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2026 MarsdenLR 1031
INDUSTRIAL COURT MALAYSIA
Thiau Yan Kong – Appellant
Versus
Indadi Utama (M) Sdn Bhd – Respondent
8(13)/4-1529/22
Constructive dismissal requires the employee to prove a fundamental breach of an essential contract term, including providing the employer notice to remedy the breach. A temporary assignment within the agreed job scope does not constitute a fundamental breach or a demotion.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) and Section 30(5) - Constructive Dismissal - Burden of proof and requirements for establishing a claim - The burden of proving constructive dismissal lies with the employee on a balance of probabilities (Paras 4, 5). The test is a "contract test" and not a "reasonable test" (Para 6).
(B) Legal Principles for Constructive Dismissal - To succeed in a claim of constructive dismissal, the claimant must establish that: (i) the employer breached the contract of employment in respect of one or more essential terms; (ii) the breach is fundamental, going to the root or foundation of the contract; (iii) the claimant provided the employer with sufficient notice to remedy the defect; (iv) the employer failed to remedy the defect, justifying the claimant's immediate termination of the contract; and (v) the claimant resigned shortly after the breach (Paras 10-12).
(C) Nature of Constructive Dismissal - Constructive dismissal does not mean an employee can automatically terminate a contract simply because an employer behaves unreasonably; such a standard would lead to unsettled industrial relations (Para 58).
Facts of the case:
An employee serving as an Assistant General Manager of Sales was tasked with debt collection as a priority assignment upon returning from a period of suspension. The employee alleged that this assignment constituted a demotion, a non bona fide reduction of responsibilities, and a fundamental breach of the employment contract. The employee further claimed that access to sales-related software was denied, effectively removing them from sales duties. The employee resigned and subsequently claimed constructive dismissal.
Findings of Court:
The court found that the debt collection task was explicitly included in the written job scope signed by the employee upon resuming duty. The assignment was a temporary priority and did not constitute a demotion or the abolishment of the employee's position. Regarding the alleged denial of system access, contemporaneous documentary evidence contradicted the employee's oral testimony, showing that access was either granted or that necessary data was provided through alternative channels.
Issues: Whether the assignment of debt collection duties and the alleged denial of system access constituted a fundamental breach of an essential term of the employment contract sufficient to justify a claim of constructive dismissal.
Ratio Decidendi: The court ruled that the claimant failed to prove a breach of an essential term of the contract because the assigned duties were within the agreed job scope. Since no fundamental breach was established, the requirements for constructive dismissal were not met. The resignation was therefore deemed voluntary.
Result: The claimant’s case is dismissed.
AWARD
Reference
This is an order of reference dated 07.11.2022 by the Director General of Industrial Relations pursuant to subsection 20(3) of the Industrial Relations Act 1967 arising out of the alleged dismissal of THIAU YAN KONG (the claimant) by INDADI UTAMA (M) SDN BHD (the Respondent) on 01.06.2022.
Preliminary
[1] Upon the termination of contract by Y.A. Tuan Arun Kumar a/l S Kanesin, as the learned Chairman of Industrial Court who heard the case in open court, this court was instructed by the President of Industrial Court to hand down the award. Based on the established law that a new Chairman may hand down the award (see Bax Global (Malaysia) Sdn Bhd v. Sukhdev Singh Pritam Singh & Anor [2011] 2 CLJ 534; Chong Jee Fatt v. Tee E & C (Malaysia) Sdn Bhd [2023] 3 ILR 204).
Pleadings, bundle of documents and witnesses’ statements
[2] The documents that were referred to by this Court to arrive to its decision are as follows:
a) Statement of Case dated 06.01.2023 by the claimant;
b) Statement in Reply dated 23.01.2023 by the Company;
c) Rejoinder dated 28.08.2023 by the claimant;
d) Claimant’s Bundle of Document – CLB1;
e) Claimants’ Bundle of Document (Additional (1)) – CLB2; f) Claimants’ Bundle of Document (Additional (2)) – CLB3;
g) Ikatan Dokumen Syarikat – COB1;
h) Ikatan Dokumen Tambahan Syarikat – COB2;
i) Ikatan Dokumen (2) Syarikat – COB3; j) Ikatan Dokumen (3) Syarikat – COB4; k) Ikatan Dokumen (4) Syarikat – COB5;
l) A witness statement by Thiau Yang Kong (CLW1) marked as CLWS1;
m) A witness statement by Frankie Ridzal (CLW2) marked as CLWS2; n) A witness statement by Nur Nazirah binti Mohamad Hashim (COW1) marked as COWS1;
o) A witness statement by Mak Kok Hay (COW2) marked as COWS2 (a);
p) A Supplementary witness statement by Mak Kok Hay (COW2) marked as COWS2(b);
Constructive Dismissal
[3] A constructive dismissal happens when “the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract,…” (per Lord Denning in Western Excavating (ECC) Ltd v. Sharp [1978] 1 All ER 713).
(See also Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd [1988] 1 CLJ 45; [1988] 1 CLJ (Rep) 298).
[4] Under the law, the burden of proving constructive dismissal lies with the employee as decided in Southern Bank Bhd v. Ng Keng Lian [2002] 2 CLJ 514; Phandian Arumugam v. Kudrat Maritime Malaysia Sdn Bhd [2020] ILRU 0587; [2020] 2 LNS 0587 (Award No. 587 of 2020); Suechi Industries Sdn Bhd v. Umah Jeralene Louis Adaikalasami [2005] 1 ILR 54 (Award No. 1319 of 2004)).
[5] The burden to prove his case is on a balance of probabilities (see Syed Othman Abu Bakar v. Cekal Teguh Sdn Bhd/ Kazakhstan Methanol Limited [2018] 4 ILR 2640).
[6] The test in a constructive dismissal case is a “contract test" and not a “reasonable test" (see Bayer (M) Sdn Bhd v. Anwar Abd Rahim [1996] 2 CLJ 49).
[7] Previously, to succeed in a constructive dismissal case, there are four (4) conditions that must be fulfilled as decided in the case of Bayer (M) Sdn Bhd (supra), where the High Court decided as follows: “To claim constructive dismissal, four conditions must be fulfilled. These conditions are:
(1) There must be a breach of contract by the employer;
(2) The breach must be sufficiently important to justify the employee resigning;
(3) The employee must leave in response to the breach and not for any other unconnected reasons; and (4) He must not occasion any undue delay in terminating the contract, otherwise he will be deemed to have waived the breach and agreed to vary the contract.”
(See also Yew Mun Khean v. Kumpulan Liziz Sdn Bhd [2018] 10 CLJ 684; [2018] 9 MLJ 729).
[8] This case was upheld during the appeal at the Court of Appeal’s stage and the principle enunciated by the High Court was approved. The principle in Bayer (M) Sdn Bhd, supra, was also approved by the Court of Appeal in the case of Ng Teck Fay v.
