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THE CONCEPT OF CONSTRUCTIVE DISMISSAL IN MALAYSIA



1)          Constructive dismissal is a term used when an employee terminates his employment contract and considers himself discharged from further performance of his work as a result of his employer’s behaviour. For example, the employer has made the employee’s position at work untenable leaving the employee with no alternative but to quit his employment under protest. Although there is no actual dismissal by the employer, the end result is the same as if the employee had been fired.

2)           Gopal Sri Ram JCA in Quah Swee Khoon v Sime Darby Bhd [2001] 1 CLJ 9 at 19 described ‘constructive dismissal’ as follows:

“A reading of the pleaded case for the parties resolved the issue that fell for adjudication before the Industrial Court into what the profession has come to call as a “constructive dismissal”. There is no magic in the phrase. It simply means this.

An employer does not like a workman. He does not want to dismiss him and face the consequences. He wants to ease the workman out of his organisation. He wants to make the process as painless as possible for himself. He usually employs the subtlest of means. He may, under the guise of exercising the management power of transfer, demote the workman. That is what happened in Wong Chee Hong (ibid). Alternatively, he may take steps to reduce the workman in rank by giving him fewer or less prestigious responsibilities than previously held. Generally speaking, he will make life so unbearable for the workman so as to drive the latter out of employment. In the normal case, the workman being unable to tolerate the acts of oppression and victimisation will tender his resignation and leave the employer’s services. The question will then arise whether such departure is a voluntary resignation or a dismissal in truth and fact.”

3)           In determining whether there is a constructive dismissal or not, the court will ask the question, firstly, whether there is a dismissal and secondly, whether the dismissal is just and with excuse. If the above questions are answered in affirmative, then the case will be made out against the employer.

4)           In similar case, Gopal Sri Ram JCA explained at page 20:

“The task is no different where a case of constructive dismissal is alleged. The Industrial Court must in such a case also determine firstly whether there was a dismissal. And secondly, whether that dismissal was with just cause or excuse. That is the statutory formula employed by s. 20(1) of the Act.

Constructive dismissal can take place, as we have attempted to demonstrate, in a number of cases. Since human ingenuity is boundless, the categories in which constructive dismissal can occur are not closed. Accordingly, a single act or a series of acts may, according to the particular and peculiar circumstances of the given case, amount to a constructive dismissal. There are cases which fall as illustrations at either end of the spectrum. An example of a case where a single act of oppression or victimisation may amount to a constructive dismissal is Wong Chee Hong (ibid). There, the Supreme Court held the workman’s refusal to accept a transfer to be justified on the ground that it amounted to a constructive dismissal. Salleh Abbas LP, delivering the judgment of the court said:

“Thus in our judgment the transfer, which relegated the applicant to a position of lesser responsibilities, albeit on the same terms and conditions of service, which transfer the Applicant refused to accept, is a dismissal. It clearly shows that not only the respondent company was displeased with the Applicant but it also exhibited the respondent company’s intention not to be bound by the contract any longer. Such relegation of responsibility with its consequent humiliation and frustration and loss of estimation amongst his fellow employees made it impossible for the Applicant to carry on being employed under the respondent company’s organisation. In other words, he had been driven out of his employment. This is therefore a dismissal. (See Cox v. Philips Industries Ltd. [1975] 1 WLR 638 and J.F Bumpus v. Standard Life Assurance Co. Ltd [1974] IRLR 232).

Woods v. W.M. Car Services [1981] ICR 666 illustrates a case at the other end of  the spectrum. In that case, Brown-Wilkinson, J observed as follows:

In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: Courtaulds Northern Textiles Ltd. v. Andrew [1979] IRLR 84. To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract: the tribunal’s function is to look at the employer’s conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it: see British Aircraft Corporation Ltd. v. Austin [1978] IRLR 347. The conduct of the parties has to be looked at as a whole and its cumulative impact assessed: Post Office v. Roberts.

Turning once again to the pleadings, it is abundantly clear that the Applicant was complaining that he had been driven out of employment whereas the respondent was contending that the former had left of his own volition. Whether one would describe the conduct complained of as amounting to constructive dismissal or the breach of the implied term governing mutual trust and confidence is really a matter of semantics. Nothing turns upon it. At the end of the day, the question simply is whether the Applicant was driven out of employment or left it voluntarily. Upon that question, the pleadings in the present instance are sufficiently precise.”

