An employee’s dismissal could be deemed unfair if the employer does not have a good reason for dismissing or did not follow the company’s formal disciplinary or dismissal process. As such, under s20(1) of the industrial Relations Act (“IRA”), an employee who feels that he has been unfairly dismissed without just cause or excuse by his employer, may lodge a representation to the Director General of Industrial Relations within 60 days from the date of his termination. In the event the employee and employer fail to come to an amicable settlement, the matter will be referred to the Minister of Human Resources who will then consider and decide whether the representation is fit to be referred to the Industrial Court for determination.
It should be noted that s20 IRA includes constructive dismissal. In Wong Chee Hong v Cathay Organisation (M) Sdn Bhd, Salleh Abas L P 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.”
Therefore, constructive dismissal arises when an employee terminates his contract of employment by resigning and subsequently communicating that by doing so, he considers himself discharged from further obligations since said employer has committed a breach of a fundamental term of the employment contract. The breach may also be anticipatory whereby the employer has evinced or shown an intention that they no longer wish to be bound by such contract.
Examples of breaches of fundamental terms are as follows:
- Demotion in rank and status
- Unilateral reduction in salary
- Breach of the term of mutual trust and confidence
- Transfer
- Sexual harassment
- Deprivation of work and marginalisation
- Persistent request to employee to resign
- Reduction of job functions and responsibilities
In order to successfully claim for constructive dismissal, the burden of proof is on the employee to prove that there was constructive dismissal by the employer. The employee will thus have to satisfy a few conditions before constructive dismissal can be established.
In the case of Anwar Abdul Rahim v Bayer (M) Sdn Bhd, it was held that to determine whether there was constructive dismissal, the ‘contract test’ is to be applied. This means that the question to ask oneself is whether the conduct of the employer was such that the employer was guilty of a breach going to the root of the contract or whether he has evinced an intention no longer to be bound by the contract.
It was further held that in order to succeed in a claim for constructive dismissal, the employee will have to meet four conditions:
- there must be a breach of contract by the employer;
- the breach must be sufficiently important to justify the employee resigning;
- the employee must leave in response to the breach and not for any other unconnected reason; and
- he must not occasion any undue delay in terminating the contract, otherwise he will be deemed to have waived the breach and agreed to vary the contract.
In conclusion, an employee must satisfy the contract test and the four conditions as laid down in the case of Anwar Abdul Rahim in order to successfully establish constructive dismissal.
