Can Malaysian law protect you if your boss forces you to resign?

So you’re a pretty decent employee. You show up for work on time, meet your performance goals, and generally won’t give anyone a reason to fire you. But one day, you really got on the wrong side of your boss. So wrong, in fact, that he makes it a personal vendetta to get rid of you.

Now, your boss is smart enough to know that he can't fire you at his whims and fancy because you can take him to court, so he tries to be sneaky about it by making life absolutely unbearable at work that you literally have no choice but to resign. Perhaps he holds back your salary for a while, or he changes your job scope so you’re nothing more than an overglorified office boy with a senior management title. You see through his little scheme, but he’s the boss and you’re just a lowly employee… what power do you possibly have to challenge him?

Well, there actually is a power that’s higher than he is…

It’s called Constructive Dismissal

In simple terms, constructive dismissal happens when you are forced to leave your job because your employer breaches an important term of your employment contract. Constructive dismissal is a common law concept (i.e. derived from court decisions), and it applies to Peninsular Malaysia, Sabah and Sawarak. 

The Industrial Relations Act 1967 and Employment Act 1955 are the common laws workers have to depend on to sue their employers. These two pieces of legislation are silent (meaning that nothing is specifically stated) on the definition of constructive dismissal. However, a claim of constructive dismissal can be made based on Section 20(1) of the Industrial Relations Act 1967 which states that no employees shall be terminated without just cause and excuse:

The specific factors that amount to constructive dismissal are quite broad to explain, so here are a number of real life cases that would give you a better idea of what it generally entails: 

• The employer transferred the employee to a position of lesser responsibilities that were incompatible with the employee’s original job role and status (basically not the job they were hired to do) – Watertec (Malaysia) Sdn Bhd v Lee Yoke Peng [2003] 1 ILR 866
• The employer refused to pay the employee’s salary on time (after the period stated in the employment contract) – Lee Cheong Company Sdn Bhd v Lim Suw Koong [2003] 2 ILR 135 
• Falsely accusing an employee of misconduct – Citec International Sdn Bhd v Selvaraja N Gandhi [2003] 2 ILR 691 –

Of course, this doesn’t automatically mean that you can start suing your boss for constructive dismissal because he or she gave you one hard day at work, or refused to give you that 20% raise you were asking for. 

The key in differentiating what is and isn’t constructive dismissal will depend on whether the following 2 main factors are proven.

The 2 things you need to prove before you sue

Malaysian courts have generally recognized two main elements an employee needs to satisfy (meet) in order to sue for constructive dismissal:

Is what your employer doing a breach of your employment contract? 

1. Does your employer’s behavior amount to a serious breach of your employment contract? – Examples such as sexual harassment, a failure to pay your salary and downgrading your job scope will generally be seen as sufficient to satisfy this first element. 
2. Did you leave your job immediately after your employer's unacceptable conduct? – This requirement will be satisfied if you resign immediately because you simply cannot stand your employer's conduct any longer. So if you decide to "hang in there" despite your boss's unreasonable conduct, then your claim for constructive dismissal may fail. 

Before we move on, let’s be clear of who exactly you’ll be bringing to court for constructive dismissal. We have used the word “employer” and “boss” loosely but, in a legal context, you’ll be suing the party that you entered the employment contract with….essentially the name that appears on the contract. 

For example, if Imaginary Company Sdn. Bhd hires you to be a personal assistant for En. Bigwig, you’ll be suing Imaginary Company Sdn. Bhd. even though it’s En. Bigwig that’s making your office life a living hell. This is because Imaginary Company Sdn. Bhd. is considered a legal entity (like a ‘separate person’) under law that ‘signs’ the employment contract with you, and the manager’s behaviour will be attributed to the company.

Similarly, if En. Bigwig hired you out of his own pocket, then he’ll be the one you sue.  

So… how do you start suing (and what can you ask for)? 

Assuming that the 2 elements mentioned above have been/can be proven, this is roughly what the process will be like:

• First, you will need to either go to an office of the Industrial Relations department or write to the Director General of Industrial Relations (more info here) within 60 days of you leaving/getting dismissed.
• Next, the Director General of Industrial Relations will try to get you and your employer to come to a mutual agreement (conciliation).
• If this doesn’t work, then the Director General of Industrial Relations will refer the case to the Minister of Human Resource, who may then refer it to the Industrial Court. This is where you and your employer will have to argue out your case and get a decision.

The common options for remedies (compensation) an employee may ask for are reinstatement of job and monetary compensation. But since it’s likely that the employer-employee relationship is pretty sour at this point, it’ll be unlikely for the employee to get their job back. So it’s much more common to see financial compensation in these cases. 

At the end of the day, employers and employees each have a role to play to make work enjoyable. While you do have certain rights as an employee, not every challenge or scolding means your boss is trying to get rid of you – it could really just be a tough period at work or that you messed up. So it might be best to see what’s happening from a big picture perspective, relook at your employment contract, weigh your options, and make a decision from there. Just like work.