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2020 MarsdenLR 940
INDUSTRIAL COURT KUALA LUMPUR
TAN KOK HWEE – Appellant
Versus
IPMUDA BERHAD – Respondent
Award No: 167 Of 2020 [Case No: 31(12)/4-2376/18]
The court upheld the claim of constructive dismissal, determining a significant breach of employment contract terms by the employer, warranting compensation.
Headnote:(A) Employment Law – Constructive Dismissal – Burden of Proof – The claimant, a General Manager, alleged constructive dismissal due to a employer's conduct breaching the essential contract terms – The court assessed that the employer's actions intended to remove the claimant from the company, fulfilling grounds established in previous case law. (Paras [58], [102])
(B)
The required elements of constructive dismissal were present, namely the breach by the employer going to the root of the contract. (Paras [40], [54], [72])
(C)
The law was referenced to establish what constitutes constructive dismissal, citing Lord Denning's principles and the ruling in Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd, [1988] 1 MLJ 92. The employer failed to demonstrate its actions were bona fide actions of restructuring. (Paras [53], [91])
(D)
The claimant sought reinstatement but awarded compensation in lieu pursuant to the recognition of entrenched relationship breakdown under the current management. (Paras [103], [106])
Facts of the case:
The claimant served from 1 March 2006 and was promoted, earning RM 19,000 at the time of the dismissal. Changes in his role under a new MD led to further actions which contributed to a claim of constructive dismissal. (Paras [3], [102])
Findings of Court:
The court found the employer had breached essential terms leading the claimant to constructively resign, awarding damages accordingly. (Paras [102], [108])
Issues
: Whether the claimant proved on balance of probabilities that his contract was breached by the company leading to constructive dismissal. (Paras [58], [99])
Ratio Decidendi:
The court determined that the employer's conduct constituted a significant breach and indicated an intention not to be bound by the contract. (Paras [102], [106])
Result:
RM 437,000 awarded to the claimant as compensation.
AWARD
[1] The Ministerial reference in this case required the court to hear and determine the claimant's complaint of dismissal by the company on 27 February 2018. This case was transferred from court 12 to court 31 on 26 April 2019 and was heard before Chairman of court 31, Syed Noh Bin Syed Nazir@Syed Nadzir and was thereafter transferred to this division of the court on 6 January 2020 pursuant to the instructions from the learned YA Tuan Yang Dipertua, Mahkamah Perusahaan Malaysia in order for a final award be handed down.
Factual Matrix
[2] The claimant is a person with legal background wherein he was a solicitor admitted to the Supreme Courts of England and Wales before he joined the company as a General Manager-Legal and Human Resource.
[3] The claimant commenced employment with the company whose business is basically a building materials trading company (Annual Report 2018, COB- 2, p 21) with effect from 1 March 2006 pursuant to the Letter of Appointment dated 1 March 2006 ["Letter of Appointment"] on a starting salary of RM8,000.00 per month (CLB-1, pp 1-4) and was put on a probationary basis for six months.
[4] He was confirmed in his position three months later as per letter dated 1 June 2006 (CLB-1, p 6).
[5] By the end of 2006, the claimant was put in charge of supervising the company's Insurance Department, which included the Property Department.
[6] In the claimant's second year of service, ie 2008, he was given the task to supervise the company's Administration Department.
[7] By an Internal memo dated 5 January 2018, the claimant was promoted to the position of Director-Legal, Human Resource, Insurance and Administration (CLB-1 p 5) and was in charge of five departments, ie Legal, Human Resource, Insurance, Property and Administration. It was also undisputed that the claimant was given yearly salary increments and was provided with a company car and a monthly allowance of RM1,000.00 in the form of a petrol card as per the Letter of Appointment. In January 2015, the claimant had returned the said car to the company for a brand-new Mercedes Benz C200. This car was a reward to acknowledge the claimant's hard work and driving results as he managed to recover a major debt for the company.
[8] At all material times, the claimant was reporting to the Managing Director/ CEO of the company.
[9] Sometime in 2016, under the management of the previous CEO Mr David Chua Soon Li (Mr David), the company had carried out a cost reduction exercise to decrease the company's operating cost under a programme called the rationalisation exercise and the review of man power resources (Scheme). The Scheme involved, amongst others, retrenchment and voluntary separation or mutual separation for surplus employees. The claimant and his Legal and Human Resource Departments were primarily tasked with the responsibility to ensure that the Scheme was in line with good and fair industrial practices to ensure the interest of both the company and the affected employees were protected at all times (CLB-1, pp 24 to 101). The Scheme was announced in Bursa Malaysia (CLB-1, p 23).
[10] During the implementation of the Scheme, on 29 January 2018, the company had appointed a new Managing Director, Dato' Stephen Sim Choo Thian (COW3) who at that material time, owned 3.62 million shares equivalent to 5% stake in the company (CLB-1, p 22).
[11] After Mr David left the company on 30 January 2018, the claimant reported to COW3 with effect from 29 January 2018.
[12] On the second day of COW3 joining the company, ie on 30 January 2018, COW3 held a discussion with the claimant on his intention to execute cost cutting measures such as a monthly pay cut of the employees' salary, reduction in staffing numbers without incurring costs and withdrawal of company cars and other benefits. He wanted the claimant to support him and propose a solution to execute the changes. The claimant advised COW3 to follow the Scheme (para 9, supra) or to discuss t
