What happens when an employee “walks out” of their job when they are suspended pending investigations, because they feel they have been wrongly or unfairly accused of misconduct?

When an employee does this, they will usually claim that they have been constructively dismissed. Constructive dismissal arises when an employee claims they are given no choice but to resign due to a breach of a fundamental term of their employment contract committed by their employer. In order to prove constructive dismissal, an employee must be able to show:

  • There must be a breach of contract by the employer;
  • The breach must be sufficiently important to justify the employee resigning;
  • The employee must leave in response to the breach and not for any other unconnected reasons; and
  • The employee must not delay their claim for constructive dismissal.

In Animesh Kumar Dev a/l Ajoy Kumar Dev v Jardine Shipping Services (Malaysia) Sdn Bhd (Award No. 779 of 2018), our firm successfully defended the employer in a claim of constructive dismissal by a former employee who walked out of his job while investigations into his misconduct was ongoing.

What happened in this case?

The employee (“Claimant”) was suspended by the Company for a period of 1 month with full pay pending investigations into certain allegations of misconduct.

The Claimant was verbally informed of the suspension during a meeting with two senior managers of the Company, and was later sent a suspension letter via WhatsApp and courier.

After the suspension letter was issued, the Company sent the Claimant a show cause letter requesting the Claimant to explain several allegations of misconduct made against him. Again, the show cause letter was sent to the Claimant via WhatsApp and courier.

The Claimant did not respond to the show cause letter, but instead requested the Company to clarify his employment status. He alleged that he was not aware of the suspension.

The Company responded to his request to reiterate that he was on suspension, and requested the Claimant to answer the show cause letter.

The Claimant did not respond to the show cause letter, and instead claimed constructive dismissal.

Court’s Findings

The Industrial Court dismissed the Claimant’s complaint of constructive dismissal. The Industrial Court made the following findings:

  • It was acceptable for the Company to issue the suspension letter and show cause letter to the Claimant via Whatsapp, in order to bring those letters to the Claimant’s attention. This is especially when there was an acknowledgement by the Claimant in the Whatsapp chat that he received the letters. There is no requirement for the physical copies of the suspension letter or show cause letter to be handed over to the Claimant or that any other form of service is unacceptable.
  • Employers have a right to suspend employees pending investigations to determine whether or not disciplinary action should be taken against the employee. The decision to suspend an employee does not amount to a fundamental breach going to the root of the contract which would allow an employee to walk out of his employment. The Industrial Court distinguished this case from other cases where the suspension period was unacceptably long (eg: 7 months).
  • An employee who is faced with disciplinary process should wait for the completion of the inquiry and rebut the matters raised in the show cause letter, instead of “jumping the gun” and claiming constructive dismissal at an early stage.
  • In the trial, the Claimant went on to refute the allegations in the show cause letter. However, since the issue before the Industrial Court was constructive dismissal, the Industrial Court held that it should not be dealing with the matters brought up in the show cause letter. Since the Industrial Court found there was no constructive dismissal, the issue of whether the allegations of misconduct have been proven does not arise.

Key Takeaways

The test for constructive dismissal is ultimately a “contract test” and not a “reasonableness test”. As such, the question is not whether the employer has acted reasonably, but whether the employer has breached a fundamental term of the employment contract.

It has always been understood that an employer has the managerial prerogative to investigate allegations of misconduct and to institute disciplinary proceedings if necessary. An employee who feels they have been wrongly or unfairly accused, should rebut the allegations and defend themselves at the appropriate juncture (eg: by responding to the show cause letter or by participating in the domestic inquiry).

As seen from this case, an employee who refuses to rebut allegations of misconduct during the disciplinary process but instead claims constructive dismissal, may later be barred from refuting those allegations of misconduct before the Industrial Court.  This is because by claiming constructive dismissal, the employee “quits” and is not terminated for misconduct. The issues to be determined by the Industrial Court are therefore limited to the issue of whether there was a breach of a fundamental term of the contract of employment, and not whether misconduct was committed.

Therefore, an employee who refuses to participate or acknowledge the disciplinary process and “quits” in protest, may find themselves on the losing end of a constructive dismissal claim.

***

This article was written by Donovan Cheah (Partner, Employment Law and Dispute Resolution), with assistance from Yeoh Kai Shin (Intern).  Donovan is an advocate and solicitor of the High Court of Malaya, and is also registered with the Singapore International Commercial Court as a foreign lawyer. He is a member of the Chartered Institute of Arbitrators, and of the Singapore Institute of Arbitrators. He is named as a recommended lawyer for labour and employment by the Legal 500 Asia Pacific in both 2017 and 2018.

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