Back
2026 MarsdenLR 1784
INDUSTRIAL COURT KUALA LUMPUR
VANITHAMANY SIVALINGAM, CHAIRMAN
MOHAMAD HAFEZ ABDUL RAHMAN – Appellant
Versus
ALPHACAPITAL (M) BERHAD – Respondent
Award No: 1108 of 2026 [Case No: 7/4-350/25]
Failure to pay agreed wages constitutes a fundamental breach of an employment contract, entitling an employee to claim constructive dismissal. The burden of proof rests on the employee to demonstrate this breach and that the resignation was a direct result thereof, based on the balance of probabilities.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Constructive dismissal - Reference of dispute - Non-payment of salary - Employer failure to pay salary constitutes a fundamental breach going to the root of the employment contract - Burden of proof lies on the employee to establish dismissal where the fact of dismissal is contested - Standard of proof in Industrial Court is based on the balance of probabilities - Ex-parte hearing procedures where a party remains absent after being served. (Paras 2, 10, 13, 14, 15, 24)
(B) Constructive Dismissal - Prerequisites for determining constructive dismissal include proof of a fundamental breach of contract by the employer, the employee leaving shortly thereafter, and the employee departing specifically due to said breach - Claims of misconduct or poor performance raised only after an employee complains about salary are deemed baseless and an afterthought. (Paras 12, 19, 25)
(C) Remedies - Reinstatement may not be appropriate in cases where the relationship is irreparably damaged - Back wages are subject to deductions for gainful post-dismissal employment to ensure equitable outcomes. (Paras 27, 28)
Facts of the case:
The employee initiated a constructive dismissal claim after the employer failed to pay wages for a specific month. When the employee queried the non-payment, the employer suggested resignation. Despite efforts to address the issue, the employer failed to rectify the salary arrears and subsequently moved to exclude the employee from the workplace while making unsubstantiated allegations of misconduct. The employer failed to appear in court, resulting in an ex-parte hearing.
Findings of Court:
The court found that the non-payment of salary was a fundamental breach of the employment contract. The employer's subsequent justifications regarding performance were found to be unsubstantiated and an afterthought intended to camouflage the breach. The employee proved on a balance of probabilities that the dismissal was without just cause or excuse.
Issues: Whether the failure to pay salary constitutes a fundamental breach amounting to constructive dismissal, and whether the respondent’s allegations of misconduct justify the termination of the employment contract.
Ratio Decidendi: An employer’s failure to pay stipulated wages constitutes a fundamental breach that goes to the root of the employment contract. Once this breach is established and leads to a resignation, it satisfies the criteria for constructive dismissal, especially where the employer fails to provide evidence of any counter-claims or misconduct.
Result: Claim allowed. Employer ordered to pay back wages minus a deduction for post-dismissal earnings.
| Table of Content |
|---|
| 1. procedural context for ex-parte industrial court proceedings. (Para 1 , 2 , 3) |
| 2. factual narrative establishing non-payment of salary and subsequent resignation. (Para 4 , 5 , 6 , 7 , 8 , 9) |
| 3. legal requirements for proving constructive dismissal via contract breach. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19) |
| 4. evaluation of evidence confirming fundamental breach of employment contract. (Para 20 , 21 , 22 , 23 , 24 , 25) |
| 5. calculation of back wages and relief due to unjust dismissal. (Para 26 , 27 , 28 , 29 , 30) |
AWARD
Reference
This is a reference by the Director General of Industrial Relations to this Industrial Court under s 20(3) of the Industrial Relations Act 1967 ("the Act") arising out of the alleged constructive dismissal of Mohamad Hafez Bin Abdul Rahman ("the Claimant") by his employer, Alphacapital (M) Berhad ("the Company").
[1] This Court takes cognizance of the following bundles and cause papers filed:
I. Statement of Case
II. Claimant's Bundle of Documents (CLB 1)
III. Witness Statement of the claimant (CLWS1)
[2] On the 1st E-Mention date of 11 March 2025, both the company and the claimant did not log in. On the 2nd E-Mention date on 25 March 2025, the claimant logged in however the company failed to log in. The direction was given to file the pleadings and documents. The hearing was fixed for 3 December 2025. The Court attempted to contact the company vide 2 company email addresses on 9 December 2025 (encls 29, 30 and 31). The company search (Encl 10) dated 20 March 2025 shows the status of the company as existing. The Court further attempted to serve Form G (Encl 13) to all company's directors however the A R Card returned unclaimed. The Claimant represented himself in this matter and requested for an ex-parte hearing. The Court proceeded to hear the matter on ex-parte pursuant to s 29(d) & (g) of the Industrial Relations Act 1967 and the Court is mindful of the role in ex-parte hearing.
[3] In the case of Wong Brothers' Building Construction v. Choo Chee Siam [2005] 1 MELR 792; [2005] 2 ILR 356, where the learned chairman quoted from the book 'Law of Industrial Disputes' by OP Malhotra Vol 3rd edn at p 716, where it was stated that 'A rule empowering the tribunal to proceed ex-parte if the party is absent and sufficient cause is not shown for his absence, would not enable it either to do away with the inquiry or straight away pass on an award without giving finding on the merit of the dispute. In other words, the absence of a party does not entail the consequence that an award will straight away be made against him.'
Brief Facts
[4] The Claimant commenced his employment with the company effective from 1 June 2022. The claimant's last held position was Chief Operating Officer with a salary of RM9,000.00. On 7 June 2024, the claimant and some of his subordinates did not receive their May 2024 salary as stipulated by the Employment Act 1955. The Claimant brought this issue to Intan Nursyazana ("the Group's General Manager").
[5] On 7 June 2024, the claimant sent an email at 9:19 pm to the Chief Executive Officer and the Company Director, Mr. Syed Mahadzir Fadaak ("the CEO") with regards to the non-payment of the salary. At 9:31 pm, the CEO replied to the email and stated that the claimant should consider resigning from his position without mentioning or reference made to the outstanding salary.
[6] On 11 June 2024, the claimant sent another email to the company stating that he was constructively dismissed due to the email sent by the CEO previously. Within 1 hour, at 5:59 pm, the General Manager replied and informed the claimant that the suggestion to resign was made as a result of the performance feedback. Furthermore, to obtain a comprehensive evaluation of the claimant's work, the claimant was asked to write officially.
[7] On 12 June 2024, the claimant proceeded to serve a letter to request for the evaluation of work. Subsequently, the claimant was called in for a me