5)           In Wong Chee Hong v Cathay Organisation (M) Sdn Bhd [1988] 1 CLJ 298 (Rep) at p. 302, Salleh Abas LP explained the meaning of constructive dismissal as follows:

“We think that the word “dismissal” in this section should be interpreted with reference to the common law principle. Thus it would be a dismissal if an employer is guilty of a breach which goes to the root of the contract or if he has evinced an intention no longer to be bound by it. In such situation the employee is entitled to regard the contract as terminated and himself as being dismissed. (See Bouzourou v. The Ottoman Bank [1930] AC 271 and Donovan v. Invicta Airways Ltd. [1970] Lloyd’s LR 486).

In Bouzourou’s case an employee would have been entitled, according to the Privy Council, to regard himself as being dismissed if his transfer from one province to another province rendered him exposed to an immediately threatening danger of violence or disease to his person. And in Donovan’s case the Court of Appeal held that when the conduct of the employer was such that it rendered the continuance of the employee’s service impossible, the latter was entitled to treat the contract as at end and to obtain damages for wrongful dismissal.”

6)        In that case, the Supreme Court concluded that before the Industrial Court determines whether there is a constructive dismissal, a contractual test must be applied. Salleh Abas LP explained the contractual test as follows (at p. 304):

“Looking at the award, it is clear to everyone that the Industrial Court in coming to the conclusion that the Applicant was dismissed did not misdirect itself in law. The Court only spoke of constructive dismissal in the context of contract test. It never even made any reference to unreasonableness test. This is made clear by the following passage at p. 9 of the award.

Past cases of constructive dismissals dealt with by this Court ... are agreed that whether or not there has been constructive dismissal is to be determined by the contract test: that is, did the employer’s conduct amount to a breach of contract which entitled the employee to resign? And did the employee make up his mind and act at the appropriate point in time soon after the conduct of which he complained had taken place. (Otherwise he would be regarded as having elected to affirm the contract and would lose the right to repudiate the contract, i.e., to treat himself as discharged.)
(The words in brackets are ours)

We accept this passage to be the correct statement of the law. The questions asked by the Industrial Court in fact are similar to that part of the judgment of Lord Denning MR in the Western Excavation case where the learned Master of the Rolls set out the contract test. Only in these circumstances can an employee be held to be constructively dismissed and that is what constructive dismissal is.”

7)           This contract test has been adopted in many subsequent cases. In the case of Shahabudin Abdul Rashid v Talasco Insurance Sdn Bhd [2004] 4 CLJ 514 at 518, Siti Normah JCA held that:

“We confirm this to be the true test as the employer’s conduct in reorganizing the business must be such as to amount to there being a breach of some term in the appellant’s contract of employment and must be so fundamental as to evince an intention not to be bound by the contract of employment. Expressed in another way has there been a unilateral repudiation of the contract of employment by the respondent as to entitle the appellant to claim that he has been constructively dismissed? The test is definitely the contract test and the law on this is well settled. See the case of Wong Chee Hong v. Cathay Organisation (M) Sdn. Bhd. [1988] 1 CLJ 45; [1988] 1 CLJ (Rep) 298 which was followed in Holiday Inn, Kuching v. Lee Chai Siok Elizabeth [1992] 1 CLJ 141; [1992] 2 CLJ (Rep) 521.”

8)           Therefore, a few conditions must be met before the Court ruled that there is a constructive dismissal done by the employer. Otherwise, the alleged constructive dismissal would only become a normal resignation.

9)           Those conditions and pre-requisites are:

a.   There must be breach of contract by employer. Breach of contract by an employer may involve breach of an expressed or implied term; and this may be an actual breach of the contract or an anticipatory breach;

b.   The breach of contract must be serious enough to warrant resignation of the employee or it must be the last incident in a series of events that led to the employee leaving his employment at that instance.

c.   The reason for the employee to leave his employment must be solely due to the breach of contract by the employer and not for some unconnected reasons.


d.   The employee did not delay in terminating the contract following the breach of contract by the employer. Otherwise, he may be considered as having affirmed the breach and agreed to alter the contract.


