Major Teoh’s Blog

May 26, 2007

Constructive Dismissal

Filed under: Constructive Dismissal — Major (Rtd) Teoh @ 11:56 am

Constructive Dismissal

(From then Lord President Salleh Abas in the case Wong Chee Hong Vs Cathay Organisation (M) Sdn Bhd (1988))

“The common law has always recognised the right of an employee to terminate his contract of service and therefore to consider himself as discharged from further obligations if the employer is guilty of such breach as effects the foundation of the contract or if the employer has evinced or shown an intention not to be bound by it any longer. It was an attempt to enlarge the right of the employee of unilateral termination of his contract beyond the perimeter of the common law by an unreasonable conduct of his employer that the expression ‘constructive dismissal’ was used.”

Constructive dismissal could be likened to a double-edged sword. The employee’s reason for resigning should be such chat it affects the important fundamentals of his terms and conditions of service, or the employer’s action was such that no reasonable employee could tolerate such an action. The timing of the resignation should also be reasonably soon, to avoid being accused of condonation. Any failure on the part of the employee to ensure these two conditions are fulfilled may result in his resignation not meeting the criteria for constructive dismissal and result in his claim being dismissed by the Court.

What are the circumstances in which an employee can resign and yet claim constructive dismissal?

In order to claim constructive dismissal, the employee should be absolutely certain that the employer’s actions are significant breaches going to the root of the Contract of Employment. In other words, the employer’s actions are such that it is certainly impossible for the employee to continue in his employment with the said employer. The employee should also make up his mind and resign reasonably soon after the employer’s action; otherwise he is said to have condoned or acquiesced the employer’s actions.

Some of the circumstances are:

(a) Arbitrary reduction of wages, commissions, allowances, etc.

(b) Withdrawal of contractual benefits e.g. car, housing, entertainment, free meals, free laundry services etc., provided they are provided in the Contract of Service.

(c) Demotion to a lower post, with or without reduction of salary, fringe benefits, etc.

(d) Transfer to a different location if such transferability is not clearly stated in the Letter of Appointment.

(e) Substantial changes in the job function.

(f) Behaviour by the employer, intended to humiliate the employee.

(g) Threatening with dismissal if the employee does not resign from the job.



1 Comment »

  1. Dear TG Lee,

    If you have enough evidence that the employer is trying to get rid of you under the disguise of constructive dismissal (CD), choose an appropriate date and walk out of your employment. This must be timely otherwise it will be construed as condonation on the part of the employee.

    On the day, do not go to work but instead go to the IR Department (not Labour Office) nearest to where you work and file a case of constructive dismissal under section 20 of the Industrial Relations Act 1967 claiming for unfair dismissal under this section. Forward a copy of this letter to your company.

    From the IR Department ring up your employer stating that you are not absent but that you are in the IR Department filing a claim of CD. Speak to the Human Resource Manager.

    Before going to the IR Department, prepare a letter and provide details and supporting evidence.

    The IR Department will then call both parties and conduct a reconciliation session. In this session IR Officer will view both sides of the case and advise the employer and employee accordingly to the merits of the case.

    Settlements are either in the form of the reinstatement of the employee or an agreed monetary compensation for the employee in return for the employee not pursuing reinstatement.

    If an agreement is not reached to resolve the compliant, than the case will be referred to the Human Resource Minister, who will decide whether or not to refer the case to the Industrial Court.

    If the case is referred, the Industrial Court will then decide on the matter. Either party can appeal the decision at the High Court and subsequently higher courts.

    At this reconciliation stage, both parties cannot be represented by lawyers. Employees can be represented by Industrial Relations Officers, and employers usually represent themselves or are represented by their human resource managers.


    Major (Rtd) Teoh

    Comment by Major (Rtd) Teoh — May 30, 2007 @ 11:49 am | Reply

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