Employers are entitled to suspend employees while conducting disciplinary investigations. During this process, the Company may clarify potential outcomes to the employee, including the possibility of termination. But does raising the possibility of termination (and its consequences) amount to a threat, or a coercion of the employee to resign? 

Factual Background

• The Claimant was a Finance Manager of the Company.
• Due to the various complaints that have been made against the Claimant, the Company decided to investigate if any workplace bullying and harassment and/or threatening or abusive behaviour took place. 
• The following day on 30.3.2022, the Company sent the suspension letter to the claimant via email. The Company’s HR Manager also clarified via a separate email the treatment of the claimant’s sick leave and holiday balance, where she highlighted that if the claimant is terminated, he would not be entitled to any salary in lieu of notice period but only be entitled to receive sick leave and holiday balance. The exact words of the e-mail were:

“Hi Jeffrey, I also wanted to make you aware if we do terminate due to gross misconduct this will be an instant termination and you will not receive your three months’ notice period payment and will only receive your sick leave and holiday balance.”

• The next day, on 31.3.2022, the Claimant called his line manager and asked if he would be receiving his three-month payment in lieu of notice if he resigned, which his line manager confirmed he would. 
• Shortly after the call, the Claimant e-mailed his resignation to the Company’s HR Manager.  The Company accepted his resignation.
• On 12.4.2022, the Claimant sent an email to the Company and alleged that he had been compelled to “forcefully tender” his resignation. Despite this, he continue to accept his payment in lieu of notice of resignation.
  
• The Claimant then filed a complaint of unfair dismissal, which was subsequently referred to the Industrial Court. 

Findings of the Court

The Court found no evidence to support the Claimant’s allegation that his resignation was forced through threats, duress, or mala fide intent. Instead of remaining in his position to contest the allegations made against him, the Claimant chose to resign on 31.3.2022 after his line manager assured him that he would receive three months’ salary in lieu of notice upon resignation. The Court determined that the email from the HR Manager dated 30.3.2022 was just a clarification. 

Further, the Claimant waited 12 days before alleging forced resignation. If coercion had occurred, an immediate response would have been expected.  When the Claimant tendered his resignation, there was no mention whatsoever of any coercion, or that he had been forced to resign. In fact, he thanked the Company for the opportunity that it had given to him. It appeared to the Court that the Claimant instead took time to think it over and carefully hatch his next plan of action, which was to allege forced resignation.

The Court also held that even if the Claimant had been advised to resign to avoid an unfavourable outcome in disciplinary proceedings, such advice did not amount to a threat. An invitation to resign given by an employer to its employee as an alternative to facing a disciplinary action by itself would not constitute a dismissal.

 If the Claimant believed the workplace harassment allegations were unfounded, he should have defended himself during the investigation or disciplinary process.  In the Court’s words:

“…the claimant instead chose to opt for resignation rather than to fight his battle at the investigation stage and/or disciplinary proceedings. It is a choice that the claimant made and he has now got to live with it.” 

Key Takeaways

This case confirms that employers may suspend employees during disciplinary investigations, provided the suspension is properly justified and clearly communicated. A suspension letter, on its own, does not amount to coercion or forced resignation. Likewise, factual and neutrally worded clarifications from the Company (such as explaining potential outcomes if the employee is found guilty of misconduct or is terminated) are not considered threats.

In assessing alleged forced resignation, the Court will examine the actual cause of the resignation. If the employee resigned due to other considerations in their own state of mind, for example to avoid disciplinary action or in exchange for payment, then the resignation will be deemed voluntary – in other words, the employee resigned because it was ultimately his own perceived interest to do so.

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This article was written by Leow Ho Eng (Associate) with assistance from Joedee Shoo (Intern) from Donovan & Ho’s employment law practice.

Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.

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