The art and science of claiming constructive dismissal
Constructive dismissal is where an employee resigns because he perceives that his employer has seriously breached their employment contract. A salient point to note regarding constructive dismissal claims is that the employee might think that the reason behind the resignation was the employer but it is very difficult to prove this in the court of law. Also, employee needs certain precision skills in order to succeed in a constructive dismissal claims – namely in the timing of their exit from the company.
The exact moment that constructive dismissal occurs is brief, fleeting and delicate, when the bedrock of mutual trust and confidence between employee and employer is broken to the core, leaving a void so large that it would be impossible to fill. The employee who intends to succeed in making a claim of constructive dismissal in the Industrial Court must make his move in that moment, lest it passes him by.
Sometimes, however, in his zealousness, miscalculation or perhaps ignorance, the employee may make his move, only to realise albeit too late that the chasm of his employer’s breach had not opened up behind him and was in fact never going to. This is known as ‘jumping the gun’ in constructive dismissal.
It is important, especially for HR practitioners to familiarise themselves with the doctrine of ‘jumping the gun’, because if a former employee from your organisation decides to lodge a complaint of constructive dismissal at the Industrial Relations Court, you will be able to gauge how to strategise your defence and how much time and effort you would need to put in. Even if the organisation has external lawyers to represent it, they will still need HR to provide input.
‘Jumping the gun’ in industrial jurisprudence
‘Jumping the gun’ denotes a premature move on the part of the employee in leaving his employment, upon perceiving that his employer has committed a breach of contract. ‘Jumping the gun’ is distinct from an anticipatory breach. An anticipatory breach occurs when the employer demonstrates an intention not to be bound by the contract in the future. The law recognises an anticipatory breach as sufficient to claim constructive dismissal.
His Lordship Abdul Malik Ishak J (as he then was) in the case of Moo Ng v. Kiwi Products Sdn. Bhd. Johor & Anor [1998] 3 CLJ 475 held:
“In a broad sense, constructive dismissal occurs when an employer repudiates a contract of employment. The repudiation may take the form of a breach, anticipatory breach or notice of intention. It may be expressed or implied and it must go to the substance of the contract.”
To understand the doctrine of jumping the gun better, let us take a look at the different scenarios where this may happen.
a. Vis-à-vis a transfer order
In the case of Malaysia Airline System Berhad, MAS Golden Boutique Sdn Bhd v Noridah bte Ahmad [2003] 2 ILR 561, an employee challenged the management’s statutory prerogative to transfer employees. The second company in this case is the subsidiary of the first company, with the same chairman. The claimant was told by the chairman that the second company was not performing well and he wanted her to write in for a transfer or else her services will be terminated. That same night the claimant wrote a letter to the Vice-President Corporate Services requesting for a transfer. Some days later the claimant sent another letter claiming constructive dismissal, stating that she was forced to request for transfer and that she did not deserve this treatment after having served for 22 years.
The Industrial Court held:
“Going by the evidence and law, the court is satisfied that on the balance of probabilities the claimant had failed to prove that the company had acted in the manner which resulted in the relationship of mutual trust and confidence between employer and employee had broken down. Evidence had shown that the 1st company was still willing to keep the claimant in their employment but the claimant in haste and on her own volition had abandoned the employment. It was the claimant herself, who had walked out of employment. The court, therefore, makes a finding that the claimant was not entitled to consider herself to be constructively dismissed.”
*Emphasis added by author.
b. To avoid disciplinary action
Another typical scenario, i.e., where the employee walked out of his job to avoid a disciplinary sanction, can be seen in Animesh Kumar Dev a/l Ajoy Kumar Dev v Jardine Shipping Services (Malaysia) Sdn Bhd [2018] MELRU 779. The claimant walked out of his job while investigations into his misconduct were ongoing. The claimant was suspended by his employer for a period of one month with full pay pending investigations into certain allegations of misconduct. The claimant was verbally informed of the suspension during a meeting with two senior managers of the company and was later sent a suspension letter via WhatsApp and courier.
After the suspension letter was issued, the company sent the claimant a show-cause letter requesting him to explain several allegations of misconduct made against him. Again, the show cause letter was sent to the claimant via WhatsApp and courier. The claimant did not respond to the show cause letter but instead requested the company to clarify his employment status. He alleged that he was not aware of the suspension. The company responded to his request to reiterate that he was on suspension and requested the claimant to answer the show cause letter. The claimant did not respond to the show cause letter and instead claimed constructive dismissal.
