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Constructive Dismissal

(From then Lord President Salleh Abas in the case Wong Chee Hong Vs Cathay Organisation (M) Sdn Bhd (1988))

"The common law has always recognised 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 effects 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."

Constructive dismissal could be likened to a double-edged sword. The employee's reason for resigning should be such chat it affects the important fundamentals of his terms and conditions of service, or the employer's action was such that no reasonable employee could tolerate such an action. The timing of the resignation should also be reasonably soon, to avoid being accused of condonation. Any failure on the part of the employee to ensure these two conditions are fulfilled may result in his resignation not meeting the criteria for constructive dismissal and result in his claim being dismissed by the Court.

What are the circumstances in which an employee can resign and yet claim constructive dismissal?

In order to claim constructive dismissal, the employee should be absolutely certain that the employer's actions are significant breaches going to the root of the Contract of Employment. In other words, the employer's actions are such that it is certainly impossible for the employee to continue in his employment with the said employer. The employee should also make up his mind and resign reasonably soon after the employer's action; otherwise he is said to have condoned or acquiesced the employer's actions.

Some of the circumstances are:

(a) Arbitrary reduction of wages, commissions, allowances, etc.

(b) Withdrawal of contractual benefits e.g. car, housing, entertainment, free meals, free laundry services etc., provided they are provided in the Contract of Service.

(c) Demotion to a lower post, with or without reduction of salary, fringe benefits, etc.

(d) Transfer to a different location if such transferability is not clearly stated in the Letter of Appointment.

(e) Substantial changes in the job function.

(f) Behaviour by the employer, intended to humiliate the employee.

(g) Threatening with dismissal if the employee does not resign from the job.