In a constructive dismissal case, is the aggrieved employee bound by the reasons stated in his resignation letter, or can he raise new grounds of constructive dismissal at the Industrial Court? The answer to this question would have a far-reaching impact on how employees need to articulate their constructive dismissal notices, and how employers should respond to the same.
In Macfood Services (M) Sdn Bhd v Mahkamah Perusahaan Malaysia & Anor [2024] CLJU 271, the High Court took the position that the Courts are only required to consider the reasons raised in the resignation letter or notice of constructive dismissal.
Brief Facts
- In July 2020, the Company issued a show cause letter to the Employee. After the Employee provided her response, the Company and the Employee had a meeting to discuss the Employee’s response (“Meeting”).
- At the Meeting, the Company’s concerns were highlighted to the Employee and it was explained that the Meeting was also held with the intention for parties to realign and set expectations. It was then agreed that the Employee would be placed on a performance improvement plan.
- After the Meeting, the Employee resigned on the basis that she was “unfairly treated” when she was issued with the show cause letter and that she was “blindsided” by the Meeting (“Resignation Letter”).
- The Company issued a letter to stress that there was no intention for her to resign, and that the Company was looking forward to improvement in her performance. However, ultimately, the Company accepted the Employee’s resignation.
- At the Industrial Court, the Court found that the Employee had been dismissed without just cause or excuse. In reaching its decision, the Industrial Court considered matters that was not raised in the Resignation Letter, such as the following allegations:
- That the Company instructed the Employee to ensure cleanliness of the office;
- That the Company scolded the Employee for raising issues about cleanliness;
- That the Company questioned the Employee about spending above budget; and
- That the Company forced the Employee to work although she was on sick leave.
- Dissatisfied with the Industrial Court’s decision, the Company filed an application for judicial review at the High Court.
High Court’s Decision
At the outset, the High Court observed that the Employee’s basis for constructive dismissal was expressly stated in the Resignation Letter: (1) the issuance of the show cause letter, and (2) the events that transpired during the Meeting.
The High Court noted the legal position that where an employee is dismissed, the employer is only allowed to justify the dismissal premised on matters which were operational in its mind when making the decision to terminate. The High Court held that conversely, in cases of constructive dismissal, the position should be similar – ie: if the employee gives reason for his constructive dismissal, the Industrial Court should not go into another reason not relied on by the employee.
As such, the Industrial Court had committed an error of law when it took into account matters not raised in the Resignation Letter. The High Court held that it was incumbent on the Industrial Court to only consider the two reasons raised in the Resignation Letter.
In respect of those two reasons raised by the Employee in the Resignation Letter, the High Court held:
- The issuance of the show cause letter did not amount to a fundamental breach of the contract of employment, as it is part and parcel of an investigation against the Employee.
- The nature and the intention of the Meeting on 5.8.2020 was for the Company to seek a further explanation of the Employee’s response to the show cause letter, as well as to explain the Company’s expectations to her.
As such, based on the above, the Industrial Court had erred in finding that there was a dismissal without just cause and excuse. The Employee resigned voluntarily and failed to prove her claim for constructive dismissal.
Key Takeaways
This decision underscores the importance of employees informing employers of their true reasons for departure. Failure to do so may prevent them from raising additional grievances during the Industrial Court stage if they claim constructive dismissal. While the law does not require full and detailed allegations to be put in the resignation letter, employees should still provide their main reasons for alleging constructive dismissal. They will not be allowed to add in more grounds at trial.
Once employers receive a notice of constructive dismissal, they should promptly assess and investigate the legitimacy of the employee’s claims. Employers should respond quickly to such notices, clearly stating their position and denying any wrongful allegations.
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This article was written by Leow Ho Eng (Associate) 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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