In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.
Most employers are now aware of the importance of having clear policies and processes when it comes to handling complaints and disciplinary issues. It’s the norm for businesses hiring a reasonable number of employees to have in place various codes of conduct, guidelines, and policies.
Despite this, an employer that receives an employee complaint and acts on it could still be at risk of being deemed to have breached the terms and conditions of employment, or severed the employment relationship, due to shortcomings in how the complaint was handled.
The Industrial Court recently considered these issues in Justin Maurice Read v. Petroliam Nasional Berhad (Petronas) (Award No. 965 of 2017). In this case, the claimant (the Employee) had complained of being assaulted and harassed in the workplace. The Employee then claimed that the manner in which these complaints were handled by the company (the Employer) entitled him to claim to have been constructively dismissed.
The Employee wrote to his HR Manager on 31 May 2010 to complain about an assault by another employee, Hasim. The Employee claimed that Hasim confronted him at his workstation twice, and used physical force. The Employee says that the four subsequent discussions that took place with his immediate superiors were in vain, as his complaint was not properly addressed. The Employee lodged a police report pertaining to the assault on 1 & 3 June 2010.
By email on 17 June 2010, the Employee also complained to the Employer about a break-in to his drawer locker.
On 22 September 2010, the Employee emailed the Employer to express his disappointment over the Employer’s inaction over his complaints, and also claimed that he had been feeling uncomfortable and anxious after the initial incidents, and that other employees had also been abusing and taunting him.
The Employee said he was asked to drop the accusations against Hasim.
On 12 November 2010 — more than five months from the initial complaint — the Employee wrote to the Employer to claim that, as a result of the Employer’s inaction, he had been constructively dismissed.
The Employer contended that it had in fact taken action, as follows:
- Following the Employee’s complaint on 31 May 2010, fact finding and early resolution to the dispute was initiated immediately at departmental level. The HR Department commenced investigation on 3 June 2010, and the Corporate Security Division (CSD) commenced investigations sometime in June 2010.
- The CSD interviewed the Employee on 17 June 2010, received documents from him on 18 June 2010, and a formal recording of his voluntary statement took place on 29 June 2010. Hasim was interviewed on 25 June 2010. The Employee was notified of the status of CSD’s investigations, and CSD completed a report on 20 July 2010.
- The Employer issued a show cause letter to Hasim on 1 September 2010 and, following Hasim’s response, issued a warning letter on 15 October 2010.
- The Employer also received complaints about the Employee’s behaviour, and prepared a show cause letter to be issued, but by then the Employee no longer reported to work.
The Employer contended that it had at all material times addressed the Employee’s complaints, conducted investigations, and taken appropriate disciplinary action, and that the Employee has no reasonable basis or justifiable grounds to substantiate a claim of constructive dismissal.
There were also several other issues brought up by the parties and considered by the Court which we will not go into for the purposes of this case update.
Legal issues to be considered
The Industrial Court had to consider the following:
- Whether the Employee was constructively dismissed.
- If the answer to 1 is yes, then whether the Employer had just cause or excuse for the dismissal.
The burden of proving the first limb above is on the Employee. If the Employee succeeds, then the burden shifts to the Employer for the second limb.
The Court also set out the following legal principles in relation to constructive dismissal:
- The underlying principle as expressed in Wong Chee Hong v. Cathay Organisation (M) Sdn Bhd  1 CLJ 45: “The common law has always recognised the right of an employee to terminate his contract and therefore to consider himself as discharged from further obligations if the employer is guilty of such a breach as affects the foundation of the contract, or if the employer has evinced an intention not to be bound by it any longer. It was an attempt to enlarge the right of the employee of unilateral termination of his contract beyond the perimeter of the common law by an unreasonable conduct of his employer that the expression “constructive dismissal” was used.”
- The application of the “contract test” as set out in Western Excavating (ECC) Ltd v. Sharp  1 All E.R. 713: “If the employer is guilty of conduct which is a significant breach going to the root of the contract, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then the employee terminates the contract by reason of the employer’s conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say that he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains; for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the (varied) contract.”
- As also stated in Anwar Abdul Rahim v. Bayer (M) Sdn Bhd  2 CLJ 197: “It has been repeatedly held by our courts that the proper approach in deciding whether constructive dismissal has taken place is not to ask oneself whether the employer’s conduct was unfair or unreasonable (the unreasonableness test) but whether ‘the conduct of the employer was such that the employer was guilty of a breach going to the root of the contract or whether he has evinced an intention no longer to be bound by the contract’.”
The principles set out in Govindasamy Munusamy v. Industrial Court Malaysia & Anor  10 CLJ 266 were also cited, where the court in that case stated:
To succeed in a case of constructive dismissal, it is sufficient for the claimant to establish that:
(i) the company has by its conduct breached the contract of employment in respect of one or more of the essential terms of the contract;
(ii) the breach is a fundamental one going to the root or foundation of the contract;
(iii) the claimant had placed the company on sufficient notice period giving time for the company to remedy the defect;
(iv) if the company, despite being given sufficient notice period, does not remedy the defect then the claimant is entitled to terminate the contract by reason of the company’s conduct and the conduct is sufficiently serious to entitle the claimant to leave at once; and
(v) the claimant, in order to assert his right to treat himself as discharged, left soon after the breach.
