When an employee faces disciplinary proceedings and opts to go for a mutual separation instead, can the employee later claim they had no choice but to do so? The Industrial Court case of LCK v Konica Minolta Business Solutions (M) Sdn Bhd (Award No. 272 of 2026) explores the high burden of proof required to vitiate a mutual separation agreement, especially for senior management.
Brief Facts
- The Claimant served the Company for 27 years, eventually reaching the position of Director and General Manager.
- A dispute arose regarding the Claimant’s management of a head office renovation project, specifically concerning fire safety compliance and procurement procedures.
- The Company issued a show cause letter and suspended the Claimant pending a Domestic Inquiry.
- During the disciplinary process, the parties entered a Mutual Consent To Terminate Employment Contract.
- Under this agreement, the Claimant received a settlement of over RM153,000 and his employment ended on 11 September 2020.
- Approximately 41 days after signing the agreement and receiving the payment, the Claimant filed a representation of unfair dismissal, alleging he was forced to resign.
Court’s Findings
The key issue was whether the Claimant was forced to resign, and if the Claimant did not resign, would he have been dismissed by the Company unlawfully. The Court emphasized that in cases of forced resignation, the burden of proof lies entirely on the employee. The Claimant provided no credible evidence of duress, threats, or intimidation.
Here, the suggestion for a mutual separation came from the Claimant, in the middle of the disciplinary process. The Company contended that even though the nature of the charges were serious enough that the Company could have terminated the Claimant, given his long service with the Company, the Company considered the Claimant’s request and still met with him to discuss a possible mutual separation.
Therefore, a key factor was the Claimant’s conduct during the discussions and signing process. He had requested a break during the meeting, was not restrained or escorted, and returned to sign the document without protest.
The delay in filing the claim was also significant. Waiting 41 days to allege coercion, especially after receiving and retaining the settlement sum, suggested the claim was an afterthought rather than a genuine grievance. The Claimant did not make any complaints or raised any concerns, and used none of the grievance channels available to him.
The Court also noted the Claimant’s seniority and experience. As a high-ranking Director with nearly three decades of service, he was well-versed in contractual matters and capable of seeking legal advice before signing.
The act of accepting and keeping the compensation was seen as a ratification of the agreement. A person acting under duress or coercion would rarely retain the benefits of the deal they claim was forced upon them. The Court concluded that the resignation was voluntary and the agreement remained binding.
The Industrial Court therefore dismissed the Claimant’s claim.
Key Takeaways
These are some points to note when mutual separations are being discussed:
- Mutual separation agreements must be entered into voluntarily. They should be clearly worded and signed without any signs of protest. Senior and experienced employees may face a higher hurdle in claiming they did not understand the consequences of the documents they signed.
- Where practicable, employees should be given sufficient time to consider the terms of a separation offer, to minimize claims of coercion, duress or threat.
- Document the negotiation process and all discussions relating to the mutual separation, including any breaks requested by the employee, their access to communication during the meeting, time given to consider the offer, and any specific requests or counter-proposals made by the employee.
- The retention of settlement payments by an employee may be evidence they have ratified the agreement.
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This article was written by Donovan Cheah (Partner) 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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