Comments

Anonymous said…
Hi, i would like to ask. So the constructive dismissal will be deemed void if there is no breach of contract from the employers?
Anonymous said…
Hi, i would like to ask. So the constructive dismissal will be deemed void if there is no breach of contract from the employers?
Anonymous said…
Salam Dr, my company is a GLC undet Mosti. Eatly this year they has been rumirs that its going to deployment at regional officess all msia. Then the Vp goes aroud for a bruefing and so called Q&A with the affected staffs. In mac everybody affected teceived their letter of deployment to a drpt in hq. All of my senior execs peer was left to lead their region. Only myself were shifted to hq and my junior very fresh no regional experience has been left. I have engaged series of mtgs with the Vice preside t and mgmt to get the clear why am i the only senexec must be deployed coz this will lead to a quit call. So now they dont xare if i not able to shift to hq then i have to quit. I have been with the co. For 14 yrs and now i feel forced to quit because they want to justify the position (suppose sen.exec) to junior no exprienve exec logically coz they just allow him to my tegion last yr june 2013 and he had stay here doing nothing than attending courses and clocking in late and out. Pls help i need your advice to how to move coz i ha e emailed the president to tell my grievance & seek help but never get any replies. I have to rwport there 1 sept. I am planning for an UPL then proceed with CD. Do i have a case here?
David said…
Salam Dr. Z, my wife is currently a victim to humiliation and victimization at her work place. She recently went under review and was told that her work performance is poor due to her not making deadlines. She is completing her work in a timely manner, but when the deadline is near they are requesting her to redo the work. Her work is intellectual property and I don't think it can be subject to 2nd opinion. Her recent tasks have also been assigned to other EEs with less experience or no experience in her expertise. The 'final straw' was when she was the only employee not to receive a bonus without explanation. When she confronted the manager about the bonus, the manager claims her bonus was not rewarded based on her tardiness. Other employees with similar or worse attendance were still rewarded a bonus. Her company also has allowance deduction in place for tardy or absences. I honestly feel as if they are trying to influence her to quit because the company is trying to downsize and she leaves for maturity leave soon. I also feel that it is a personal matter between her and the owner.
DrZ said…
Dear Dave B,

Wassalam. I sympathise with your wife's problem. One thing which your wife should revisit is the procedure and her job scope. The job scope is normally stated in the Letter of Offer. Sometimes, it is stated in the manual of the company. Please read back all these procedures and scope of work and make sure she complies with them. If she has already complied with them, then, she can lodge a written complaint to the boss asking why she was treated badly.

I was once consulted by a client, who had received a complaint by her boss. Apparently, the boss alleged that she did not complete her work correctly. She was given a show cause letter. According to her, the boss had bad feeling against her for personal reason.

When I perused the Letter of Offer and Scope of Work, the complaint was actually outside the perimeters of her work and that she was actually doing another person's work. This was unfair to her as she was subject to disciplinary proceeding. She replied the show cause letter refuting the charges against her by narrating her job scope and the work she did. Eventually, the company accepted her explanation.

On another note, there are other metaphysical ways of handling your wife's problem. I recommend you to read Joseph Murphy's books like The Power of Your Subconscious Mind and the Miracle of Mind Dynamics or Dale Carnegie's book, How To Win Friend and Influence People. There are some new ideas in these books for you to adapt and solve your problem beyond the legal principles.
Anonymous said…
Dear Dr Z

My husband is in a situation where his company hasn't paid the salary of their staff for 3 months as to date. their staff's wages are different, varying from RM2k - more than RM5k. Their only grouse is the late payment. Is this a case of CD? Or is there any alternative way in making their bosses (shareholders) pay their salaries? I am also concerned of the fact that they have sat on this matter for 3 months now, reading the part where you said that there is a requirement of not delaying and that if they delay they are deemed to have agreed to the alteration of the contract. Please help Dr. I feel a bit hopeless...
DrZ said…
Dear Anon,

Late payment of salary is not a CD if all the staff get the same delay. However, if your husband is singled out from the rest of the staff, it could be a CD.

