THERE are times when dismissal of employment is not obvious. Some scrupulous employers might not give a termination notification in writing for example via a letter, email or WhatsApp messages etc.
But the employee feels he is not wanted by the employers since he is pressured or coerced by the employer to resign. In another situation, the employer breaches the employment contract or does some major variation to terms of the employment contract. Such actions may be considered legally as a form of indirect dismissal or termination, a dismissal in disguise
On the flip side, employers may risk themselves stepping on a legal landmine when an employee resigns but claims he or she is forced to do so by the employer. In another scenario, the employee alleges breach of contract by the employer and just leaves the employment.
Constructive Dismissal
Constructive dismissal occurs when an employer’s conduct fundamentally breaches the employment contract, leaving the employee no other choice but to resign.
In the seminal case of Wong Chee Hong v Cathay Organization Malaysia Sdn. Bhd. [1988] 1 CLJ Rep 298/[1988] 1 CLJ 45 his lordship Salleh Abas LP, delivering the judgment of the Court had this to say about constructive dismissal:-
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“The common law has always recognized the right of an employee to terminate his contract of service and therefore to consider himself as discharged from further obligations if the employer is guilty of such breach as affects the foundation of the contract or if the employer has evinced or shown an intention not to be bound by it any longer.
It was an attempt to enlarge the right of the employee of unilateral termination of his contract beyond the perimeter of the common law by an unreasonable conduct of his employer that the expression “constructive dismissal “ was used.
Some common examples of serious or fundamental breaches of the employment contract:
- Unilateral changes to employment terms by the employer.
- Harassment (Including sexual in nature) and bullying
- Failure to pay salaries or statutory benefits such as EPF and SOCSO
- Demotion or significant reduction in duties. Not given any duties at all
The burden on proving constructive dismissal is on the employee. To be able succeed in a case of constructive dismissal, the claimant-employee must be able to establish:
The employer has by its conduct breached the contract of employment in respect of one or more of the essential terms of the contract;
The breach is a fundamental one going to the root or foundation of the contract. It is pertinent to note not every breach would lead to constructive dismissal, it must a serious or fundamental breach
The claimant-employee had placed the company on sufficient notice period giving time for the company to remedy the defect. This normally done via written notice either by letter or email stating the alleged breaches clearly and giving employer reasonable time to rectify the alleged breaches.
If the employer despite being given sufficient notice period, does not remedy the defect then the claimant-employee is entitled to terminate the contract by reason of the company’s conduct and the conduct is sufficiently serious to entitle the claimant to leave at once; and The claimant- employee must not delay in leaving the job due to the breach.
Forced to Resign?
Forced resignation happens when the employee resigns against his or her free will. Forced resignations are sometimes used interchangeably with constructive dismissal but it actually refers to a more direct and intentional form of pressure exerted by an employer to force an employee to leave, such as deliberately creating an inhospitable work environment with the specific goal of making the employee quit.
Unlike constructive dismissal, forced resignation normally involves external pressure rather than breach of contractual terms as constructive dismissal hinges on employer breach. The employee is essentially coerced or pressured into resigning through threats, intimidation, or manipulation by the employer.
A classic example is when an employee given an ultimatum to either “resign or be fired” The employer tells them that if they do not resign, they will be dismissed anyway. In such circumstances, the law sees through the veil of a voluntary resignation and treats it as a dismissal.
In Philleo Allied Bank (M) Bhd v. Tan Mon Ee & Mahkamah Perusahaan Malaysia [2010] 1 LNS 813, forced resignation was established on the basis the employer confronting the employee at one specific meeting using the threat of a suspension letter to pressure the employee to resign, the latter having been made to believe that a dismissal would follow the suspension after the formality of a domestic inquiry.
The employer prepared the letter at the meeting and not allowed to return to her workstation before the resignation was accepted by Head Office there and then.
However, in some cases, the employer might an employee who is a poor performer or has misconduct issue to resign rather than being terminated for such reasons.
