INDUSTRIAL COURT OF MALAYSIA

CASE NO. 19/4-442/10

BETWEEN

ENCIK DAVID HO SENG KONG ….. THE CLAIMANT

AND

HIAP LEE CLAY PAVERS & BRICKS SDN. BHD ….. THE COMPANY

AWARD NO. 1716 OF 2012

Before : Y.A. PUAN HAPIPAH BINTI MONELCHAIRMAN (Sitting Alone)

Venue : Industrial Court Malaysia,Kuala Lumpur.

Date Of Reference : 28.12.2009Dates of Mention : 21.05.2010, 23.07.2010, 07.09.2010, 11.10.2010,

26.10.2010.

Dates of Hearing : 28.03.2011.

Representation : Mr. C.H. So of Messrs. Zailan & CoCounsel for the Claimant.

Mr. Albert Yew Messrs. Ewe Chong & Khoo Counsel for the Company.

REFERENCEThis is a reference under section 20(3) of the Industrial Relations Act 1967 arising out of

the dismissal of ENCIK DAVID HO SENG KONG (hereinafter referred to as “the Claimant”) by HIAP LEE CLAY PAVERS & BRICKS SDN. BHD (hereinafter referred to as “the Company”) on the 12 November 2008.

1

AWARD

The Facts

The Claimant was employed as General Manager – Marketing Head via a Letter of

Appointment dated 3rd January 2007 (page 1 – 3 of CLB1). On 29 th May 2007 the Company

confirmed the Claimant's employment with salary adjusted of RM8,800.00 with effect from 1st

January 2007 (page 6 of CLB1).

The Company via a letter dated 14th April 2008 disallowed the Claimant for car

allowance. Out station expenses will be paid according to the rate approved by the Company

(page 8 of CLB1).

Until 12th November 2008 the Company did not pay salary for the month of October

2008 to the Claimant. The Claimant then sent a letter dated 12 November 2008 to the

Company stating as at 12 November 2008 he did not receive his October 2008 salary and he

considered the Company has breached the fundamental term of the contract and considered

himself to be constructively dismissed (page 1 of COB1).

“12th November 2008

Strictly Private & Confidental

David Ho Seng Kong31 Jalan LincahTaman ConaughCheras56000 Kuala Lumpur

Mr. Tan Kim LengGroup Managing DirectorHiap Lee Clay Pavers & Pricks Sdn. BhdWisma TCL, Level 3470, 3rd Mile Jalan Ipoh

2

51200 Kuala Lumpur

Dear Sir,

In view of your failure to remit my salary for the month of October 2008 to me, I consider that you have breached the fundamental term of the contract.

As such, I shall not report to work forthwith and shall reserve all my rights to commence action against you for constructive dismissal.

Please also take note that you are to immediately remit my salaries for the month of October and November 2008 to date. Please also reimburse my unutilized annual leave for the year 2007 & 2008, which are 25 days and 22 days respectively.

Your earliest settlement will be greatly appreciated.

Your faithfully,

David Ho Seng Kong (C No: 571009-01-6463

cc. HR Department”

After receiving this letter the Company on 13th November 2008 paid the Claimant salary

for the month of October. The Claimant did not return to work on 14 th November 2008 or

thereafter.

The Issue

(a) Whether the Company has breached the fundamental term by failure to make payment

of salary for the months of October 2008 by 12 November 2008.

(b) If the answer to the issue (a) is in affirmative whether the breach committed by the

Company amounting to termination of the Claimant's employment.

3

The Law

In the case of Wong Chee Hong v. Cathay Organisation (M) Sdn. Bhd (1988) 1 CLJ 45;

(1988) 1 CLJ (Rep) 298 at pp. 302 and 303, the Supreme Court decided as follows:

“When the Industrial Court is dealing with a reference under s.20, the first that the court will have to

do is to ask itself a question whether there was a dismissal, and if so, whether it was with or

without just cause or excuse.

Thus it would be a dismissal of an employer is guilty of a breach which goes to the root of the

contract of if he has evinced an intention so longer to be bound by it. In such situation the

employee is entitled to regard the contract as terminated and himself as being dismissed.

The next question is this. Is the dismissal with a just cause or excuse? Since the appellant has

succeeded on showing that he was dismissed, it is for the respondent company to show that the

dismissal was with a just cause or excuse.”

The principles of law enunciated in Wong Chee Hong, supra is once constructively

dismissed is proven by the employee, the burden of showing whether the dismissal is with just

cause or excuse lies on the employer.

The term “constructive dismissal” was clearly defined in the case of Western Excavating

(E.C.C) Ltd v. Sharp (1978) 1 ALL E.R. 712 at p. 717 where Lord Denning M.R. decided that the

correct test to apply is the contract test as follows:

“If the employer is guilty of conduct which is a significant breach going to the root of the contract of

employment, 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 terminates the contract by reason of the

employer's conduct. He is constructively dismissed.”

4

In order to succeed in a claim of constructive dismissal, the Claimant must establish the

following:

i) that the respondent company, by its conduct, had breached term or terms of

the Claimant's contract of employment or had evinced an intention no longer

to be bound by the contract;

ii) the breach is a fundamental breach going to the root or the contract;

iii) the Claimant's left in response to that breach and not for some other

unconnected and ancillary reason; and

iv) the Claimant did not delay too long in terminating the contract in response to

the respondent company's breach.

The test to be applied in a case of constructive dismissal had been succinctly explained

in the Court of Appeal case of Anwar Abdul Rahim v. Bayer (M) Sdn. Bhd (1998) 2 CLJ 197 at

p. 205 held as follows:

“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 unreasonable 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 of whether he has evinced

an intention no longer to be bound by the contract.”

