Constructive Dismissal In Malaysia: Essay On Requirements And Legal Considerations.

Title: Constructive dismissal is a dismissal disguised as resignation.

Discuss this statement with particular attention to the requirements for a successful claim by the workman that he was constructively dismissed.

Legal requirements for a successful claim of constructive dismissal

The assignment is about the constructive dismissal which is regarded as a dismissal disguised as resignation. In Malaysia, the constructive dismissal mainly refers to the act of the employee in breaking its employment contract because of the breach of contract committed by the employer. The breach committed by the company must be in the form that it alters the essential elements of the contract which forces the employee to leave the company or break the contract at all levels. The constructive dismissal mainly related to the common act of the employees in terminating his job post due to the violation of contract committed by the employer. It is highly common in both small scale and large scale organizations around the world. The employees mainly leave the boss but not their job because of their violent or bad behavior.

As per the Malaysian law, when the employees leave their job because of their employer behavior, it could be highly considered as the constructive dismissal. But, in this case, the employee has to show the valid reasons about the employer’s intentions who had committed a breach of contract that forced the employee to take such action forcefully. The breach of the contract would involve the following reasons: hard working conditions, the employer fails to pay the employee dues, change their regular schedule, demoted them without giving any notice, violence, and harassment.

The discussion and analysis will be conducted to elaborate and understand the topic in detail.

The conclusion will be added in the end to find the findings of the facts.

It is to be believed that discrimination in the workplace may lead an employee to guarantee constructive dismissal. From the year 2009 to 2013, the Industrial Court of Malaysia has made 663 honors on constructive dismissal which are mostly against employers. In the Malaysia, which is an emerging nation, constructive dismissal is making another test in labor associations because of the growing number of honors on constructive dismissal made by the Industrial Court of Malaysia in the course of the most recent years. With compensation granted to every worker added up to as much as 2 years of pay in addition to a month's compensation for each time of service, managers can never again disregard this problem that needs to be addressed. The awareness of constructive dismissal falls inside the sphere of the Industrial Relations Act (1967). The Constructive dismissal is an 'esteemed rejection' if a business is blameworthy of a break of the work agreement which drives to the base of the agreement. It emerges when an employee ends his/her agreement of occupation and thinks about themselves released from more commitments on account of the employers.

Laws governing industrial and labor relations in Malaysia

It is to be believed that the industrial and labor relations in Malaysia are mainly governed by the three laws, i.e. Trade Union Act 1959, Employment Act 1955, and Industrials relations Act 1967. This act defines the trade unions prescribes their registration, delineates their membership, and describe their responsibilities and duties.  The employment act defines the employment relationship along with the effective terms and conditions under which the employers may employ a large number of employees. The industrial relations act defines the relations between the workmen, employers and their trade union and provides the remedies for the settlement of the disputes between them (Tshoose, 2017). It is to be believed that section 14 permits the employees to dismiss or fire the employees on the ground of the misconduct. But it is analyzed that an employer could do this only after conducting a Due Enquiry about the performance of the employee or any misconduct form the side of that employee.  Due enquiry mainly relates to all the policies and procedures have been clearly and successfully performed before the dismissal of any employee. If any employer failed to hold DI, then this could be highly fatal for the employer at all levels.

The industrial court in Malaysia is mainly a court of good conscience and equity along with this it is motivated by the social justice and employer. To file the case, there is no filling fees needed but the employer or employee who will file the case or need to hire the lawyer for which it has to bear the fees at all. Even, transferring the employee to a different office without even considering their flexibility in the movement may give rise to the constructive dismissal. It is analyzed that notifying the employees about the changes in the advance are highly crucial to lessen the risk of accountability for constructive dismissal (Chelliah & Netto, 2006). The foremost policy for guarding the association is to make sure that no worker should be in a position to convey a constructive dismissal claim against any individual or company. If any employer reduces the employee benefits or salary along and takes away the decision and responsibilities regarding the job, when the breach occurs, the employee must not take much time to file the case to claim for the constructive dismissal. It is crucial for the employees to set out the exact reasons for the cause of the resignation and the reasons for their resignation. It must not be taken lightly which is definitely a serious matter of concern (Richardson, 2001).

Elements essential for a claim of constructive dismissal

In this case, the fact is that to develop a foundation for the constructive dismissal it is not significant to show that the employer intended any repudiation of the contract. The applicant has argued that the employer has driven him out of the employment course along with this it is the duty of the tribunal.

It could be seen that when the employees demand does not meet, and then they mainly form the trade union. The reason could be job security, increased wages and benefits, peer pressure, protection against the unfair treatment by the respective employer, and making employees voice heard. It is to be believed that employees in Malaysia have the right to form and join a trade union which is mainly known as the freedom of association. In addition to this, it is concluded that no employer could prevent any employee to participate in the trade union by providing unnecessary conditions of the employment contract. In Malaysia, the manager could not call the workers to withdraw themselves from the trade unions. A trade union could be formed with a group of 7 or more workers working in the same company, or the same trade. The Union member can also register them in the Malaysian act to conduct the trade union over the time.

