WEEK 10:CONSTRUCTIVE DISMISSAL AND

TERMINATION BENEFITS

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Constructive dismissalConstructive dismissal occurs when an

employee leaves his employment claiming that he has been dismissed by his employer. Sometimes, he leaves after submitting a letter of resignation.

There is no requirement that an employee, before he leaves his employment, informs his employer that he intends to make a claim of constructive dismissal.

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The Court will prove four elements before declaring that there is constructive dismissal.

1)The employer has breached the employment contract

2)The breach must be of the major term3)The employee must leave his employment in

timely manner4)The employee must leave in response to the

breach and not for any other reason.3

The example of caseCo-operative Central Bank limited v Wong Pot

Heng

A senior manager in a local bank claimed constructive dismissal. First, his job was changed from General manager to Executive Advisor which is less prestigious title. He was removed from all the committees ha head previously sat on. He was a given a new office, half the size of the previous one. The final indignity was when his Mercedes Benz was replaced with a Volvo which had been used by his subordinate.

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Constructive dismissal is not about unfairness. It is about a breach of an employee’s contract.

Examples of scenarios; 1) Transfer from one location to another with different business.

2) The employer humiliated the employees and showed that the employer was not interested to maintain the implied obligation of mutual trust and respect.

The burden to prove constructive dismissal is on the employee.

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The procedure in unfair dismissalThe employee can claim for reinstatement

under section 20 of the Industrial Relations Act.

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If conciliation fails to bring about a settlement to a claim for reinstatement, the Minister of Human Resources is required by the Industrial relations Act to decide whether the claim should be referred to the Industrial Court for arbitration or not.

If there is a possibility (the benefit of doubt will usually be given to the employee) that the employee has been dismissed without just cause, the Minister would be expected to refer the case to the Industrial court.

If the employer dissatisfied, they can make appeal to the High Court to set aside the decision of the Minister.

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Who can claim?Only a workman as being defined under section

2 of the Industrial Relations Act 1967

“Workman” means any person including an apprentice, employed by an employer under a contract of employment to work for hire or reward and for the purposes of any proceedings in relation to a trade dispute includes any such person who has been dismissed, discharged or retrenched in connection with or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute”

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Therefore, only covers;

i)Contract of service.ii)Does not cover public sector employers.

However, they can have redress at the High Court.

iii)Cover all employees working legally in Malaysia including Malaysian and foreigners.

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Settlement out of CourtIt is allowed.

The parties must inform the Court that they have reached an agreement and their consent will be noted as the Court’s award and are enforceable.

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INDUSTRIAL COURT HEARINGWill conduct a formal hearing and both

parties can produce evidence.

The employees can claim for; i) The employee wants reinstatements- can

claim his job back, with no loss of benefits and also can receive backwages from the time of dismissal.

ii) the employee does not reinstatement but wants monetary compensation.

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COMPENSATION FOR LOSS OF EMPLOYMENT

The amount is up to the discretion of the Court.

However, the common formula is

1.One month’s wages (based upon his last drawn wages) for every year of the employee’s services;

2.Backwages from the date of dismissal to the last date of the Court hearing, with a maximum period of 24 months.

Nevertheless, the court will reduce if the employee gainfully employed after dismissal and he also contribute to the dismissal.

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Termination of a probationer1. Termination for misconduct

2. Non-confirmation of a probationer. - the employee’s work was clearly

unacceptable. - The employee had been informed that his

work was unacceptable prior to termination; - The employee had given sufficient time to

improve.

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The employee must give notice for termination after the expiry of probationary period.

The length of notice depends on the contract. If the contract is silent, the Employment Act requires 4 week’s notice.

Probationers have the right to claim dismissal without just cause under section 20 of the Industrial Court. Rare for the court to award reinstatement and more likely to award compensation.

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At the end of the probationary period, the probationers remain as probationers until get the letter of termination or dismissal.

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