The Industrial Court in dismissing the claimant’s claim opined that an employee who is faced with the disciplinary process should wait for the completion of the inquiry and rebut the matters raised in the show cause letter, instead of ‘jumping the gun’ and claiming constructive dismissal at an early stage.
c. In a corporate reorganisation exercise
In Tokio Marine Insurance (M) Bhd V. Chew Waung Tat & Ors [2006] 2 MELR 743, the claimants were initially employed by The Wing On Fire & Marine Insurance Co. Ltd. The company had gone through a massive reorganisation exercise but had maintained the claimants’ underemployment throughout. The company, however, had varied some of the terms and conditions of employment for all employees, including the introduction of a transfer clause. The claimants wrote a letter objecting to the new terms and conditions.
The company replied that while there was indeed the introduction of new terms, there were also additional benefits. The claimants responded by separate letters maintaining their contention of unilateral variation of their employment contract and demanding a withdrawal of the new terms and conditions, failing which, they would consider themselves constructively dismissed.
The company explained again in writing the need to harmonise the said terms and conditions of employment so that all employees of the company would be covered by one standard set of terms and conditions of employment. The company also denied any breach of contract and requested that the claimants look at the package as a whole rather than accepting the enhanced benefits and rejecting those terms which they construed as detrimental.
The claimants responded by maintaining that they had no alternative but to treat themselves as constructively dismissed.
The Industrial Court held, inter alia, as follows:
“One last point calls for separate mention i.e., the expanded transfer clause which permits the company to transfer the claimants to an “international” i.e., overseas, location. In objecting to this clause, the claimants were ‘jumping the gun’. Up to the time that they left the company on constructive dismissal, none of them had received any such transfer order, so their objection was premature. If, perchance, at some future date there were to be such a transfer order the claimants could, if justified by the facts, seek to show that such transfer was a demotion or an act of victimisation, that would be a question of fact for the court to determine if and when that happened. For the claimants to say that by introducing this transfer clause the company was ipso facto committing a breach of contract, this would be carrying the doctrine of constructive dismissal too far.”
Distinguishing between ‘jumping the gun’ and timely exit on grounds of constructive dismissal
Perhaps the most wholesome discussion on the application of the doctrine of ‘jumping the gun’ in the Malaysian courts can be found in the High Court case of Wong Pow Lin v. Philips Malaysia Sdn Bhd & Anor [2016] MLRHU 1696. The High Court in this case allowed the application for judicial review and held that there was NO issue of the applicant having jumped the gun in leaving her employment.
The applicant was directed to undergo a “Performance Improvement Plan” (“the PIP”) to meet her job expectations. In a letter from the company, it was made known to the applicant that her superiors were dissatisfied with her overall performance and attitude. The letter further informed her that the company could not afford further deterioration of the business performance of the team and hence would give the applicant a period of 3 (three) months to understudy one Mr Michael Lai, who was the sales manager of the trade retail of the consumer channel.
Being dissatisfied with the allegations against her concerning her poor performance and work attitude, the applicant replied four days later, stating that contrary to the 1st respondent’s policy, the PIP was implemented without any discussion between her superior and her, thereby giving her no chance to discuss the matter with her superior and to present her view. In the letter claiming constructive dismissal, the applicant also denied and refuted all the allegations made against her concerning her poor performance and work attitude.
She also stated that she was humiliated and embarrassed by the company’s action in directing her to report to Mr Michael Lai, who was of the same rank and seniority as her, and who has never managed the OEM Channel before. Hence, she informed the company that she was left with no choice but to consider herself constructively dismissed with immediate effect.
On the same date, the company replied to the applicant’s letter, stating that it had been having performance issues with the applicant prior to her emplacement on the pip and that this was conveyed to her. The company concluded its reply by giving the applicant two weeks’ leave of absence and asking the applicant to report back for duty thereafter. The applicant did not report back for duty. Instead, she reiterated that she considered herself constructively dismissed by the company.
During the trial at the Industrial Court, both parties had accused the other party of jumping the gun’. The applicant (claimant, at the time) found issues with the manner in which she was placed under PIP, contending that the People Performance Management (PPM) had to be completed before the emplacement on the PIP. The Industrial Court found that the claimant actually admitted that at the time of her constructive dismissal claim, the PPM process had not even been completed. The Industrial Court concluded it was an instance of the claimant jumping the gun and rejected her claim.