The test for constructive dismissal as it stands is a test on contractual breach rather than unreasonableness. Further, where the workman’s claim for reinstatement is based on constructive and not actual dismissal, the onus of proving that he has been constructively dismissed lies on the workman himself.
Findings of the Court
Based on the evidence presented, the Court was satisfied that Hasim had indeed slapped the Employee as alleged.
In relation to the handling of the complaint and investigation of the assault, the Court found the following:
- The Senior Manager did not report the assault complaint to the General Manager Group HR Management as required under the Employer’s Code of Conduct and Discipline, as he wanted to conduct fact-finding and resolve the matter within the department. The Employee directly contacted the Human Resources Manager, but was asked to bring the matter up with the Head of Department to be resolved at departmental level.
- The Employee was aware of the Employer’s follow-up actions and investigation, and that the investigations were almost completed by 8 July 2010. However, the Employee was thereafter not kept informed of the progress and outcome of the investigations, despite an email requesting for information on 22 September 2010.
- The Employer claimed that it is not company practice to inform the complainant (the Employee here) of the outcome of investigations, or action taken against the perpetrator. The Employer further claimed that at the point the Employee requested the information, the final disciplinary action had yet to be taken. The Court took the view that this was not a sufficient justification or excuse not to update the Employee on the status of the investigation, and that the Employee could have been informed that at that point, the investigation had been completed, and that a show cause letter had been issued.
The Court found that the Employer’s attempt to persuade the Employee to retract the assault complaint to HR and not lodge a police report was “totally unbecoming and callous”.
In relation to the Employee’s (first raised in his email of 22 September 2010) of being subjected to taunts and harassment from other employees, the Court concluded that the Employer did not investigate the complaints.
The Employee pleaded that the Employer’s conduct in addressing the various issues was motivated male fides (in bad faith) with a view of victimising him. The burden was on the Employee to prove that he was victimised by the Employer as alleged. The Court was satisfied that the Employee had proved that the Employer victimised him, due to the following:
- The Employer’s response to Hasim’s complaint was much quicker than the Employer’s response to the Employee’s complaint — 1 month 9 days compared to 3 months (from the date of the complaint to the date of the show cause letter). The Court agreed that there was a clear disparity in the Employer’s response in each case.
- The Employer proposed to relocate the Employee, but not Hasim. The Court’s view was that this indicated bias, and gave the impression that the Employer saw it fit to ostracize the Employee rather than Hasim.
The Industrial Court concluded that the Employer did not conduct itself in an ethical, responsible and transparent manner, due to the following, each of which were deemed to be a serious breach:
- Failure to inform the Employee of the outcome of the investigations and indication of punishment against Hasim pertaining to the assault complaint.
- Failure to inform the Employee of the outcome of its investigation into the locker break in.
- Failure to investigate his other complaints of continued harassment, abuse and taunts by his colleagues.
The Court added that the Employer’s conduct caused the Employee to fear for his safety and wellbeing in the workplace, and the Employer failed to provide a safe and conducive workplace environment.
The Employer’s conduct was deemed to be in violation of its duties, responsibilities and obligations towards the Employee, and the Court said that the Employer breached the implied duty/obligation not to do anything that could destroy the mutual trust and confidence that is necessary to maintain the employer-employee relationship.
Therefore, the Industrial Court concluded that the aforesaid conduct of the Employer were serious breaches and amounted to a breach (express or implied) of a fundamental term of the Employee’s terms of employment which goes to the root of his contract of employment, and were sufficient for the Employee to consider himself constructively dismissed.
Having found that the Employee had been constructively dismissed, the Court moved on to the second limb, which was whether the dismissal was with just cause or excuse. Based on the above reasons, and the Court being satisfied that the Employee had been victimised by the Employer, the Court found that the dismissal was without just cause or excuse.
The Employee was awarded 24 months backwages (the maximum permissible), less 15% to take into account post-dismissal earnings, and compensation in lieu of reinstatement of one month’s salary per year of service.
The following are some practical takeaways for employers based on this case:
- If there is a code, guideline, policy or other document in place, it must be followed.
- Any code, guideline, or policy in relation to complaints-handling or disciplinary processes should include clear timelines so that all parties have a reasonable expectation and target to work towards. These timelines should also be reasonable.
- All complaints must be handled consistently in terms of the process and the time taken to investigate and make a decision.
- The complainant should always be kept updated regarding the status of the complaint. Again, the code, guideline, or policy should set out clear milestones at which these reminders should be sent out. This will ensure that the employer’s representatives handling the matter will know that they should update the complainant, and also sets expectations for the complainant regarding the process.
- The punishment handed out for similar offences should be consistent to avoid allegations of bias or unfair treatment.