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2020 MarsdenLR 2509
INDUSTRIAL COURT KUALA LUMPUR
THEVA PRAGASH KANAPATHY – Appellant
Versus
MATRIX POWER NETWORK SDN BHD – Respondent
Award No: 694 Of 2020 [Case No: 22(26)(2)/4-207/19]
Employer's failure to remit statutory contributions and delayed salary payments constituted a fundamental breach of contract, permitting the claimant to claim constructive dismissal.
Headnote:(A) Industrial Relations Act 1967 – Section 20(3) – Employees Provident Fund Act 1991 – Section 45 – Claim for constructive dismissal due to non-payment of statutory Obligations – The claimant proved that the employer's actions constituted a fundamental breach of employment leading to constructive dismissal – The court found that failure to remit EPF, SOCSO, and timely salary payments amounted to constructive dismissal. (Paras 29-34, 36-39, 45-49)
(B) Constructive Dismissal – The claimant demonstrated the employer’s breaches of contract and statutory duties, supporting the claim for constructive dismissal – The court rejected the employer's justification based on cash flow issues as insufficient. (Paras 31, 40-46)
Facts of the case: The claimant, employed as a Consultant and later a Chief Executive Officer, alleged constructive dismissal due to the company's failure to remit statutory contributions, delayed salary payments, lack of workplace, and proposed conversion to a contractual role. (Paras 7-13, 14, 17-22)
Findings of Court: The company failed to meet its fundamental obligations, justifying the claimant's claim of constructive dismissal. The claimant was awarded RM195,750.00 as compensation. (Paras 70-78)
Issues: Whether the claimant faced constructive dismissal, and whether such dismissal was with just cause. (Paras 28)
Ratio Decidendi: The court ruled that the company’s failure to remit statutory contributions and the delay in salary payments constituted a breach going to the root of the contract and allowed the claimant to treat himself as constructively dismissed. (Paras 29-39)
Result: The claimant was awarded compensation in lieu of reinstatement. (Paras 70-78)
[1] The Ministerial reference in this case required the court to hear and determine the claimant's complaint of dismissal by the company on 20 August 2018.
I. Procedural History
[2] The court received the letter pertaining to the Ministerial reference under s 20(3) of the Industrial Relations Act 1967 (Act 177) on 8 March 2019.
[3] The matter was fixed for mention on 15 April 2019, 18 June 2019, 14 August 2019, 27 August 2019 and 14 October 2019.
[4] The trial proceeded before the learned Chairman of court No 26, ie Tuan Yong Soon Ching, on 13 November 2019, 10 December 2019 and 11 December 2019.
[5] Due to the non-extension of the Task Force Courts, and in this case court No 26, the learned President of the Industrial court on 5 February 2020 instructed the file to be transferred from court No 26 to this court, ie court No 22, for the purposes of handing down an Award for this case.
[6] This court, after perusing the pleadings, the documents, the witness statements, the notes of proceedings as well as the written submissions (together with the bundles of authorities) filed by the parties to this matter, herein hands down the Award as per the instructions of the learned President of the Industrial court.
II. The Parties' Position On The Merits(i) The Claimant
[7] The claimant was appointed by the company as a Consultant for a period of 2 years effective 1 February 2016. He was subsequently offered the position of Chief Executive Officer for a subsidiary of the company, ie MX Energy Services Sdn Bhd for a period of 2 years commencing on 1 August 2016 to 31 July 2018.
[8] The claimant was thereafter offered the position of Group Chief Marketing Officer (Grade: SM1) effective 1 March 2017.
[9] Sometime in early 2018, the claimant discovered the following facts:
i. the company had failed to remit the claimant's portion for EPF contributions which had been duly deducted from the claimant's monthly salaries since April 2017 to the Employees' Provident Fund ("KWSP");
ii. the company had failed to remit the claimant's portion for SOCSO, which had been duly deducted from the claimant's monthly salaries since March 2017 to the Social Security Organisation ("PERKESO");
iii. the company had failed to make the employer's contributions for EPF and SOCSO for the claimant's employment since March/ April 2017.
[10] Since August 2017, the company started to delay the payment of the claimant's salary. The company also started the practice of paying salary by stages instead of one full payment, including the claimant's salary, without his consent. From December 2017 onwards, the company had failed to pay the claimant's monthly salary of RM15,000.00 in full, resulting in overdue salaries to the claimant.
[11] Sometime in January 2018, the company shifted to a new premises. However, the claimant was not provided with an office at the new premises. The claimant's official email was also deleted sometime in June/July 2018; both of these incidents obstructed the performance of the claimant's duties.
[12] Sometime in March/April 2018, the claimant discovered that the company did not remit the monthly PCB deductions of the claimant's salary to the Inland Revenue Board of Malaysia ("LHDN").
[13] On 9 July 2018, the claimant was made an offer by the company to convert his full-time employment to contractual basis for one year as a Consultant, through a letter of appointment that was backdated to 28 May 2018. In addition, the claimant was also required to sign off a notice of resignation backdated to 1 May 2018 pre-prepared by the company.
[14] As a result of the above incidents, the claimant gave the company a Notice of Constructive Dismissal on 20 August 2018, informing them that he considered himself to be constructively dismissed by the company with immediate effect.
[15] The claimant's last drawn basic salary with the company was RM15,000.00 per month together with a fixed monthly allowance of RM90.00 for phone.
[16] The claimant claims for