This in the what we call in Malaysia as “saving face”. It is common for employees to take such an option to have their reputation intact or to avoid embarrassment and to leave with a seemingly “good record” not to jeopardise their chances of getting a new job. The Industrial Court recognises such realities.
In City-Link Express (M) Sdn Bhd v Greenson Dauk [2002] 3 ILR 1219, the Court expressed its reluctance to find that scenarios such as the one above to be considered as forced resignation:
“Where an employee who had been told of the several respects in which he has failed to perform, or to meet the standards of conduct expected of his employer, decides that it would be wise to make the best out of a bad situation and that it would be in his interest to resign, it would be a matter of some difficulty for the Court to find that the Claimant left the employer because he had been forced to tender his resignation.
To do so would be to ignore the reality of workforce dynamics and interaction between the employer and employee.”
Employees should know that the mere act of boss reprimanding them about work or merely raising the voice doesn’t mean its forced resignation. Some employees actually leave their jobs when their bosses asked them to improve their work or reprimand them. There should be a level of maturity and mental toughness at the workplace.
Just like constructive dismissal, the burden to prove forced resignation is on the employee who alleges it. If the employee resigned due to other considerations such to avoid disciplinary action or in exchange some form of payment by the employer, then the resignation can be considered as voluntary.
There are times when some employees might send a seemingly “friendly” resignation” letter but perhaps the same day send another letter claiming forced resignation. The employees attempt to reverse decision to resign may be seen as afterthought and a strategy to manufacture a claim of forced resignation.
To identify the actual cause of the resignation, the court will normally look at the content and tone of resignation letter or email whether the employee who alleges forced resignation has mentioned being coerced or any issues to that effect.
The court will also examine all other evidence before the resignation such as past communications such as email and WhatsApp messages. In reality, forced resignations are hard to prove and very few cases succeed.
Practical Considerations for Employers and Employees
Employers can take several proactive steps to mitigate the risk of constructive dismissal and forced resignation claims:
Have a clear and comprehensive employment contracts, policies and handbook: Ensure that all terms and conditions of employment, remuneration and benefits are clearly stated.
Adhere to the terms of the contract: avoid making unilateral changes to fundamental terms of the employment contract. If changes are necessary, it should be done with the consent of the employee.
Job description (JD): This should be given before the employee starts work in company. The best would giving the JD before the prospective employee comes for the job interview so that both parties are aware what is expected. The job scope should be stated clearly in the JD and adhered to avoid dispute later
Foster good Industrial Relations: Implement and enforce clear policies against workplace bullying and harassment. Have an efficient grievance system and resolve grievances speedily and fairly
Handle Resignations Professionally: Avoid any actions that could be perceived by the employee as pressuring or coercing the employee to leave.
Never, prepare a resignation letter for the employee!!! even if the employee asks. Conduct an exit interview to understand the reasons for the resignation.
Document Everything: Performance reviews, disciplinary actions and communications with employees.
Reply and rectify the breaches speedily, if the employee alleges constructive dismissal or forced resignation. Don’t ignore the letter or email! If you genuinely made a mistake, rectify it. If you find the allegations not true, reply in writing denying it and stating why so.
Employees should be mindful that it’s not an easy task bearing the burden to prove both constructive dismissal and forced resignation is on them. Regardless employees can take a number of proactive measure to protect their rights:
Awareness: employee should be familiar with their basic rights under the law and be familiar with the terms of the employment contract
Always communicate in writing (letter, email, whatsapp etc). Create a paper trail.
Gather evidence at the earliest opportunity, do not wait for the issue to get really bad to start collecting evidence. It might be too late, as you might not have access to your workplace or your laptops and emails.
Evidence such as secret recordings can be useful (Industrial Court cases generally accept secret recordings but there are cases where compensation was deducted due to employee making recordings in secret)
Before doing anything brash, see a competent employment lawyer or go to the nearest Labour Department and Industrial Relations Department for advise.
Resignation Letter: State the reason of resignation clearly. If the employer has forced you to resigned, state how this was done. If you claim constructive dismissal mentioned the breaches clearly and give employer reasonable time to rectify the alleged breaches
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