To seek recourse of the matter, your husband should lodge a report with the nearest Jabatan Tenaga Kerja. You can find them if you google 'Jabatan Tenaga Kerja'
Anonymous said…
Dear Dr Z,

In an attempt to get me to resign, my company has demoted me and reduced my salary by half with never giving me any written or verbal warning. Since then the environment is very hostile towards me. Upon receiving my demotion notice, I immediately resigned.

Please advise what I should do from here. They have done this several times, but no one has taken any action.

Thank you
DrZ said…
You have to go to the nearest Jabatan Perhubungan Perusahaan Malaysia and lodge a report. You may find its directories on the internet. The report must be lodged within 60 days, otherwise you may not be able to get remedy at the Industrial Court.
Anonymous said…
Assalamualaikum Dr Z,

I would like to refer to you my serious case.

I am working currently and my last day with my employer on next Friday, 15/1/16.

It's a bit sensitive to write here.

Do you have e-mail address which i can email to you the details.

Thanks for the help.

Diana
DrZ said…
Dear Diana,

you may find my email at the profile at the side of this blog
Tommy said…
Dear Dr Z,

What shall i do if the employer humiliated employee using some kind of threatening word? And, can employer do not accept employee's resignation?
Tommy said…
Dear Dr Z,

What shall i do if the employer humiliated employee using some kind of threatening word? And, can employer do not accept employee's resignation?
DrZ said…
Dear Tommy,

What were those threatening words?

If the way of resignation is described in the contract of employment, then you have to follow that. If there the contract does not spell out the way of resignation, an employee may give 24 hours notice to resign.
Anonymous said…
Dear Dr Z

An employee filed for constructive dismissal after he was demoted and salary was reduced after the employer found him guilty of sexual harassment. Can he actually file for such dismissal and can he summoned the company for taking action against him?
Unknown said…
This comment has been removed by the author.
DrZ said…
Dear Anon,

the employee can file for constructive dismissal but it is likely his claim would be dismissed if the employer followed proper procedures. If the company had issued a termination letter, he should not file for constructive dismissal. Instead, he should file for dismissal without lawful and just cause. The court would go through all the evidence and procedures to find whether there was an error.
DrZ said…
Dear Jue Sang,

please refer to email
Anonymous said…
< Dear Dr Z
Saya Nazifa,
Jika xkeberatan boleh saya bertanya soalan. Saya seorang pekerja akaun.
Saya telah berkerja 6 tahun. Baru2 ni terjadi masalah antara pengarah yang di sebabkan pembayaran denda LHDN.
Ada pengarah yang xbagi pembayran cek itu tetapi cek itu tetap dibayar.
Jadi saya pada masa itu Akaun syarikat hanya mengikut arahan bos untuk membayar cek itu.
Selepas kejadian itu bos yg suruh sy bayar dipecat melalui verbal.

Saya pula diugut oleh bos yg menghalang cek dibyr. Di ugut dan dituduh bersubahat. Sedangkan saya hanya mejalankan tugas.

Selepas beberapa lama saya hantar notis letak jawatan 1 bulan ikut tender sy. Sy masih di ugut jika saya berhenti ikut notis dia akan buat sabitan berkenaan kes sebelum ini dan diberi tarikh lain untuk berhenti kerja.

Apakah yang perlu saya buat, kerana saya telah cuba call dan berunding tapi tiada balasan dan gaji saya pon dia masih tangguhkan untuk sign cek.

terima kasih >
nms said…
Dear Dr Z,

My team would be placed under performance improvement plan (PIP) w.e.f 1/6/2016, which will eventually lead to dismissal. The decision to put us under PIP was based on our 2015 performance, which was claimed to be 'under performing'. In Jan 2015, we were given a target but it was revised down during the mid yr review. However, during the year end appraisal, the management decided to use back the original target given in Jan even though we were tracked monthly based on the revised target earlier. The decision was made as we were abt to do our appraisal. Things got worst when we were not informed exactly what we were the actual target set at the end of the yr because even those who met the original target also being scored as under performer. Subsequently all of us didn't get bonus n increment and now the PIP. Pls advise us on what shld we do.
Anonymous said…
Dear Dr Z,

