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2025 MarsdenLR 6005
INDUSTRIAL COURT KUALA LUMPUR
LIM MEI MEI – Appellant
Versus
I-SERVE TECHNOLOGY AND VACATIONS SDN BHD – Respondent
Award No: 251 Of 2025 [Case No: 19/4-367/22]
The unilateral reduction of an employee's salary constitutes a significant breach of contract, justifying a claim for constructive dismissal.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Dismissal - Constructive dismissal - Claimant, Chief Financial Officer, dismissed without just cause after unilateral salary reduction by Company - Claimant's claim of constructive dismissal upheld due to breach of trust and confidence - Court emphasized the employer's burden of proof in dismissal cases. (Paras 1, 10, 15, 19, 24, 35)
(B) Constructive Dismissal - Definition and burden of proof - The employer must prove dismissal was with just cause; failure to conduct a Domestic Inquiry does not invalidate the dismissal claim before the Industrial Court. (Paras 12, 31, 35)
Facts of the case:
The Claimant commenced employment on 1 March 2018 and was dismissed on 8 April 2021 after the Company unilaterally reduced her salary by 50%. The Claimant argued this constituted constructive dismissal. (Paras 3, 10, 11)
Findings of Court:
The Court found that the Company failed to establish just cause for dismissal, ruling in favor of the Claimant. (Paras 35, 44)
Issues: The Court addressed whether the Claimant proved constructive dismissal and whether the dismissal was bona fide. (Paras 14, 30)
Ratio Decidendi: The Court ruled that the employer's unilateral salary reduction constituted a significant breach of contract, justifying the Claimant's claim of constructive dismissal. (Paras 19, 21, 22)
Result: The Claimant awarded RM137,600.00 in compensation. (Paras 44, 46)
AWARD
Reference
[1] This is a reference made under s 20(3) of the Industrial Relations Act 1967 [Act 177] pertaining to the dismissal of Lim Mei Mei (hereinafter referred to as "the Claimant") by I-Serve Technology And Vacations Sdn Bhd (hereinafter referred to as "the Company") on 8 April 2021.
[2] This Director General of Industrial Relations ("DGIR") reference required this Court to hear and determine the Claimant's complaint of dismissal on 8 April 2021 by the Company.
[3] The Claimant commenced employment with the Company on 1 March 2018 as the Chief Financial Officer ("CFO") via a letter of appointment dated 13 February 2018.
[4] The Claimant was employed with the Company from 1 March 2018 until 8 April 2021 which was three (3) years and one(1) month.
[5] The Claimant received and executed a letter from the Company dated 24 January 2019 confirming her position as the CFO at the Company with effect from 1 January 2019.
[6] The Claimant had been paid a salary of RM16,000.00 as per the letter of appointment.
[7] Being the CFO of the Company, it is undisputed that the Claimant is one of the top management personnel in the company.
Referred Cause Papers
[8] The following Pleadings and Documents filed before this Honorable Court are as follows:
i) Statement of Case dated 15 April 2022;
ii) Statement in Reply dated 1 March 2022;
iii) Rejoinder dated 15 September 2023;
iv) Claimant's Bundle of Documents, marked as "CLB-1";
v) Claimant's Additional Bundle of Documents, marked as "CLB-2"; and
vi) Witness Statement of Lim Mei Mei, marked as "CLWS-1";
[9] The matter was heard on 10 September 2024 whereby the Claimant had called herself as indicated above, and the Company's representative present on the hearing date but did not call any witnesses.
Chronology Of Events
[10] The Claimant received a letter dated 22 February 2021 from the Company (signed off by the Managing Director, Dato' Allan Goh) ["Dato' Allan"] which sought for a temporary 50% reduction of the Claimant's salary (from RM16,000.00 to RM8,000.00) starting from the month of March 2021 onwards due to alleged "deficit in financial accounting of the Company".
[11] All the above is in direct contradiction with the reason provided by the Company in seeking to reduce the Claimant's contractually agreed salary of RM16,000.00.
a. The aforesaid letter from the Company carried a portion which required the Claimant's acknowledgement, acceptance and signature;
b. The Claimant did not agree to the deduction and accordingly did not sign the said letter; and
c. Notwithstanding the Claimant's disagreement, the Company had unilaterally deducted the Claimant's salary by 50% wherein the Claimant was only paid RM8,000.00 as her salary for the month of March (which were only issued on 2 April 2021).
[12] In breach of duty of trust and confidence, which left the Claimant with no choice but to consider herself as discharged from further obligation ie constructively dismissed.
The Function Of The Industrial Court
[13] The role of the Industrial Court pertaining to a reference under s 20(3) of the Industrial Relations Act 1967 is to ask itself a question whether there was a dismissal; and, if so, whether it was with or without just cause or excuse ( Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd [1987]; [1988] 1 MLJ 92; [1988] 1 CLJ (Rep) 298).
Issues To Be Decided
[14] The issues to be determined in this case are:
(i) whether a case of constructive dismissal has been made out and; and
(ii) whether the constructive dismissal of the Claimant by the Company was made bona fide.
The Court 's Findings And Reasons
[15] First and foremost, it is the duty of the Industrial Court to determine whether the termination or dismissal is with or without just cause or excuse. In Goon Kwee Phoy v. J & P Coats (M) Bhd; :
"if the employer chooses to give a reason for the action taken by him, the duty of the Industrial Court will be to enquire whether the excuse or reason has or has not been made out".
