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CONSTRUCTIVE DISMISSAL : PRINCIPLES & CASE LAWS




The common law has long recognised the right of an employee to terminate their contract of service. Therefore, for employees to be discharged from their obligations under the employment contract, it must be shown that the employer is guilty of a breach that affects the foundation of the labour or if the employer has displayed an intention to no longer be confined to such work relationship thus leading to a constructive dismissal.


In view of the above, over the years, Malaysian case laws have firmly established the doctrine and elements of constructive dismissal. As a result, constructive dismissal was successfully enshrined within the bounds of Section 20 of the Industrial Relations Act 1967[1], which means dismissal rights under the law were extended to employees who are compelled to exit a workplace due to an employer’s detrimental actions. Discussed below is a perusal of such principles and case laws for a better understanding on the concept of constructive dismissal.


“THE CONTRACT TEST”


The test of constructive dismissal is a test of contractual breach rather than unreasonableness. In order to succeed in constructive dismissal claim, a contract test must be present. The contract test was established in the landmark case Wong Chee Hong v Cathay Organisation (M) Sdn Bhd[2] wherein the learned judges of the Supreme Court enunciated the following comments:-


“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 evinced an intention no longer to be bound by it. In such situations, the employee is entitled to regard the contract as terminated and himself as being dismissed.


“Constructive dismissal does not mean that an employee can automatically terminate the contract when his employer acts or behaves unreasonably towards him”


The principles above were derived from the landmark English case of Western Excavating (ECC) Co Ltd v Sharp[3] wherefore the case states that reference must be made to the contract of employment in order to see whether the employer's conduct constitutes a fundamental breach of contract.


In the case of Govindasamy Munusamy v. Industrial Court Malaysia & Anor[4] where Hamid Sultan Abu Backer (as he then was), laid down the test of constructive dismissal as follows:-


i. the Company has by its conduct breached the contract of employment in respect of one or more of the essential terms of the contract;


ii. the breach is a fundamental one going to the root or foundation of the contract;


iii. the Claimant had placed the Company on sufficient notice period giving time for the Company to

remedy the defect;


iv. if the Company, despite being given sufficient notice period, does not remedy the defect, then the Claimant is entitled to terminate the contract by reason of the Company’s conduct and the conduct is sufficiently serious to entitle the Claimant to leave at once; and


v. the Claimant, in order to assert his right to treat himself as discharged, left soon after the breach.


In a more recent case of Yew Mun Khean v Kumpulan Liziz Sdn Bhd[5], the learned High Court Judge had this to say on the constant trend of constructive dismissal:-


(a) there must be a breach of contract by the employer/defendant. This may either be an actual breach or anticipatory breach;


(b) that breach must be sufficiently important to justify the employee/plaintiff resigning or else it must be the last in a series of incidence, albeit an erroneous interpretation of the contract by the employer will not be capable of constituting a repudiation in law;


(c) the employee must leave in response to the breach and not for some other, unconnected reason; and


(d) the employee must not delay too long in terminating the said contract in response to the alleged breach by the employer or else he may be deemed to have waived the alleged breach.


THE BURDEN OF PROOF IN A CONSTRUCTIVE DISMISSAL


Unlike wrongful dismissals and unfair dismissals or other genus of employment terminations, in a constructive dismissal the burden of proof is on the employee to prove that their employer is guilty. In Chua Yeow Cher v Tele Dynamics Sdn Bhd[6], the Court held that:-


“It is now trite law that in a reference before the Industrial Court by an employee complaining that he had been constructively dismissed by his employer the burden is on the employee to prove that he had been dismissed unlawfully.”


The principles above was encapsulated in the case of MPH Bookstores Sdn Bhd v Lim Jet Seng[7] as well. It was made comprehensible that in order for a claim of constructive dismissal to be successful, two limbs of the common law ‘contract test' must be canvassed. This required a consideration of the following notions[8]:-


(a) Whether the employer's conduct amounted to a breach of the contract or whether the employer had evinced an intention not to be bound by the contract any longer thereby entitling the workman to resign, and


(b) Whether the employee had made up his mind to act at the appropriate point in time soon after the conduct complained of had taken place.


Therefore the onus of proof is on the employee and not the Company to prove on a balance of probability that they were dismissed. The Claimant has to prove that the Company has breached the contract thereby entitling them to plead constructive dismissal. In order to prove that they have suffered such dismissal, an employee must prove that as a result of a breach of contract their employer, the employee no longer intends to be bound by the essential terms of the contract (see: Anwar Abdul Rahim v. Bayer (M) Sdn Bhd[10]).


In view of the above notions, it would therefore be relevant for the Court to also ascertain whether the Claimant was driven out of his employment by the conduct of the Company or the Claimant had simply abandoned his employment on his own volition[11].


Conclusion


Hence, in claiming constructive dismissal, it is pertinent for the employee to map out that the employer caused a set of events which are breaches of contract and that those events justifies the employee in resigning. In addition, it is also equally important to highlight that the employee had left their workplace due to the aforementioned breaches without undue delay. The employee should dissent or voice out the alleged breach of contract to their employer or tender their resignation soon after the breach of the contract arises (see: Yew Mun Khean v Kumpulan Liziz Sdn Bhd). By remaining in the company and pursuing their job, the employee may be deemed to have acceded to the breach and thereby waived their right to commence a constructive dismissal suit against their employer.


[1] Section 20 of the Industrial Relations Act 1967: Representations On Dismissals

[2] Wong Chee Hong v Cathay Organisation (M) Sdn Bhd [1988] 1 MLJ 92

[3] Western Excavating (ECC) Co Ltd v Sharp [1978] ICR 221 (CA)

[4] Govindasamy Munusamy v. Industrial Court Malaysia & Anor[2007] MLJU 684

[5] Yew Mun Khean v Kumpulan Liziz Sdn Bhd[2018] MLJU 330

[6] Chua Yeow Cher v Tele Dynamics Sdn Bhd [2000] 1 MLJ 168

[7] MPH Bookstores Sdn Bhd v Lim Jet Seng [1987] 1 ILR 585

[8] Thavarajah, T (2008) Constructive Dismissal: Commentaries and Cases, CCH Asia, Kuala Lumpur

[9] Matrix Global Education Sdn Bhd v Felix Lee Eng Boon [2023] 1 MLJ 880

[10] Anwar Abdul Rahim v. Bayer (M) Sdn Bhd [1998] 2 MLJ 599

[11] Masitah bt Mohamad v University College Bestari [2020] ILJU 311


Authored by Charumathy Nair


For an insight on the definition and basic overview on the law of constructive dismissal, kindly refer to our previous article on “What is Constructive Dismissal?

Kindly note that this legal article does not, and is not intended to, constitute formal legal advice by the Firm, instead all information, content and materials available on this site are for general informational purposes only. If readers require further clarification or legal advice, please email office@kevinwuassociates.com



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