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2025 MarsdenLR 779
INDUSTRIAL COURT IPOH
MOHAMED HAZLAN MOHAMED HUSSAIN – Appellant
Versus
VELOCITY TECHNOLOGY SDN BHD – Respondent
Award No: 331 Of 2025 [Case No: 10(5)/4-725/22]
Non-payment of salaries constitutes a fundamental breach of contract, justifying a claim for constructive dismissal under the Industrial Relations Act.
Headnote:(A) Industrial Relations Act 1967 - Sections 20(3), 22(2), 22(3), 29(g), 30(6), 30(1A) - Constructive dismissal - Claimant alleged non-payment of salary for five months, constituting a fundamental breach of employment contract - Company denied employment status and claimed contract was forged - Court found Claimant was a workman and established constructive dismissal due to non-payment of salaries. (Paras 1, 10, 50, 66, 70, 76)
(B) Constructive dismissal - Definition and principles - Conduct of employer must constitute a significant breach of contract, allowing employee to resign without notice - Claimant proved breach of contract through non-payment of salaries, justifying constructive dismissal. (Paras 23, 24, 30, 50, 66)
(C) Burden of proof - Claimant must prove constructive dismissal; once established, burden shifts to employer to prove dismissal was with just cause or excuse - Company failed to provide evidence to counter Claimant's claims. (Paras 30, 68)
Facts of the case:
Claimant employed as Managing Director with a salary of RM15,000.00; alleged non-payment of salaries from April to August 2021 led to constructive dismissal claim on 2 September 2021. (Paras 3, 10, 50)
Findings of Court:
Claimant was constructively dismissed due to Company's failure to pay salaries, which constituted a fundamental breach of the employment contract. (Paras 66, 70)
Issues: Whether Claimant proved constructive dismissal and if the Company had just cause for dismissal. (Paras 33, 66)
Ratio Decidendi: Non-payment of salaries constitutes a fundamental breach of contract, justifying constructive dismissal; Company failed to provide evidence to counter Claimant's claims. (Paras 66, 70)
Result: Claimant awarded RM391,000.00 in back wages and unpaid salaries. (Paras 75, 76)
AWARD
Reference
[1] This is a reference made by the Director General of Industrial Relations Malaysia dated 21 March 2022 pursuant to s 20(3) of the Industrial Relations Act 1967 which was received by the industrial Court on 28 March 2022 arising out of the alleged constructive dismissal of Mohamed Hazlan Bin Mohamed Hussain (hereinafter referred to as "the Claimant") against Velocity Technology Sdn Bhd (hereinafter referred to as "the Company") on 2 September 2021.
Factual Background
[2] The hearing of this matter was conducted and heard before YA Tuan Ahmad Zakhi bin Mohd Daud, the Chairman at the Industrial Court of Malaysia, Kuala Lumpur on 8 March 2023 & 13 July 2023. However, due to mandatory retirement of the previous presiding Chairman from his services, and to expedite the disposal of this matter in due course, the President of the Industrial Court of Malaysia on 23 January 2025 had transferred this matter to the Industrial Court of Malaysia, Perak Branch for the Chairman of the said division to adjudicate and handed down the Awards pursuant to s 22(2) and 22(3), 29(g) and 30(8) of the Industrial Relations Act 1967 .
[3] The Claimant claims that he started employment with the Company (Velocity Technology Sdn Bhd) as Managing Director on 1 April 2021 with a final salary of RM15,000.00 per calendar month. A written employment contract was issued by the Company to the Claimant on 19 April 2021 which is effective from 1 April 2021 (Letter of Employment "MH-2").
[4] The Claimant further claims that his salary was paid by the Company for the first month of employment on 30 April 2021 of RM10,000.00/ leaving the unpaid balance of RM5,000.00/ which the Company still failed to pay until this representation filed to the Department of Industrial Relations.
[5] The Claimant states that there was a discussion with the CEO of the Company named Zainul Alam bin Abdul Kadir and the Chief Operating Officer (COO) named Mohamad Ameen Abu Bakar on around 20 April 2021 discussing the reduction of the Claimant's monthly salary to RM10,000.00/ month due to the inability to pay the Claimant's monthly salary of RM15,000.00/ if the parties intended to maintain the Claimant's employment with the Company.
[6] However, the Claimant did not agree to the reduction of his salary to RM10,000.00 per month albeit that the CEO of the Company promised to pay the Claimant's salary in the following months. Until June 2021, the Claimant only received his salary payment of RM3,000.00/ on 6 July 2021 from the Company. Despite the Claimant repeatedly asking about the payment of his monthly salary as promised several times by the Company, the Claimant once again received only RM1,000.00/ on 6 August 2021 from the Company.
[7] Ever since the Company did not fulfill their promises to pay the Claimant's monthly salary as promised, the Claimant wrote a letter dated 20 August 2021 (Attachment "MH-7") to the CEO of the Company to remind the Company to pay his monthly salary as promised by the Company. Due to the same purpose the Claimant also sent a reminder letter to the CEO of the Company dated 26 August 2021 (Attachment "MH-8") reminding the Company to settle his outstanding monthly salaries within seven (7) days from the date of the said letter, but there is still no response and action from the Company to pay off the Claimant's outstanding salary.
[8] Consequently, in accordance to the Company's failure to pay the outstanding monthly salary from April 2021 to August 2021, the Claimant pleads that it is a fundamental breach of the employment contract between the Claimant and the Company, resulting the Claimant to submit his constructive dismissal letter against the Company from 2 September 2021 (Attachment "MH-9").
[9] Thereafter, the Company did not respond to the constructive dismissal claim from the Claimant, but submitted a letter via email from the Company's solicitors; Messrs S Chandran & Partners dated 30 August 2021 (Attachment "MH-10") which d