The burden of proving constructive dismissal is on the employee ie. the Claimant in the

instant case. It was incumbent on the Claimant to establish on a balance of probabilities that

5

the respondent's conduct amounted to a fundamental breach of the employment contract that

went to the root of his contract or whether the Respondent had evinced an intention no longer

to be bound by the contract.

Evidence, Evaluation and Finding

The Claimant's can only confine his claim for constructive dismissal based on the

contents of the letter dated 12 December 2008. Hence, the Claimant is not allowed to rely on

other allegation not contained in the letter. The nonpayment or the delay in payment of salaries

is considered breach of contract of employment but under certain circumstances, such breach

may be judged by the Courts as a not being a fundamental breach.

In Sama World Asia Sdn. Bhd v. Teh Soo Seng (2008) 1 ILR 112, the employee claimed

constructive dismissal when the Company did not pay his salaries, income tax and EPF for

three months, and his reimbursements for travelling and medical expenses were also not paid.

The Industrial Court dismissed the employer's claim, holding that the employee had failed to

prove that the company had evinced an intention not to be bound by the contract. It found that

the Company had adduced evidence to show that it had paid all EPF arrears, penalties and

gratuities to the staff that had remained with the Company, thereby indicating that the Company

had not evinced an intention not to be bound by the contract:

“In the normal course of things the court would sympathise with any worker who has not been paid

their salaries for work done. But the Asian Financial Crisis were turbulent times for many

businesses and especially so when the company has embarked on a RM170 million theme park

project. It is at times like this that the employees should show their solidarity with their employers

6

to demonstrate their appreciation that they have only been given a pay-cut and have not been

retrenched. Non-payment or the delay in the payment of salaries in the instant case is not doubt a

breach of the contract of employment. But it is open to debate whether the delay in the payment of

salaries amounts to a breach so fundamental that it goes to the root of the contract. This court is

of the view that breach of the contractual term by the company is undeniable but it does not go to

the root of the contract because the claimant does have an option to stay on in the company by

exercising patience and restraint. ...”

In Southern Bank Bhd v. Ng Keng Lian & Anor (2002) 2 CLJ 514, the bank applied for

certiorari to quash an award of the Industrial Court. The principal issue of law in this case was:

Is an employee who considers himself as having been constructively dismissed obliged to first

inform the employer that he has been constructively dismissed before he makes a

representation under s 20(1) read with s 20(1A) of the Industrial Relations Act 1967? The High

Court held that:

“The statutory regime housed in s 20(1) and s 20(1A) of the Industrial Relations Act clearly

prescribes the 'dismissal before representation' formula. Accordingly, where a representation is

made before, or precedes, the dismissal, the representation would in law be premature, null and

void. Where a representation is premature, the Industrial Court would not be seized with

jurisdiction to hear the claim of dismissal based on the representation. This was decided in the

case of Supermix Concrete (M) Bhd v. Teoh Boon Beng (1987) ILR 274. In that case, the

dismissal was to take effect on 26 March 1986 but the employer made his representation under s

20(1) on 27 February 1986, ie, before the dismissal. The Industrial Court held that the

representation was premature as it preceded the dismissal and thus it did not have jurisdiction to

hear matter. The claim was struck off. The Industrial Court's decision in the Supermix case was

upheld on appeal by the Supreme Court as confirmed in the case of Shaw Computer and

7

Management Service Sdn. Bhd v. Cheong Kiew (1989) 1 ILR 261.The following parts of the

Supermix decision are important to appreciate the jurisdictional importance of the 'dismissal before

representation' formula stipulated in the Industrial Relations Act.

Section 20(1) of the Act envisages a situation that the workman has already been

dismissed and it follows from the phrase 'to be reinstated in his former employment' and

this is followed by another phrase 'from which the workman was dismissed'.

Section 20(1) is very clear and the court will have to give effect to it, no matter how unjust

or unconscionable the result would be.

The phrase 'within thirty days of the dismissal' is the operative phrase in this section. It

stipulates the time by which the representation is to be made, ie, thirty days after the

dismissal. The word 'dismissal' is the key word to this phrase as the concept of effective

date of dismissal is very important in that it indicates when the workman is to made the

representation and also the time starts to run from that effective date of dismissal.

(Please note that the 'thirty days' requirement has now been replaced by 'sixty days' in s

20(1A) of the Industrial Relations Act by Act A718).

The provision of s 20(1) of the Act has been strictly interpreted, and it follows, therefore

the claimant should in this case make his representation 'after the dismissal'.”

The Court finds that the Claimant has failed to discharge his burden of proof that there

was dismissal. The Company had paid his October 2008 salary on 13 November 2008 but the

Claimant failed to return to work on 14th November 2008 or thereafter. The Claimant

abandoned his employment, by immediately walking out after handing over his constructive

dismissal letter complaining about non-payment of October 2008 salary despite the same being

remedied immediately on 13 November 2009.

8

Conclusion

Based on the totality of the evidence as adduced both oral and documentary and upon a

consideration of the submission of parties, this Court having borne in mind s.30(5) of the

Industrial Relations Act 1967 acting in equity and good conscience finds that the Claimant had

failed to discharge his burden of proof that the Company had dismissed him without just cause

or excuse. Therefore the Claimant's claims is hereby dismissed.

HANDED DOWN AND DATED THIS 14 DECEMBER 2012

(HAPIPAH BINTI MONEL)CHAIRMAN

INDUSTRIAL COURT OF MALAYSIAAT KUALA LUMPUR

9