a practical activation plan to fix the enforcement gap before it costs you a case.

The Scenario: Laid out

Take a composite case built from patterns HR practitioners will recognise: 

A manufacturing company has a clear attendance policy - clocking in more than 15 minutes late without approval is a disciplinary offence. In practice, supervisors on the floor have tolerated persistent lateness for years. No verbal warnings, no memos, no write-ups. It's simply how things run. 

One employee, after a dispute with his supervisor over an unrelated matter, is issued a show-cause letter for repeated lateness. A domestic inquiry follows, and he is dismissed.

He refers his case to the Director General of Industrial Relations, and eventually it is referred to the Industrial Court under Section 20 of the Industrial Relations Act 1967, where he claims dismissal without just cause or excuse.

At this point, the case largely turns on two questions the Industrial Court will almost always ask:

1. Did the employer, through its own conduct, forfeit the right to treat this breach as dismissible? (condonation)
   

2. Was this employee treated the same way as others who did the same thing? (consistency)
   

Where the answer to either favours the employee, the dismissal - however procedurally correct the domestic inquiry was - is at serious risk of being found unfair.

Condonation: When Tolerance Becomes a Legal Bar

Condonation, in the Malaysian industrial relations context, is the principle that an employer who knowingly allows a breach of duty to continue without objection, warning, or corrective action - is treated as having waived its right to later punish that breach.

The classic articulation of the doctrine comes from the Industrial Court in United Traction Co. Sdn Bhd, Butterworth v Transport Workers' Union (Award No. 282 of 1986), which remains the most frequently cited authority on condonation in Malaysian dismissal cases to this day. The Court explained that an employer who keeps an employee in service with full knowledge of a breach of duty is treated as having condoned that breach - and once condoned, the employer cannot later reverse its position and rely on the same conduct as grounds for dismissal.

This principle continues to be applied by the Industrial Court and raised as a live defence in current dismissal proceedings. Courts have confirmed that where an alleged misconduct occurred before dismissal but was discoverable earlier through reasonable diligence, the tribunal is entitled to weigh defences of waiver, condonation, and estoppel alongside claims of bad faith or afterthought on the part of the employer.

What the Industrial Court Looks At

When condonation is raised, the Court typically examines:

• Duration and frequency: was this a one-off missed enforcement, or a pattern stretching over months or years?

• Knowledge: did supervisors or management actually know, or should they reasonably have known, that the breach was occurring?

• Notice of change: was there ever a circular, briefing, or warning that reset expectations before the disciplinary action was taken?
  

A single missed enforcement is not condonation. If a supervisor happens to overlook one late clock-in on one occasion, that is an isolated lapse, not a pattern of tolerance. Condonation requires sustained, knowing tolerance - the kind that, over time, tells employees the rule is no longer actually being enforced.

Lim Chee Keong v MDC Precast Industries Sdn Bhd [2026] 2 ILR 215 

In the case of Lim Chee Keong v MDC Precast Industries Sdn Bhd, the claimant was dismissed on two charges after 16 years of service, rising to Assistant Inventory Manager: failing to update stock cards, and habitual lateness repeatedly clocking in after 8.00am between May and August 2023. He argued his actual working hours had been 8.30am since 2021, that his superior knew this and had never objected, and that no disciplinary action of any kind, not even a pay deduction, had ever been taken against him for it, until the show-cause letter arrived months after the earliest cited instances.

The Industrial Court agreed. It found that the claimant's superior had accepted his 8.30am start time without challenge for years, and that the company's own witness confirmed under cross-examination he had never once been reprimanded for lateness before the show-cause letter - only for the unrelated stock card issue. Applying the long-standing principle that an employer who discovers misconduct but chooses to continue employing the worker anyway is taken to have waived the right to punish it later, the Court held the claimant's attendance pattern had been condoned since 2021, and the company could not reverse that position more than two years on and use the same conduct as grounds for dismissal.

The Court ultimately found the dismissal was without just cause or excuse and awarded the claimant RM218,400 in backwages and compensation in lieu of reinstatement, though it did reduce the backwages by 30% for the claimant's own contributory misconduct, showing that even a successful condonation defence doesn't erase an employee's share of responsibility, only the employer's right to dismiss for it.

Consistency: Like Cases, Alike Treatment 

Related to condonation, but distinct from it, is the principle of consistency, sometimes described through the lens of natural justice and equality of treatment. The Industrial Court routinely tests whether an employer treated comparable cases of misconduct in a comparable way.

Selective enforcement - disciplining one employee while knowingly ignoring identical conduct by others in the same position, undermines the proportionality of the punishment and can, on its own, render a dismissal one without just cause and excuse.

Consistency does not mean every employee who breaches a policy must receive an identical penalty. Mitigating factors legitimately differ: length of service, prior disciplinary record, seniority, whether the conduct was a genuine misunderstanding versus wilful defiance, and the employee's response during the domestic inquiry all matter.

