Constructive Dismissal Explained
We often associate dismissal as an act of an employer firing or terminating its employee from employment. However, constructive dismissal is somewhat different.
Constructive dismissal is not really a ‘dismissal’ per se because the one terminating the contract of service or employment is the employee himself. It is defined as an act of an employee terminating his or her service with the company, or resigning due to conduct or behavior by the employer.
In other words, it’s an act of walking out. The employer’s action(s) have made the employee somehow feeling he is being mistreated or not wanted by the company. He chooses to leave.
In the book: A Handbook of Malaysian Labour Laws, the author outlined 9 possible circumstances that may give rise to a claim for constructive dismissal:
- Arbitrary reduction of wages, commission, allowance etc
- Withdrawal of contractual benefits e.g. car, housing, entertainment, free meals, free laundry services etc., provided they are stipulated in the Contract of Service
- Altering or taking away facilities reflective of the position (for example company direct telephone line, room and personal secretary)
- Demotion to a lower post, with or without reduction of salary, fringe benefits etc.
- Transfer to a different location if such transferability is not clearly stated in the Letter of Appointment
- Substantial changes in the job function, especially if the employee is incapable of performing those functions
- Behavior by the employer, intended to humiliate the employer
- Acts of victimization (for example, setting unattainable deadlines, constant fault-finding and harassment)
- Threatening with dismissal if the employee does not resign from the job
Claiming constructive dismissal
Claiming constructive dismissal requires you to inform your employer (or rather ex-employer) soon after you leave them of what has transpired. This is normally done by writing a letter stating that you have been constructively dismissed.
You must remember to walk out of employment soon after a particular conduct or incident that can grant you claiming a constructive dismissal, and not later. For instance, if you’re informed by your employer to be demoted to a lower position, you should resign once the demotion becomes official, and then raise your claim.
Under section 20 of the Industrial Relations Act 1967, you can raise your claim for constructive dismissal at the Industrial Relations Department. If the employee is found to be guilty, then the IR office will tear them apart, either by ordering a reinstatement, or a monetary compensation.
Note: While attempt has been made to make sure you get accurate information, this is not deemed as a legal advice for constructive dismissal in Malaysia or other countries. You should seek a proper legal advice before acting.