Whilst there is no legal definition of the phrase “quiet firing”, it refers to a situation where an employer makes the workplace unpleasant for the employees to “encourage” them to quit. Some examples include intentionally neglecting an employee to demotivate them, humiliating or being unnecessarily harsh to the employee, making them perform only menial tasks, or unilaterally reassigning the employee’s functions to something materially different or not within their skillset.

Is “quiet firing” legal in Malaysia?

In Malaysia’s industrial jurisprudence, quiet firing can be equated to the concept of constructive dismissal, which refers to an act of an employee terminating his employment due to a breach of contract committed by the employer.  In such a case, although there is no direct dismissal by the employer, it could still amount to unfair dismissal due to the actions of the employer.

The doctrine of constructive dismissal is a way for employees to defend themselves against employer’s breaches of the employment contract. For a claim of constructive dismissal to succeed, an employee must prove: –

  • A breach of contract by the employer;
  • The breach was important enough to justify the employee resigning;
  • The employee left in response to the breach and not for any other unconnected reasons; and 
  • The employee did not delay in doing so. 

The employee must therefore be able to prove that the quiet firing amount to a breach of the employment contract, and that such breach was severe and not for trivial matters. The severity of each breach will be examined case-by-case , but here are some actions which have been considered a form of constructive dismissal:

  • Unilateral reduction of wages, commissions, allowances of benefits without good reason. 
  • Failure to provide a safe working environment. 
  • “Forced resignations” – ie: resignations made under threats or duress. 
  • Non bona-fide reduction of duties or change of job scope. 

A recent case of quiet firing

A recent example of where an employer was liable for quiet firing can be seen in Tan Cheang Hin v Prestige Scuba Sdn Bhd [2022] 3 ILR 314.  Here, the company failed to pay the claimant’s commission and salary in full during the MCO period. When the claimant had a meeting with the company on this issue, the director had repeatedly asked the claimant to resign if he was not happy with the company’s actions. After that meeting, the director had on multiple occasions continued to tell him that if he was not happy, resignation is an option. 

In addition:

  • The Company instructed the claimant to troubleshoot the electricity that had short-circuited at the premises during MCO, when travelling beyond a certain distance is not permitted. This was although the Claimant was a sales executive and not an electrician. 
  • After a meeting with the director, the Claimant was instructed to be seated outside the office and not to serve any clients. 

While the phrase “quiet firing” was not used or mentioned, the actions of the Company could be equated to a form of quiet firing.  In allowing the employee’s claim for constructive dismissal, the Court also considered the claimant’s humiliation and distress when the company had asked him to sit at the lounge without doing any work. Because of this and other conduct of the company, it was held that the company’s actions amounted to a fundamental breach of the employment contract. 


Key Takeaways

Some practical tips for employers:

  • Have frank and open discussions with employees regarding workplace matters and performance issues; 
  • Try to avoid any actions that may be perceived as victimizing the employee or unfair labour practice. If action is to be taken against an employee (eg: giving them a reduced portfolio;  putting them on a performance improvement plan, etc), there should always be a proper commercial or justifiable reason; 
  • Address employees’ grievances swiftly.

Not all allegations of quiet firing may result in a successful constructive dismissal claim. Mere disagreements, petty arguments, or an employee simply being “difficult” and casting spurious allegations does not always mean this is a quiet firing or constructive dismissal. Employers who are able to justify their actions, should take comfort that fair and reasonable actions are likely to be upheld by the Industrial Court.

***

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. Have a question? Please contact us.

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