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Exercising Constructive Dismissal
by Hew Soon Kiong
Constructive dismissal is a “deemed dismissal” if an employer is guilty of a breach which does to the root of the contract or if the employer has shown unreasonable act or behavior or has evinced an intention no longer to be bound by it.

In such situations, the employee is entitled to regard the contract as terminated and construed himself/herself as being constructively dismissed.

The industrial law recognizes the right of an employee to walk out from the employment without serving notices to the employer where the actions and behavior of the employer are so unacceptable and unreasonable that tantamount to a breach of contract.

The legal requirements for constructive dismissal to operate were summarized in Bryn Perrin’s Industrial Relations and Employment as follows:

• There must be a breach of contract by the employer. This may be either an actual breach or an anticipatory breach;
• That breach must be sufficiently important to justify the employee resigning, or else it must be last in a series of incidents, albeit erroneous interpretation of the contract by the employer will not be capable of constituting a repudiation in law;
• He must leave in response to the breach and not for some other unconnected reason; and
• He must not delay too long in terminating the contract with respect to the employer’s breach, otherwise he may be deemed to have waived the breach and agreed to vary the contract

If the employee leaves in circumstances where these conditions are not met, the will be held to have resigned and there will be no dismissal within the meaning of the legislation at all.

The burden of proof is on the employee and not the employer to prove on a balance of probability that he/she was constructively dismissed.

For an employee to succeed certain conditions must be satisfied as states in Bryn Perrin’s Industrial Relations and Employment as mentioned above.

It has been repeatedly decided by the industrial court that for a claim of constructive dismissal to succeed, the following principles must be established by the workman:

• That the company by its conduct has breached a term or terms (express or implied) of the contract
• That the breach is a fundamental one going to the root or foundation of the contract;
• That the claimant has terminated the contract by reason of the company’s conduct and the conduct is sufficiently serious to entitle the claimant to leave at once; and
• That the claimant, in order to assert his right to treat himself as discharges, left soon after the breach.

To determine whether there was constructive dismissal by an employee is the “contract test”. Salleh Abbas L.P. delivering the judgment of the Supreme Court in the locus classics case of Wong Chee Hong versus Cathy Organization [1988] 1 CLJ 45 approved of the contract test.

The contract test was enunciated by Lord Denning M.R. in Western Excavating Ltd versus Sharp [1978] IRLR 21, which held:

“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 an further performance.”

“If he does so, then he terminates the contract by reason of the employer’s conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at once. Moreover, he must make up his mind soon after the conduct which he complains for.

“If the continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having been elected to affirm the contract.”


Therefore, following the contract test as stated above, what the claimant has to prove to the court is that:

• The company by its conduct had breached a term or terms (express or implied) of the contract of employment which had gone to the foundation of contract; and
• The claimant left or resigned from the company soon after the breach

It is rule of industrial law that where the workman claims for reinstatement under S.20(1) of the Industrial Relations Act 1967 is founded on constructive and not actual dismissal, the onus of proving that the workman has been constructively dismissed by the employer lies on the workman himself.