Need your kind advise here. I have been force to resign by my company. they claimed that i did not follow company procedure. Apparently the real issue is mainly due to personal. when I refused to tender my resignation, they had transfer me from HR to Sales dept which is out of my expertise and job scope. Can i bring this to IR under Constructive Dismissal?.
well said about it
DrZ said…
Sdri Nazifa,

saudari perlu membuat laporan kepada Jabatan Buruh atau Jabatan Perusahan untuk mendapatkan remedi. Majikan tidak boleh berbuat begitu kepada pekerjanya. Negara kita ada undang-undang pekerja terutama ke atas pekerja-pekerja yang ditindas.
DrZ said…
Dear NMS,

I think your team should hold a meeting with the management. If the management does not entertain, you should write to the board of directors.

DrZ said…
Dear Zzieyans,

You have a good case to bring to the IR if you can prove that the real issue is personal.
Ibrahim82 said…
Dear DrZ,
I've emailed a question about CD. Appreciate your time for review.
DrZ said…
Dear Ibrahim

I have replied your email
Anonymous said…
Greetings,

Would appreciate your thoughts about this scenario.

Ten plus years service as a Director in large company. Leading a team that is internationally awarded by independent industry organisation.

Recently had to performance manage a new team member under guidance of HR.

Went to discuss this with senior management team (SMT)and was told to resign as been in company too long. Reason was very minor issue that SMT were aware of, plus the inability to get along with new team member (who by the way was being performance managed for issues of honesty and integrity).

Feel like that no choice but to offer resignation as small industry and would find very difficult to get work considering age and leaving under a cloud.

Until meeting with SMT was not made aware of any issues. Annual appraisals all good and no negative feedback until this meeting.

Not sure what to do as I don't want to resign and it would be a long drawn out process if they wanted to dismiss me as absolutely zero negative feedback to date. However, if I stay they can destroy my reputation in the industry.

Confused, scared and worried.
DrZ said…
Hi,

If you want to resign, it is better for you to negotiate terms of resignation. I think you should be compensated for your 10 years of service

As a director, you are not entitled to sue them in the Industrial Court. However, you may initiate legal proceeding in the civil court.

Thanks

DrZ
Gowri said…
Hi DrZ,

I'm working with a Multi Level Marketing company. Due to personal reason, my immediate manager attacking me and forcing me to resignation. Recently, she has a conversation with one of my colleagues thru whassup. I have the conversation proof which has mention that she wants to kick me out and requesting my colleagues to "spy" on me. I have received numerous warning and reminder for small issue such as, No make up, late to apply medical leave etc. She also requested my colleagues not to talk to me.

Please advice what I can do now.
Anonymous said…
Sir can you explain on the Foo Chee Huah @ Foo Jee Huah's case regarded to Constructive Dismissal ?? In a way, the synopsis or the summarized plot of the very case? THANKS.
DrZ said…
Hi Gowri,

If the situation is unbearable, you may resign and lodge complaint to Jabatan Perhubungan Perusahaan within 60 days from the day of resignation.
DrZ said…
Dear Anon,

I am sorry, I don't have copy of judgment of Foo Chee Huah's case except regarding the reinstatement of the case
Preston Icicute said…
I ve been issue with warning letter for recent isusue out of sudden. The next few days followed with show cause letter. CEO even threating me thru group wassap saying that i ll keep collecting warning letter n she will ensure that my employment wont stay long. It is clearly stated her intention that she do not have any interest to see me as part of the team. Is it possible for me to terminate myself n breach the employment contract in 24 hours? Then proceed with CD. I feel humiliated and stressful.
DrZ said…
Dear Preston,

I think a constant threat and intimidation can be a ground for CD
Unknown said…
Dear DrZ,

I received an explanation letter (1st Dec) from my hr about my classes ( i am a teacher in a college). Early dismiss of students in class. I replied to that letter within stipulated time (9th Dec) with reasons for early dismiss.

Since then, Hr has been emailing me since then to have a meeting about my response.

There were 3 times - 1 week after that, 2 weeks after that, and latest on 12 Jan.

I told the hr manager, if you are not happy with my response, please give me a warning letter because there is no need to keep postponing.

This really create stress to me.