What is fatal is not different outcomes - it is unexplained selective enforcement: punishing one employee while wilfully ignoring the same conduct by others, with no articulated reason for the distinction. If HR can show a defensible basis for differentiated treatment, say, a repeat offender versus a first-time breach, or an employee who was previously warned versus one who wasn't - that is not inconsistency. It is proportionality.

Therefore, HR must be able to explain the why behind every disciplinary decision relative to how the same rule has been applied elsewhere in the organisation. If you can't answer "why him and not her," you have a consistency problem before you've even opened the file.

Manager Accountability - The Missing Link

Here is the part HR departments most often underestimate: policies rarely fail because they're badly drafted. They fail because line managers don't enforce them - and HR rarely holds managers accountable for that gap. 

Supervisors and line managers are the "eyes and hands" of any workplace policy. They are the ones present when lateness happens, when safety gear is skipped, when expense claims are approved without the right documentation. Condonation, in almost every real-world case, originates at the supervisor level - not in HR. But when the case reaches the Industrial Court, HR wears the legal consequence, not the manager who looked the other way. 

A few structural fixes HR should be pushing for:

• Build policy enforcement into manager KPIs and performance conversations. If a manager's only measured outcomes are output and team morale, enforcement will always lose to "keeping the peace."

• Equip, don't just instruct. Managers avoid enforcement not necessarily because they don't care, but because they haven't been trained on how to have the conversation, document it, or escalate it without damaging team relationships. Memos alone don't fix this - coaching does.

• Make non-enforcement visible. If a manager consistently fails to flag or act on breaches within their team, that itself should surface as a performance issue, not stay invisible until a dismissal case blows up.

Three Questions to Ask Before You Discipline

1. Has this policy actually been enforced before - consistently, and recently? 

2. Who knew about the breach, and for how long? 

3. What, if anything, did the organisation do about it before now? 

If HR cannot answer all three confidently, the disciplinary case is not ready, no matter how clear-cut the misconduct looks on paper.

Breaking the Condonation Chain: A Worked Example

One of the most common questions HR practitioners ask is: if we've been condoning a breach, is it condoned forever? The answer is no - but breaking the chain requires clear, prospective, documented notice, not a retroactive decision to suddenly start enforcing.

Example: A logistics company has tolerated employees using personal vehicles for site deliveries without the required insurance declaration for over two years - a clear breach of its safety policy, but never once enforced.

To break the condonation chain properly, HR should not simply issue a show-cause letter to the next employee caught doing it. Instead:

1. Q1 (reset quarter): HR issues a formal, dated circular to all affected staff and supervisors, stating explicitly that the insurance declaration requirement will be strictly enforced from a specified future date (e.g. the start of the following quarter), and that the previous informal tolerance is withdrawn effective immediately.

2. Briefing sessions are conducted with line managers and staff, with signed acknowledgement of the circular - creating a documented, individualised record that every employee received clear notice.

3. A defined grace period (commonly one full quarter) runs before any disciplinary action is taken for non-compliance, giving employees genuine opportunity to adjust their conduct.

4. Only after the grace period expires does enforcement begin - applied evenly across every employee found in breach, not selectively.

This sequence matters because it converts the employer's position from "we let this go for years and are now punishing you for it" (a condonation problem) to "we gave clear, documented notice that the rule would be enforced going forward, and you breached it after that notice" (a legitimate, defensible disciplinary action). The critical ingredient is advance, dated, communicated notice.

The Fix - A Policy Activation Plan

Rather than waiting for a dismissal case to expose the enforcement gap, HR should proactively run a Policy Activation Plan for any policy suspected of selective or lapsed enforcement.

The Industrial Court does not expect employers to be perfect enforcers. What it expects is evidence of reasonable, consistent steps taken once the employer decided to act - and a documented paper trail showing employees were treated fairly and given genuine notice.

Key Takeaways / Practitioner Checklist

• Selective enforcement is a bigger liability than a weak policy. A well-drafted policy that's inconsistently applied is often worse than having no policy at all.

• Condonation can be broken - but only with clear, prospective, documented notice. Retroactively punishing the next offender after years of silence rarely survives scrutiny; a defined reset period (commonly a full quarter's advance notice) does.

• Consistency doesn't mean uniform punishment - it means defensible reasoning. Different outcomes are fine; unexplained selective enforcement is not.

• Managers must own enforcement, not just HR. Build it into KPIs, coach the conversation, and make non-enforcement visible before it becomes a legal problem.

• A Policy Activation Plan is cheaper than losing an unfair dismissal claim. The audit-reset-monitor cycle costs a fraction of back-wages, compensation in lieu of reinstatement, and reputational fallout from a public Industrial Court award.

Conclusion

Policies don't protect an organisation simply by existing in a Handbook. They protect it only when enforcement is consistent, documented, and defensible, and when line managers are held to the same standard as the policy itself.

If your organisation has a policy you suspect has quietly stopped being enforced, the time to run an activation plan is before the next disciplinary case - not during one.