Constructive dismissal

Abstract

The employment laws in Malaysia have provided for security of tenure and equated this right to be engaged in gainful employment to a proprietary right. This proprietary right provides safeguards to the employee against termination save and except for just cause or excuse. The courts in Malaysia have also recognizes the security of tenure as a fundamental constitutional and proprietary rights under Articles 5(1) and 8(1) of the Federal Constitution. In exercising the management prerogatives, employers from time to time find it necessary to terminate the employees for many reasons. In the context of employment in Malaysia nowadays, all termination of employment initiated by the employer may be viewed as dismissals. In some cases, contract of employments have been terminated arbitrarily and the employees were dismissed without just cause or excuse. In certain circumstances, the employee may deemed himself to be ‘constructively dismissed’ even though he was not being formally dismissed by his employer. This dissertation examines the nature and position of the employer and employee relationship by referring to the employment laws in Malaysia and in the United Kingdom. A thorough study on all relevant cases has also been made to determine what principles of law operate to bring a contract of employment to an end by reason of the employer's conduct: should it be the contract test or the test of unreasonableness or other type of tests? What type of employer's conduct will justify constructive dismissal: should it be the employer's conduct in breach of the terms of employment contract or unreasonable behaviour on his part that leads the employee to walk out of his employment? The applicability of the doctrine of constructive dismissal in the interpretation of Section 20 under the Malaysian Industrial Relations Act is always an issue. The Supreme Court found that the common law always recognizes the right of an employee to terminate a contract of service if the employer was guilty of such breach that affected the foundation of contract or had evinced the intention not to be bound by the contract any longer. But a point to note is that even though the Industrial Court is not a court of law, but it regards itself as being bound by decision of courts of law under the doctrine of precedent. Furthermore, since constructive dismissal has been brought within the ambit of Section 20(1) of the Industrial Relations Act, dismissal rights under the law - reinstatement or payment of compensation in lieu - are extended to those employees who are compelled to resign because of their employers' conduct. The study also revealed the prevailing issues on the constructive dismissal, the awards granted to the unfairly dismissed employees as well as the lacunae in the current legislations and the dire needs for legislative interference in regulating the exercise of discretion in making the awards to the dismissed employee.