Back
2025 MarsdenLR 694
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]
The non-payment of alleged salaries and false promises by an employer constitutes a fundamental breach, justifying an employee’s constructive dismissal under the Industrial Relations Act.
Headnote:(A) Industrial Relations Act 1967 - Sections 20(3), 22(2), 22(3), 30(6), 30(1A) - Constructive dismissal - Claimant employed as Managing Director - Allegations of unpaid salaries for five months leading to constructive dismissal claims - Company contended there was no formal contract of employment, asserting Claimant was an Independent Director without fixed terms - Court ruled that non-payment amounted to a fundamental breach of contract justifying constructive dismissal. (Paras 1-76)
(B) Constructive dismissal - Applicable legal test - For constructive dismissal to be established, there must be a significant breach by the employer affecting the contract's foundation, coupled with a timely resignation. (Paras 23-66)
Facts of the case:
Claimant alleged non-payment of salaries from April 2021 to August 2021 after being appointed as Managing Director on April 1, 2021; claimed constructive dismissal on September 2, 2021 after repeated unpaid salary promises by the Company. (Paras 1-10)
Findings of Court:
Claimant proved non-payment of salaries as a breach going to the root of the contract; upheld Claimant's constructive dismissal without just cause or excuse. (Paras 67-70)
Issues: Whether the Company's failure to pay wages constituted a breach that justified the Claimant's constructive dismissal; whether the Claimant was an employee under the Industrial Relations Act. (Paras 33-35)
Ratio Decidendi: The court found that the delinquency in salary payments was a breach justifying constructive dismissal, highlighting that employee claims for unpaid wages constitute a breach of the fundamental employment contract. (Paras 67-70)
Result: The Company ordered to pay RM391,000.00 to the Claimant for back wages and unpaid salaries within thirty days, with interest thereafter if unfulfilled.
| Table of Content |
|---|
| 1. basis for claimant's constructive dismissal (Para 3 , 4 , 5 , 6 , 7 , 8) |
| 2. company’s refutation of claimant's claims (Para 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 3. function of the industrial court's inquiry (Para 19 , 20 , 21) |
| 4. legal standards for constructive dismissal (Para 23 , 24 , 25 , 26 , 27 , 28) |
| 5. burden of proof in dismissal cases (Para 30 , 31 , 32) |
| 6. verification of claimant’s employment status (Para 39 , 40 , 41 , 42) |
| 7. nature of breach impacting employment (Para 50 , 51 , 52) |
| 8. fundamental breach due to salary non-payment (Para 58 , 59 , 60) |
| 9. judgement regarding unjust dismissal (Para 67 , 68 , 69) |
| 10. financial remedies ordered by the court (Para 72 , 73 , 74 , 75 , 76) |
[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
