A demotion based on misconduct does not constitute a breach of the employment contract sufficient for constructive dismissal when the employer follows proper inquiry procedures.

Reference

[1] This is a reference made by the Director General of Industrial Relations Malaysia dated 19 July 2021 which was received by the Industrial Court of Malaysia on 30 July 2021 pursuant to s 20(3) of the Industrial Relations Act 1967 arising out of the alleged constructive dismissal of Georgiana Chai Siaw Vun (hereinafter referred to as "the Claimant") by Lekamas Sdn Bhd (hereinafter referred to as "the Company") on 19 December 2020.

[2] The dispute before this Court is the claim by Georgiana Chai Siaw Vun ("the Claimant") that she had been dismissed by way of a constructive dismissal from her employment without just cause or excuse by Lekamas Sdn Bhd ("the Company") on 19 December 2020. The reference by the Director General of Industrial Relations (DGIR) in this case required the Court to hear and determine the Claimant's complaint of constructive dismissal by the Company.

Factual Backgrounds

[3] The Claimant joined employment with the Company since 3 January 2017 and she was served in various entities within the Palm Gold Corporate Services group of companies until her last position with the Company as Management Executive with the basic salary of RM5,770.00 a month. The Claimant's letter of transfer within the Palm Gold Corporate Services Sdn Bhd Group of Companies were exhibited at pp 16-20 of COB. On her last transfer to Lekamas Sdn Bhd vide letter of Transfer of Payroll dated 24 February 2020 (at p 20 of COB) her last designation as Manager Executive - Operations shall remain unchanged and her employment with previous company; Optimum Brilliance Sdn Bhd shall end on 29 February 2020.

[4] Before the Claimant claimed for constructive dismissal, the Company had carried out two (2) Internal Investigations and Domestic Inquiries against the Claimant on charges of misconduct such as the following:

(a) Issuance of unauthorized credit advancement (IOU) to club customer named Muhamad Jamil bin Rahman or better known as "Peter J";

(b) Frequent absenteeism and failing to observe hours of duty as stipulated in her employment contract.

[5] After finding the Claimant guilty of the misconducts, the Company has taken action and punishment against the Claimant as follows:

(a) For the issuance of unauthorized credit advancement (IOU), a repayment plan agreement dated 14 September 2020 to the Claimant in which a schedule of repayment plan of the current outstanding IOU by Peter J through deduction from the Claimant's salary for September 2020 was proposed. The Claimant was also informed that once Peter J had made payments towards the current outstanding IOU, the Company will refund the deducted salaries on the following cycle of salary payment to the Claimant.

(b) For frequent absenteeism and failing to observe hours of duty as stipulated in her employment contract, the Claimant was demoted to a position as a Marketing Officer with effect from 15 December 2020 with a new salary adjustment and remuneration package.

[6] Despite the Claimant responding to the show cause letter, a Domestic Inquiries had been conducted against her, at the conclusion of which, she had been found guilty of the charges preferred against her and demoted from her position. As a result of the demotion, she had suffered a reduction in salary.

[7] Being dissatisfied with the decision and conclusion of Domestic Inquiries as above, the Claimant had tendered her resignation letter dated 20 December 2020 contended that she had been constructively dismissed by the Company in this case.

The Claimant's Case

[8] There has been delay and also non-payment of salary and claim by the Claimant. The non-pay