An employee is suspended when they are temporarily excused from their duties and are not required to attend work during the suspension period.  Suspensions are commonly regarded as falling within the parameters of permissible actions that employers can take against employees, whether as a form of punishment or as a means to facilitate investigations into allegations of misconduct. This concept of employers’ right to suspend is to a large extent true, but as with every other decisions affecting employees, must be restrained by what is reasonable, especially since Industrial Courts are guided by equitable principles and do not necessarily defer to employer’s prerogatives.

Must the right to suspend be expressly provided for in the employment contract?

Courts generally recognize that there is an implied term in the contract of employment for an employer to suspend an employee – so long as the suspension is with pay and there is cause or basis for it, such as where it is necessary to allow the employer to carry out investigation into allegations of the employee’s misconduct. In other cases, employers can only act within the ambit of their authority as provided under the contract or risk breaching the fundamental terms of the employee’s employment contract, giving rise to potential claims of constructive dismissal.

Can employers suspend employees without pay?

An employer can only suspend the employee without pay if it is provided under the contract (and where the suspension is justified) because failure to pay wages or salary when it falls due may otherwise constitute a fundamental breach of the employee’s contract of employment.

In the case where the employee comes within the scope the Employment Act 1955 (“EA”), the EA provides that employers may suspend the employee from work for a period not exceeding 2 weeks but shall pay him not less than half his wages for such period; where the inquiry does not disclose any misconduct on the part of the employee, the employer must forthwith restore to the employee the full amount of wages so withheld.

How about suspension as a disciplinary punishment for the employee’s misconduct?

Under the EA, employers can impose a punishment of suspension without wages, provided that the period of suspension does not exceed 2 weeks.  For employees who do not fall under the ambit of the EA, the punishment has to be commensurate with the nature and gravity of the misconduct.

Under what circumstances will a suspension amount to constructive dismissal?

Case laws suggest that the following factors are relevant in the court’s evaluation of whether the suspension amounted to constructive dismissal:

  • Whether the suspension was bona fide: was there investigation, did the employer have a cause/basis for the suspension?
  • Whether the employee was informed of the reason for his suspension?
  • Whether the length of suspension was reasonable?
  • Whether the employee’s conduct was reasonable: did the employee wait for a reasonable time pending investigation, did the employee make inquiries?

In a decided case, the Court found that a suspension for an indefinite period could amount to constructive dismissal. In that case, the employee was suspended by the Company on full pay, but he was not informed about the duration of his suspension. The Court found that the indefinite suspension without formal charges considered together with the failure to investigate constituted a breach of the implied term of mutual trust and confidence.

In other cases, the Courts have held that it is not constructive dismissal if an employee “jumps the gun” (ie: walks out of their job when they are suspended, before investigations are completed, or before disciplinary action can be meted out). In such situations, the employee may have been better off participating in the disciplinary proceedings (even if under protest) and taking all available opportunity to defend themselves against any allegations of misconduct. Otherwise, they may be viewed as merely claiming constructive dismissal to evade or avoid disciplinary proceedings.

Employees who wrongfully claim constructive dismissal may also find themselves liable to their employer for failing to serve their notice period.

What length of suspension is considered reasonable?

There is no hard and fast rule. It depends on the circumstances of the case, taking into account factors such as the number of allegations, the complexity of the issues, and the thoroughness of the investigation. 1 month may be unreasonable in one case, whereas 2 months may be considered reasonable in another. The real question is whether on the totality of the facts, the employer/employee had acted reasonably in the circumstance.

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This article was written by Donovan Cheah (Partner) and Adryenne Lim (Legal Executive). Donovan  has been named as a recommended lawyer for labour and employment by the Legal 500 Asia Pacific 2017. He has written for publications such as the The Edge and the Star, as well as for the Malaysian-German Chamber of Commerce and Industry.  Have a question? Please contact us.

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