With regards to Malaysian work dealings, training on industrial laws mainly on constructive dismissal are forced as it is considered as another territory and a specific zone of study. The Constructive dismissal happens when any worker ends the contract of work with or without notice and still make an entitlement to have been terminated if the conditions are to such an extent that the person in question fired it by reason of employer's conduct or a breach of the agreement by the employer. The employee must leave quickly in response to the breach of contract (Rowland, 2001).

It is to be believed that the claim of the constructive dismissal linked to the industrial action for determination and the court mainly examine the four essential elements to know if it is constructive dismissal.

As per the Malaysian law, the control of the constructive dismissal is monitored by the agreement test which shows the that the breach of contract committed from the part of the employer gives the chances to the employees to claim for the damages in the end. This would help in considering the suitable reasons on what grounds the employee or employer claim for the damages.

The improper conduct from the employer side may give rise to the suitable claim for the constructive or unfair dismissal, mainly if there is no breach of the contract. It would be not possible for the employer to sustain and maintain their business position for a long time. The foremost concern for any employer would be inspected by the court is whether the employer had breached the valid terms and conditions of the employment contract.

The Employee must be able to provide valid reasons for the constructive dismissal:

The constructive dismissal by the employer must be enough to explain the justified reasons for the breach of contract to claim for the constructive dismissal.  The conflicts or arguments with the bosses cannot be taken as the breach of contract or cannot be taken as the constructive dismissal. The suitability of the breach of contract will be inspected by the court to analyze the situation carefully. The example of the breaches could be commissions, reduction of wages or employment benefits, fails to provide a safe working environment, and forceful resignation.

The employee should take immediate action

In the case of constructive dismissal, time plays a crucial role as the employee must not delay claiming for the breach of contract to get paid for the damages done to them by the employer. The employee is highly expected to take this serious matter of concern by providing the valid notice to the employer, or by protesting for their rights. There are many cases where the worker delays in taking the legal action were even held entitled to claim for the constructive dismissal

The employee must leave

In such cases, when there is constructive dismissal, the employee must resign or leave the company because of the breach of the contract. It is very crucial for the employee to set out the valid and suitable reason to claim for the constructive dismissal and claim for the damages or to get the full payback salary.

‘There are various causes which lead to constructive dismissal of an employee. These are as follows:

It is to be believed that the employee could be terminated for the misconduct, demotion for the poor performance, corporate restructuring, harassment, fraud, and violent. But, the employee could also use the demotion as the constructive dismissal (Islam, 2017). Quah Swee Khoon v. Sime Darby Bhd is an example of the Malaysian constructive dismissal. Sime Darby Berhad is a famous Malaysian trading conglomerate Quah Swee Khoon was an employee of the Sime Darby Company and filed a case against the employer for the constructive dismissal by fraud. If an employer does like any particular employee of the company and he doesn't want to dismiss him but at the same time making ways like demoting the employee or making fun in front of the colleges. In this way, the employer can give resign to the employer, and this is the true case of constructive dismissal (Nhrc.com.my, 2019). 

 If an employer is forcing a promotion/demotion to its employee than it could also be referred to as constructive dismissal. For the particular employee, forcefully promotion could be taken a valid reason for the constructive dismissal. So forcefully promotion is also considered as a constructive dismissal. No employee must be forced to move to the lower position as nobody wants to demote to a lower position after putting their maximum efforts in the best possible manner. Titan Polyethylene V. Othman Busu is the classical example to describe Malaysian constructive dismissal. In this case, the company demoted the employee from the position of the human resource manager to assistant of Vice President of Human resource manager. He asked the managing director to reconsider his position and return him to his former position. The employee was even has given the time to the employer to fix the breach at all to avoid the legal actions on their company (Nhrc.com.my, 2019). 

If an employer is lowering commission percentage, reducing base salary or cancelling a bonus of employee than it can consider as constructive dismissal. That is cutting down employee’s bonus or award on his achievements, or reducing base salary suddenly can lead to constructive dismissal. Therefore, if the employee wants to reduce the pay, then it must need to provide valid reasons for the salary reduction with the prior notice along with the valid reasons. Kitcheneering Studio V. Chia MooiKeng [2002] is the classical example of the constructive dismissal. Chia MooiKeng was an employee of the Studio who was forcefully dismissed by the company by reducing his salary. In this case, the company has constructively dismissed the employee by reducing his salary without even giving suitable notice or any reasons for this action. The Malaysian court held this as the constructive dismissal. 

