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Constructive Dismissal: Malaysian Employment Law

Constructive Dismissal Malaysian Employment Law by TYH & Co. Trusted Employment Law Firm In KL Selangor Malaysia

Constructive Dismissal: Malaysian Employment Law

Constructive dismissal is defined as an act of an employee terminating his employment due to a breach of the employment contract committed by the employer.

It is illustrated in situations where an employee feels that the employer has done something which are so fundamentally wrong under the employment contract, leaving the employee no choice but to resign from his company. Although there is no direct dismissal/termination by the employer, it can amount to unfair dismissal pursuant to Section 20 of the Industrial Relations Act 1967.

It means that you can go after your employer for unfair dismissal. But how and who to prove it?

Here are some frequently asked questions in respect of constructive dismissal in Malaysia.

Who to prove the claim of constructive dismissal?

The employee who is alleging constructive dismissal has burden of proving the same on a balance of probabilities (meaning that the employee must prove that the alleged constructive dismissal is more probable than not). Once it is proven that the employee was constructively dismissed, the employer will have to prove to the Court that it was done with just cause and excuse.

How to establish constructive dismissal?

Whether there is a case of constructive dismissal, the Court will look at the 4 key elements. There are as follows:-

  • There must be a fundamental breach of the employment contract committed by the employee;
  • The employee in question must resign in response to the said breach and not for any other unconnected reason;
  • Such a breach must be sufficiently important to justify the resignation and it must be so severe that it goes to the root of the employment contract; and
  • The employee’s resignation must not delay.
What can amount to a fundamental breach of the employment contract that goes to the root of the employment contract?

The test of determining whether a breach is fundamental is of a contract test and not of a test of reasonableness. It means that even if there is a breach of the employment contract, the breach committed must be so important or significant enough to justify a claim of constructive dismissal.

Unreasonable behaviour of an employer may not be enough to give rise to a valid claim of constructive dismissal, such as small argument or disagreement with your boss.

The Court will assess the severity of the breach based on a case to case basis whether it goes to the root of the employment contract and/or whether the employer have evinced an intention not to be bound by the employment contract.

How long must I resign after a breach is committed by my company?

The employee must act fast and take immediate action after the alleged breach to either voice out against the alleged breach or to tender his resignation.

If an employee continues to stay on broad, it can be argued that the employee has accepted the alleged breach and waived his right for legal action. In some cases, the courts have held that a delay of 1 month to response was too long to give rise to a valid claim of constructive dismissal.

I felt mistreated by my boss and he is behaving unreasonable because he scolded me. Do I have a case of constructive dismissal?

Bear in mind that the test is of a contract test and not whether the conduct done by the employer is reasonable or not. Unreasonable conduct may not be enough to justify a constructive dismissal claim.

In the event I intend to leave the company on the bases of constructive dismissal, do I need to inform my company?

Yes, case law show that the employee must inform the employers that he deemed himself as constructively dismissed before he can take an action. There is a duty to inform the employer and it is significant especially when the employee bears the burden to first prove whether there is a dismissal.

Constructive dismissal should not be taken lightly because of a higher threshold needed to be met under the law. Therefore, it is highly advisable for both employers and employees to seek for proper legal advice before taking any action.

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