Can I ask for your kind advise if this can be considered as constructive dismissal?
DrZ said…
Dear Tronc,

I do not think it is sufficient to be considered as constructive dismissal
Unknown said…
Salam Dr Z, I sent u an email yesterday on the matter. Could you please clarify and comment.

Thank you and I hope to hear from you soon.

Best,

Amir
DrZ said…
Wasalam Sdra Amir

already replied to your email
Jazz said…
Dear Dr Z,

All the staff in our company were terminated by our previous employer because he loss his distributorship. Hence all of us were given termination letter. Together with this termination letter there is an offer letter by the new company with new management.
Some of us were promised by our ex employer that if we do not pursue the matter legally we will get compensated by him. But this is all verbally done (nothing in black & white).
His existing company still exist but with minimal staff. Could we file for CD in this case?

Thank you.
DrZ said…
Dear Jazz

This is not a CD. this is a case of unlawful dismissal. You can proceed to lodge a report with Jabatan Perhubungan Perusahaan within 60 days from the date of dismissal. Do not put trust on something that you cannot hold on. There has to be a written offer and acceptance on the terms of compensation.
Anonymous said…
Dr Z,

I am holding a HR Manager Position and the only HR in the office.
My office have less than 20 staff. Recently, I was being force to move out from my cubicle which I share with my finance. The reason given by on of the management staff was he is now taking over a global position and need to have more privacy in telephone conversation.


We found out that actually, he was requested a room from a CEO and the CEO told him to find a way himself.

Now i had been transfer outside, i feel demoted. Can i resign under constructive dismissal due to breach of contract? My notice in the LO is 2 months.
DrZ said…
Dear Anon,

I do not think your position is amounting to CD even though you feel that you are being unfairly treated
Zahari said…
Dr Sir,

Currently my company is planning to relocate the office from Ahah Alam to Kuala Lumpur. Currently we are enjoying a lot of benefit such as free parking, gym and canteen in Shah Alam, these benefit were not spelled out in the employment contract.

The company will give hardship allowance for the first 6 month and revise their salary of the effected staff. However, the rational to move were not communicated yet. Is this a constructive dismissal because we felt that absence of valid business rational for the move, benefit such as parking, gym and canteen that were not provided and the time to travel for some staff are significantly longer?

Zahari said…
Is it a constructive dismissal for reducing the headcount by pressuring staff to resign by relocating them to a new location?
Anonymous said…
hello. Would like to ask for clarity.

If a company by name of genuine restructuring has to transfer a key personnel to another division in which it results to a relegation of responsibilities and being downgraded since the required position is of lower level, can the Company base this as just cause ?

Thanks for your response.

Kirana said…
Assalaam DrZ,

There are some issues under my supervision has brought attention to the Directors. I have explained to them the chronology of the issues. They are not happy with me & decided to put me as Non Executive Director with immediate effect without proper documents,investigation nor domestic inquiry was done. They accused me gaining something & hiding information from them. The first Resolution was drafted by them asking me to step down they even drafted a Resignation letter for me to sign. I refused to sign, I sent letter asking for decorum, proper Resolution should be done & I demand withdrawal of my name as Co Guarantor. I was treated harshly. No respect at all, I've been working with the company for 20years. They didn't reply my letter until 2 months plus then came another simple Resolution appointment of the new MD (backdated) My salary as MD salary to non executive director salary takes immediate effect as well without giving proper notice. I am one of the shareholder in the company. I would like to seek your advice. Thank you.

Anonymous said…
Hi Dr.Z,

I'm currently working with one of the MNC insurance company. I've been working around 9 mths & my probation was extended for another 4mths till Feb. Reason is that I'm not performing is that in fact I don't even have my proper target & performance review during the 6mths. I don't even have my mid term review for my probation.I was consider unlucky or was play out by the previous superior where he employed me & resigned in Sept. Now I'm reporting with a new superior just join 2 mths ago and saying im not achieving this & that & my probation extended 4 months. Another worse thing is that my superior propose to me to transfer to another department with lower salary. I did 1 mistake is follow the superior instruction email out request to transfer. Is this consider constructive dismissal if I resign once the new letter offer with lower salary & lower ranking offer to me? What should I do? Please advise me cause I'm in desperate situation. Thanks.
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