It is justifiable to suspend an employee if the employee has a valid reason to justify the employee misconduct or improper work for a long time. Sometimes, employee hides their misconduct and falsely claim for the constructive dismissal must be carefully inspected by the court to analyze the situation and take the decisions accordingly. And, of course, the employee must commit an offence that justifies suspension (DAVIDSON, 2014). Wood v WM Car Services (1981) ICR 666 is a classical Malaysian example of the doctrine of constructive dismissal. In this case where Browne J held that there is an implied in the employment contract that the employer will not without any proper cause and reason, conduct themselves in a manner to build the trust between the employer and employee. It was arguably said by the court that to build a breach of an implied term; it is not necessary to show employer has the intention to reject the contract of employment. Ms Wood was account clerk, and chief secretary and the new business owners believed that she worked really less but overpaid. She has given more workload which she felt not fair with her. Her solicitor advised her to resign and claim constructive dismissal against the employer. But in this case, Ms Wood has left with no remedy unless she can prove that she is working maximum hours as per the given salary. It is to be believed that constructive dismissal does not mean that an employee can automatically terminate the employment contract when the employer behaved unfairly towards him. The unfair behavior must be serious so that it could be proofed as constructive dismissal (swarb.co.uk. 2019). 

Humiliating an employee in front of their co-workers or reducing them out of a key decision that is undermining an employee's authority; if it makes it hard or unbearable for them to organize their job, then it can be a form of constructive dismissal. Shabudin Abdul Rashid v Talasco Insurance is an example of the Malaysian doctrine of constructive dismissal. In the case, the company has restricted the Rashid to take the important decision and get him out of the important discussion. The court held and said that the constructive is true in this case as there is the breach of some crucial elements of the employment contract. It is fundamental to break the contract if the employer breaks the contract (Nhrc.com.my, 2019). 

Providing a negative working environment to the employees could be treated as the constructive dismissal. Co-workers and supervisors harass their employees even if they do not participate in that misconduct are also liable to pay the damages to the hurt party. Justin Maurice Read v.  Petroleum Nasional Berhad (Petronas) is an example of the Malaysian constructive dismissal. Justice Maurice was an employee in the Petroleum Nasional Berhad Company where he was highly harassed in the workplace by the senior members and employer. In this case, the employer has forced the Justice Maurice to leave the company on his notice so; he filed a case against the company for constructive dismissal. He then claimed that the way, in which the company handled this matter, he is entitled to claim as a constructive dismissal. It is to be believed that employees have the right to secure their tenure, as well as the employers, have the right to control and hire or fire the perspective and potential employees for the purpose of their business. Employees must not dismiss any employee without evaluating the proper dismissal policies and procedures. In that case, an employee is entitled to get the compensation for the unfair and constructive dismissal and highly entitled to the back wages, reinstatement if the particular complaint is upheld. Employees must fire the employees carefully, i.e. before any employees are being fired to perform his job responsibilities, he must be informed with a prior notice that his work is not up to the standard even, by providing an opportunity to improve (Nhrc.com.my, 2019).

Moving an employee to diverse work location or office can give upsurge to a constructive dismissal complaint. The pay and terms of new position should be compared with the previous one by a court, and it was involuntary on the employee individually, the employee has a strong entitlement for constructive dismissal (Tomassetti, 2012). Wong Chee Hong v Cathay Organization [1988] is a classical Malaysian example of the doctrine of constructive dismissal. Wong Chee was an employee of the company. It is to be believed that the main facts of this case indicate that Wong Chee refuses a transfer order along with this filed a complaint against the employer of the Cathay Organization Under the section of IRA 1967. It has been identified that industrial court held this serious case as a constructive dismissal. The court has given its decision that Wong Chee has been humiliated by the employer intentionally with the demotion of his. So, It is concluded in the end that the confidence and mutual trust between the employee and employer have been breached. In these circumstances, the employee may leave the job instantly without giving any notice or may leave with the notice in the end. It is arguably said that the employee point must be that strong to prove that he is constructively dismissed, otherwise it could lead to losing the right to treat him as discharged (Nhrc.com.my, 2019).

Conclusion

The given assignment discussed the constructive dismissal at the workplace. Even, transferring the employee to a different office without even considering their flexibility in the movement may give rise to the constructive dismissal. It is analyzed that notifying the employees about the changes in advance are highly crucial to lessen the risk of accountability for the constructive dismissal. When the breach occurs, the employee must not take much time to file the case to claim for the constructive dismissal. It is crucial for the employees to set out the exact reasons for the cause of the resignation and the reasons for their resignation. It must not be taken lightly which is definitely a serious matter of concern. The breach of the contract would involve the following reasons: hard working conditions, the employer fails to pay the employee dues, change their regular schedule, demoted them without giving any notice, violence, and harassment. The Constructive dismissal is an 'esteemed rejection' if a business is blameworthy of a break of the work agreement which drives to the base of the agreement. It emerges when an employee ends his/her agreement of occupation and thinks about themselves released from more commitments on account of the employers.

References:

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