Constructive dismissal occurs when an employer's actions fundamentally breach the employment contract, thus allowing the employee to resign and claim compensation.

The claimant joined the company as a marketing executive and after confirmation her salary was raised to RM1,700 per month.

In the statement of case the claimant alleges that she wrote to the company by letter dated 15 September 1997 on its failure to pay her salary for the month of August 1997. In response to her complaint the company served her a show cause letter dated 17 September 1997 alleging two incidents of misconduct against the claimant. The claimant in her reply to the show cause letter denies the allegations of misconduct and put on record she had acted in the manner with the approval of her immediate supervisor Mr. Michael Chung. Mr. Michael Chung had problems with the top brass of the company and had to resign. The company accused the claimant for not being honest at an inquiry. On 26 September 1997 the claimant was transferred to plant and machinery department as marketing executive. On 4 October 1997 the claimant informed the company she had deemed herself being constructively dismissed and would not report to work due to the company's actions. On 9 October 1997, the company issued notice to the claimant to explain her absence from work and warned her of termination of employment.

In the statement in reply the company alleges that it has just cause and good reasons to stop payment of the claimant's August 1997 salary. The company contends that in accordance with cl. 8 of the claimant's letter of appointment the company had the contractual right of transfer. Similarly, the payment of any benefit and personal incentive the company contends that these were noncontractual and discretionary.

In claiming she was constructively dismissed the claimant adduced evidence that her transfer was verbal and immediate and that was no transfer form was submitted like other employees going on inter-departmental transfers. The transfer resulted in the removal of the claimant's benefits such as petrol, toll, parking allowances and commission. It is also the claimant's contention the transfer was not bona fide and the change of job functions was detrimental to her area of expertise. The act of transfer was done mala fide as it was done after her complaint of failure to pay her August 1997 salary. The allegations of misconduct against her was also mala fide as the company did not proceed to hold a domestic inquiry. The claimant further refuted her transfer was due to economic reason. The company was displeased with her superior Mr. Chung who had resigned and took its anger on the claimant by refusing to pay her salary and ordered her immediate transfer without consultation or consensus of the claimant.

The company's case is that it had the contractual right to transfer the claimant and upon transfer the claimant still enjoyed the same salary. Moreover the claimant's new employer after her transfer, was a subsidiary of the company. There was no breach of the claimant's contract. It is the company's contention it has no obligation to give the claimant notice nor to obtain the claimant's consensus before the transfer in view of cl. 8 in the contract of employment. The company contends that the transfer was bona fide due to the closure of the claimant's department. Apart from the claimant other staff in the department were gradually transferred out later. The claimant had suffered nothing detrimental financially because she was still paid the same salary. As such, it is the company's submission there was no repudiation of the fundamental terms of the contract of service.

The company contends that the removal of the claimant's benefits on transfer was justified because these benefits were given to her for official duties only. Her new job did not require travelling. Moreover, these benefits were not contractual. The claimant was not paid the commission because she had earned a high salary and commission is not a term of contract of employment. The company admitted it held back the personal incentive amounting to RM283 but said it was per