Aggrieved by this decision, the applicant applied to the High Court for an order of certiorari to quash the decision of the Industrial Court. In allowing her application, the High Court held:
“I found that in failing to appreciate the importance of the compliance by the 1st respondent of its PPM process, before making its unilateral decision to emplace the applicant on the PIP to understudy Mr Michael Lai for 3 (three) months, the 2nd respondent has committed an error of law. This is because the 2nd respondent failed to consider that the PPM process is an important policy of the 1st respondent which, had it been complied with, would have enabled the 1st respondent to have a fair evaluation of the applicant’s performance before making the decision to emplace her on the PIP. In doing so, it has failed to take into account relevant evidence, particularly, that of both COW1 and COW2 confirming that the applicant was placed under the PIP before the completion of the PPM process. By deciding that the “applicant had jumped the gun” without taking into account this evidence, the 2nd respondent has erred in law and in fact.
The High Court judge went on to discuss the raison d’etre for his decision:
“I did not find any contributory misconduct on the part of the applicant. There was no evidence that the applicant had contributed, in any way, to her constructive dismissal. It was the 1st respondent, which had caused its own misery by finding fault with the applicant when there was no valid reason to do so, and by mistreating and punishing an exemplary employee like the applicant in the instant case, without justification and, ultimately, in driving the applicant out of her job.
I found that the applicant was, perfectly, entitled to walk out of her job after receiving the 1st respondent’s letter dated 13 January 2012…This is because she had left her job soon after receiving the 1st respondent’s letter dated 13 January 2012, viz on 17 January 2012, which was a mere 4 (four) days after she received the 1st respondent’s letter dated 13 January 2012.”
*Emphasis added by author.
What if the transfer order was to an entity which had no unity of purpose with the business of the original employer?
In the case of Ng Bee Yoong v Capital Development Sdn Bhd [2016] 2 MELR 480, the employee had been given a transfer order to an entity which had no unity of group enterprise with her original employer, and unilaterally altered her job functions along with the transfer order. When she appealed against the transfer order, the management ignored her appeal and proceeded with their decision. The employee claimed that she was victimised and that the transfer order was tainted with mala fide.
The Industrial Court agreed and held as follows:
When the Claimant appealed against the transfer and redesignation and requested that her transfer and subsequent redesignation be revoked, the COO refused to accede to her request and instead issued a transfer order that she be transferred from the Company to HSPKL. The Claimant cannot be said to have acted prematurely and ‘jumped the gun’ because the Company had confirmed its course of action in the letter dated 15.12.2010. Thus, the Company had evinced an intention to no longer be bound by the contract of employment between the Claimant and the Company. The Claimant had rightfully left the Company at that point in time…
How HR can help manage the risk of employees claiming constructive dismissal
When an employee ‘jumps the gun’, it is a sign that not all is well in the organisation. Something must have led the employee to perceive that he is no longer wanted in service, and his sense of cynicism and distrust towards the organisation is to such a degree that it has clouded his judgement. HR must get to the root of this.
HR’s senses must be sharp enough to spot tell-tale signs of a disgruntled employee. True that not all employees express their dissatisfaction with their work so openly; however, if you care enough, you can detect the subtle indications.
Jumping the gun incidences also happen when an employee is genuinely suffering at work and struggling with the way in which they’ve been treated. They may feel they have no other choice but to resign. Resignation decisions can be made in the heat of the moment when emotions are running high.
In any case, the employer has a legally binding obligation to investigate an employee grievance. A failure on the employer’s part to do so and to take appropriate steps to resolve the matter, can cause irreparable damage to the employment relationship.
Of course, the most obvious indication that an employee is considering a claim of constructive dismissal is if they notify to the company in writing that they’re working under protest due to certain actions of the company which they deem to be a breach of contract and request that the company remedy the breach within a certain period, lest they proceed to leave their employment on a constructive dismissal claim.
As a HR leader, you will need to analyse the facts of the employee’s case thoroughly, advice your management and respond to the employee’s letter accordingly. If the employee is unhappy with your reply, he may still proceed to lodge a complaint of constructive dismissal. However, you will have already done your part and the next thing to do will be to try and resolve the matter as amicably as you can over the conciliation table at the Industrial Relations Department.
If you are at the end of your tether as to how to resolve these delicate issues without putting your employer at risk of litigation, discuss with your company’s lawyers the various approaches you can take. It is also good to run your proposed courses of actions by your company’s lawyers so that they can help to ‘fine-tune’ them to ensure legal compliance, and also to give them the heads-up as to what you plan to do so that they can help you in case something unexpected happens.
Tahirah Manesah Abu Bakar is the Specialist Consultant and partner of Funktional Solutions. She is also a Research Fellow with the National Human Resource Centre (NHRC) of HRD Corp. She has more than 24 years of experience in Industrial Relations and HR Professionals across the spectrum of industries.
The views expressed here are entirely the writer’s own.
