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Constructive dismissal is always easy to allege but not easy to prove in Court. The burden to prove a constructive dismissal claim lies on the employee and the Courts would usually apply a strict test for a constructive dismissal claim to succeed.

Recently, the firm successfully represented an employee (“Employee”) in a constructive dismissal claim against her former employer (“Employer”).  In Najah binti Ahmad v Consist College Sdn Bhd [2019] 2 LNS 1301, the Industrial Court ruled in favour of the Employee, holding that she was constructively dismissed by the Employer. A crucial point in this case was that the Employee alleged that she was subjected to pregnancy discrimination after she informed the Employer that she was pregnant with her second child.

Background Facts

The brief facts of the case are as follows:-

  • After the Employee returned from her maternity leave for her first child, she alleged that the Employer committed a series of acts that breached the relationship of mutual trust and confidence between them. This included instructing the Employee to shift to a smaller room, changing her position from Manager to Counselor (Tier 2 to Tier 3 of the Organizational Chart) without her consent, and issuing many accounts of Warning Letters and Memos.
  • 6 months later, the Employee informed the Employer that she was pregnant with her second child. She also informed the Employer through her medical reports that she was suffering from several pregnancy related issues, which required the Employee to go for medical check-ups and apply for sick leave.
  • After the Employee informed the Employer that she was pregnant with her second child, the Employer proceeded to issue 11 warning letters and memos to the Employee in the span of 2 months.
  • Further, the Employer issued a letter to the Employee, purporting to abolish the Employee’s position and demoting her to the role of a HSE Assistant with an 80% reduction in salary.
  • The Employer also instructed the pregnant Employee to shift to another office located in the basement car park area, next to the smoking area.
  • The Employer later attempted to retract its abolition of the Employee’s position and her reduction in salary. However, as the Employer’s conduct was already overwhelming, the Employee felt that she could not tolerate this further and deemed herself constructively dismissed.
Court’s Findings

The Industrial Court, ruling in favour of the Employee, made the following observations:

  • the Employer’s actions, including the 11 warning letters / memos, demotion of the Employee’s position and significant reduction of her salary amounts to a fundamental breach that goes to the root of the Employee’s employment agreement with the Employer.
  • prior to her announcing her second pregnancy, the Employee never had any complaints against her from the Employer. The Employer did not produce any evidence to show otherwise. The sudden surge in the complaints against the Employee by the Employer after she announced her second pregnancy is suspicious.
  • the Employer’s actions made it clear that the Employer wanted to get rid of the Employee because she was not able to commit to her work due to issues with her health (a result of her pregnancy). The Industrial Court held that this was not a valid reason to attempt to oust the Employee.
  • the two events that were the breaking points for the Employee were the reduction of her salary by 80% and the relocation of her office to the basement of the car park in close proximity to the smoking area.  As the Employee was pregnant, she was exposed to the risk of moving cars and smoke emissions, which was a risk to her health and pregnancy.
  • even though the Employer attempted to retract the abolition of the Employee’s position and her reduction in salary, it was too late as the Employee had already deemed herself constructively dismissed through the Employer’s conduct.
  • the Employer had acted or conducted in a manner which destroyed or seriously damaged their relationship of trust and confidence.

The Industrial Court held:

“It is obvious from the Company’s series of actions that the Company had wanted to get rid of the Claimant as she was not able to commit to her work, validly or otherwise. The Claimant was pregnant and had issues with her health at the material time which caused her to be absent from work frequently. These would have prompted the Company to endeavor to remove the Claimant. Notwithstanding the Claimant’s inability to commit to her work, it was certainly not a valid reason for the Company to attempt to oust her from the Company.”

Key Takeaways

In Malaysia, while employees in the public sector who are discriminated against on grounds of pregnancy may have recourse by relying on the Federal Constitution, there are no laws to protect pregnant employees in the private sector.

Changes are being proposed to the Employment Act 1955 which will hopefully address this gap in the law, but for now, this means that employees in the private sector who are discriminated against may have to rely on the principles of unfair dismissal (if they are terminated due to their pregnancy) or constructive dismissal (if they are subjected to unfair treatment as a result of their pregnancy, forcing them to leave employment) in order to protect their rights.

Constructive dismissal is a situation where there is a breach of a fundamental term of the employment agreement. If an employer discriminates against an employee in an obvious and severe manner such that it could amount to a breach of trust and confidence, this could form the basis for a constructive dismissal claim.

In the case above, the pregnancy discrimination was directly related to a breach of express terms of the employment contract –i.e. the unilateral change in her position and the 80% reduction of salary. The other actions of the employer such as the surge in complaints against her after her pregnancy, supported the Employee’s allegation that the Employer no longer intended to be bound by the employment contract.

The Industrial Court also made an important ruling that an Employer may not easily backtrack from their actions once a breach has been committed.  Here, the Industrial Court found that attempting to retract a breach may be futile if the damage was already done. Here, the Employee had already claimed constructive dismissal before the Employer made an attempt to retract its actions. The Industrial Court’s ruling is sensible as otherwise, any employee is at risk of being treated unfairly by their employer, only to have it “retracted” later should there be a risk of legal action.

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About the author: Zi-Han Lim is an associate in the dispute resolution practice group at Donovan & Ho. He is experienced in dispute resolution, focusing on employment and industrial relations, administrative law and commercial litigation. 

Donovan & Ho is a law firm in Kuala Lumpur, Malaysia. Our practice areas include employment law, dispute resolution (litigation and arbitration), corporate and tax advisory, and real estate/conveyancing. Have a query? Contact us.

 

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