Employee Limited by Resignation Letter in Constructive Dismissal Claim

by MH Law | Sept 1, 2024 | Case Study

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Overview

[ Macfood Services (M) Sdn Bhd v Mahkamah Perusahaan Malaysia & Anor [2024] ]

In a case of constructive dismissal, does the employee have to stick to the reasons given in their resignation letter, or can they bring up new grounds at the Industrial Court? The outcome of this issue will significantly impact how employees should present their constructive dismissal claims and how employers should handle them. In Macfood Services (M) Sdn Bhd v Mahkamah Perusahaan Malaysia & Anor [2024] CLJU 271, the High Court held that the Courts must only take into account the reasons specified in the resignation letter or constructive dismissal notice.

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Brief Facts

In July 2020, the Company sent a show cause letter to the Employee. Following the Employee's response, a meeting was held between the Company and the Employee to discuss the Employee's reply (referred to as the "Meeting").

During the Meeting, the Company raised its concerns with the Employee and clarified that the purpose of the Meeting was to realign and establish expectations. Subsequently, it was mutually agreed that the Employee would be placed on a performance improvement plan.
Subsequent to the Meeting, the Employee tendered her resignation, citing feeling unfairly treated due to the show cause letter and feeling caught off guard by the Meeting (referred to as the "Resignation Letter").
The Company issued a letter emphasizing that there was no intention to prompt her resignation and expressing anticipation for improvement in her performance. Nevertheless, the Company ultimately accepted the Employee's resignation.
Following a ruling by the Industrial Court that the Employee had been terminated without valid cause, the Court considered additional allegations not mentioned in the Resignation Letter, including:
- The Company's directive for the Employee to maintain office cleanliness;
- The Company's reprimand of the Employee for raising cleanliness concerns;
- The Company's inquiry into the Employee exceeding budget limits; and
- The Company's insistence on the Employee working while on sick leave.

Displeased with the Industrial Court's verdict, the Company lodged an appeal for judicial review at the High Court.

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High Court Decision

The High Court decision highlighted a mistake by the Industrial Court, emphasizing that the evaluation should focus solely on the reasons stated in the resignation letter.

In cases of direct dismissal, the employer can only defend the termination based on factors considered at the time of the decision. If an employee cites reasons for constructive dismissal, the Industrial Court should not consider additional grounds not mentioned by the employee.

Due to the insufficient reasons outlined in the resignation letter, a constructive dismissal claim could not be substantiated. Consequently, the employee was deemed to have resigned voluntarily.

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Key Takeaways

This decision highlights the significance of employees being transparent with their employers about the true reasons for leaving. Failing to do so could restrict their ability to raise further complaints during the Industrial Court proceedings should they claim constructive dismissal. While the law doesn't mandate including a comprehensive list of allegations in the resignation letter, employees should still outline their primary reasons for alleging constructive dismissal. Any additional grounds cannot be introduced at a later stage. Upon receiving a constructive dismissal notice, employers should promptly evaluate and investigate the validity of the employee's claims. It is crucial for employers to respond promptly to such notices, clearly articulating their stance and refuting any unfounded accusations.