Constructive dismissal occurs when an employer's conduct constitutes a fundamental breach of contract, allowing the employee to terminate the contract and claim damages.

Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Constructive dismissal - Claimant's employment terminated without just cause - Claimant entitled to treat himself as constructively dismissed due to non-payment of salaries and breach of contract by employer - Burden of proof lies on the employer to justify dismissal - Court found evidence of fundamental breach of contract. (Paras 12, 23, 30, 49)

(B) Constructive Dismissal - Definition and principles - Employee can terminate contract if employer breaches essential terms or evinces intention not to be bound - Test is whether employer's conduct constitutes a significant breach of the contract. (Paras 12, 15, 22)

Facts of the case:
Claimant was employed as Operations Manager with a monthly salary of RM4,500. Company defaulted on salary payments from March 2020 to October 2021, leading to a claim of constructive dismissal. Claimant reported for work on 15 October 2021, was dismissed two hours later. (Paras 3, 7, 30)

Findings of Court:
Court found that the non-payment of salaries constituted a fundamental breach of contract, entitling the Claimant to treat himself as constructively dismissed. (Paras 30, 49)

Issues: Whether the Company's conduct amounted to a fundamental breach of the employment contract, and whether the Claimant acted timely in response to the breach. (Paras 23)

Ratio Decidendi: The Court ruled that the non-payment of salaries and failure to fulfill contractual obligations by the employer constituted a significant breach, justifying the Claimant's claim of constructive dismissal. (Paras 30, 49)

Result: Claimant awarded RM76,950.00 in compensation. (Para 60)

Table of Content
1. reference to the industrial court. (Para 1 , 2)
2. claimant's appointment and salary details. (Para 3 , 4 , 5 , 6)
3. claimant's allegations against the company. (Para 7)
4. company's defense against the claimant's claims. (Para 8)
5. burden of proof in dismissal cases. (Para 9 , 10 , 11)
6. principles of constructive dismissal. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22)
7. issues to determine in constructive dismissal. (Para 23)
8. evaluation of evidence and findings. (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35)
9. delay and waiver considerations. (Para 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48)
10. finding of constructive dismissal. (Para 49 , 50)
11. determination of remedies. (Para 51 , 52 , 53)
12. compensation in lieu of reinstatement. (Para 54 , 55 , 56 , 57 , 58)
13. final order and compensation amount. (Para 59)

Rusita Md Lazim:

[1] This is a reference from the Director General, Department of Industrial Relations Malaysia to the Industrial Court of Malaysia pursuant to s 20(3) of the Industrial Relations Act 1967 (hereinafter referred to as "the IRA ") in respect of the dismissal of Gerard A/L Elias (hereinafter referred to as "the Claimant") by his employer, K-GE Restaurant Sdn Bhd (hereinafter referred to as "the Company") effective 1 November 2021.

Proceeding In The Industrial Court

[2] This Court has considered the following cause papers and documents in handing down this Award, namely:

(a) the Claimant's Statement of Case dated 23 August 2022.

(b) the Company's Statement in Reply dated 23 September 2022.

(d) the Claimant's witness statement (Gerard A/L Elias) marked as "CLWS-1";

(e) the Company's witness statement (Tan Qi Sheng) is marked as "COWS-1";

(f) the Company's witness statement (Tan Ah Kok) is marked as "COWS-2";

(g) the Company's witness statement (Lai Phooi Theng) is marked as "COWS-3";

(h) the 1st Claimant's Bundle of Documents marked as "CLB-1";

(i) the Company's Bundle of Documents marked as "COB-1";

(j) the 2nd Company's Bundle of Documents marked as "COB-2";

(k) the 3rd Company's Bundle of Documents marked as "COB-3";

Brief Facts Of The Case

[3] The Claimant was appointed by the Respondent by a Letter of Appointment on 15 October 2019 as an Operations Manager with a basic monthly salary of RM4,500.00. The Letter of Appointment was dated 15 October 2019 (CLB-1 pp 1-6).

[4] The Claimant was duly confirmed to his position on 15 January 2020.

[5] Sometime between 15 October 2019 and December 2020, the Claimant was paid his monthly salary of RM4,500.00 by way of cheques.

[6] No deductions of EPF and SOCSO payments were done at the Claimant's early service. The deduction of EPF and SOCSO payment had only started from January 2020.

The Claimant's Case

[7] In his Statement of Case, the Claimant avers the following:

(i) The Company had defaulted and refused to pay in full the Claimant's monthly salaries between March 2020 and October 2021 as well as other allowances totalling RM36,000.00;

(ii) The Company agreed to pay the Claimant a basic salary of RM4,500.00 for his position as the Operations Manager;

(iii) The allegation that the Claimant had prepared his own appointment is illogical as the Director of the Company had prepared and signed the same document on behalf of the Company;

(iv) The Respondent had also defaulted or failed to submit the Claimant's Employee Provident Fund (EPF) or Kumpulan Wang Simpanan Pekerja (KWSP) and Socso contributions to the respective bodies accordingly at the material time;

(v) The non-payment of salaries and the failure of the Respondent's obligation to pay the relevant statutory authorities for the deductions constituted a fundamental breach that went to the root of the contract of employment by the Respondent Company;

(vi) The Claimant did not sign or agree to any of the salary deduction forms but merely signed the PEMULIH Programme invoice slip to receive the amount paid by the

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2023 MarsdenLR 2950

INDUSTRIAL COURT PENANGGERARD ELIAS – AppellantVersusK-GE RESTAURANT SDN BHD – RespondentAward No: 2075 of 2023 [Case No: 9/4-1118/22]

Constructive dismissal occurs when an employer's conduct constitutes a fundamental breach of contract, allowing the employee to terminate the contract and claim damages.

Cases Referred (7)

INDUSTRIAL COURT PENANG
GERARD ELIAS – Appellant
Versus
K-GE RESTAURANT SDN BHD – Respondent
Award No: 2075 of 2023 [Case No: 9/4-1118/22]