BIR 2884 - Constructive Dismissal: Analysis of Legal Requirements

This report provides a detailed analysis of constructive dismissal, defined as a dismissal disguised as a resignation, within the context of Malaysian law and industrial relations. It examines the legal framework, particularly the Industrial Relations Act 1967, and explores key elements required for an employee to successfully claim constructive dismissal. The report discusses various scenarios that may lead to such claims, including demotion, forced promotion, salary reduction, and the creation of a hostile work environment. Case laws, such as Quah Swee Khoon v. Sime Darby Bhd and Titan Polyethylene V. Othman Busu, are analyzed to illustrate the application of legal principles in real-world situations. The importance of timely action by the employee and the need to provide valid reasons for resignation are emphasized. The report concludes by highlighting the significance of understanding constructive dismissal in maintaining fair labor practices and protecting employee rights, noting that Desklib provides resources for students to further explore these topics.

CONSTRUCTIVE DISMISSAL

Contents
INTRODUCTION...........................................................................................................................................2
DISCUSSION AND ANALYSIS.........................................................................................................................2
Demoting the Employee:.........................................................................................................................8
Forcing an Employee to Accept a Promotion:.........................................................................................8
Suspending the Employee:......................................................................................................................9
Discouraging the Employee’s Authority:................................................................................................9
Subjecting the Employee to a Poisonous Work Environment:...............................................................10
It gets difficult for the employee to return after the leave......................................................................10
CONCLUSION.............................................................................................................................................11
REFERENCES:.............................................................................................................................................13

INTRODUCTION
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.

DISCUSSION AND ANALYSIS
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.
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).
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:
Demoting the Employee:
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).
Forcing an Employee to Accept a Promotion/Demotion:
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).
Reducing the employee salary
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.
Suspending the Employee:
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).
Discouraging the Employee’s Authority:
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).
Subjecting the Employee to a Poisonous Work Environment:
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).

Employee transfer
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.

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