INDUSTRIAL COURT OF MALAYSIA

CASE NO: 20/4-262/09

BETWEEN

ENCIK MUSTAFFA BIN CHE YUSOFF

AND

RHB BANK BERHAD

AWARD NO: 1463 OF 2009

Before : DATO' HAJI SULAIMAN BIN ISMAIL - Chairman

Venue : Industrial CourtKuala Terengganu

Dates of Reference : 3.6.2009

Dates of Mention : 9.7.09, 28.7.09, 18.8.09

Dates of Hearing : 9.9.09

Representation : Encik Mohd Ridzuan bin MuhamadMessrs K.H . Tay & AssociatesKota Bharu, KelantanCounsel for the Claimant

Claimant : Attend

Mr Vincent ArokiasamyMessrs Kamil Hashim Pury & LimPetaling Jaya, SelangorCounsel for the Company

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AWARD

This was a reference by the Honourable Minister of Human

Resources pursuant to Section 20(3) Industrial Relations Act

1967 arising out of the alleged constructive dismissal against

Encik Mustaffa bin Che Yusoff (“The Claimant”) by RHB Bank

Berhad (“The Company”) on 2 May 2008.

Brief Facts of the Case:

The Claimant commenced employment with the Company

as Assistant Executive Officer on 1 January 1985 at the salary of

RM1,392.00 per month. He continued in the normal course of

his employment until the Company was undergoing a

transformation process and the Claimant was reassigned from

Regional Branch Operation Manager to Business Support

Manager. The Claimant tendered his resignation vide letter

dated 1 April 2008. The resignation was accepted to take effect

from 2 May 2008. The Claimant last drawn salary RM6,950.00

per month.

The Claimant contends that he had to tender the

resignation as he believe that he had been victimised by the

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Company and constructively dismissed without just cause and

excuse, a negation of the Principles of Natural Justice and

tantamount to unfair Labour practise.

For ease of reference the Claimant's resignation letter is

hereby reproduced as follows:

1/4/08

Head Of Human ResourceRHB Bank BerhadBangiSELANGOR

Dear Puan,

NOTICE OF RESIGNATION

After considerable thought and soul searching, I decided to tender my resignation with one month notice from the date herewith.

Pleased be informed that with the transformation of the Banking Group and the implementation of the new organizational structure which was on 1/1/2008, I have not been given any position nor responsibility to carry out in the East Coast Region. No new appointment letter was issued to me.

As at to-date I have yet to receive any instruction on my appointment nor job scope and responsibility from the Bank or the Regional Director of East Coast.

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By merely coming to the office daily and starring at my pc to read my mail from 8:45am to 5:45pm, is very demoralising and stressful. Am I targeted to be manage out or is this waiting game another form of mental torturing me. I was earlier informed that I do not fit in the Regional structure and thus was left to the mercy of HR on where they want to post me. It looks like the Bank have forgotten my past contributions as Branch Manager and RBO. I am sure if you could kindly refer my past performance from my previous superiors, they would speak highly of me.

After careful consideration and discussion with my family members (who resides in Kota Bharu), it is with heavy heart that I submit to this resignation to be with my family who have been supportive. I wish to thank the Bank for the past opportunities and recognition and I guess this “transformation” is a lesson learnt for all. I wish the bank all the best of luck. Thank you.

Yours truly,

MUSTAFFA BIN CHE YUSOFFSTAFF ID 142131

c.c. Regional Director East Coast

The Company, on the other hand denies allegation and

state that the Claimant voluntarily tendered his resignation.

The Issue:

As this is a case of alleged constructive dismissal the

question before the Court is two fold:

i) Was there a dismissal infact and in law?

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If, affirmation

ii) Was the dismissal with just cause or excuse?

The two fold query will begin with a deliberation of the

established jurisprudential position in this type of Industrial Court

cases.

The Law:

When dealing with a reference under Section 20 of the

Industrial Relations Act 1967 the first thing that the Industrial

Court has to consider is the question of whether there was in fact

a dismissal. If the question is answered in the affirmative it must

only then go on to consider if the said dismissal was with or

without just cause or excuse. Reference is drawn to the case of

Wong Chee Hong v Cathay Organisation (Malaysia) Sdn Bhd

[1988] I CLJ 45 : [1988] I CLJ (Rep) 298 Federal Court for

Salleh Abas LP.

In Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong

[1998] 2 ILR 965 (Awards No. 368 of 1998) it was held as

follows:

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“In a Section 20 reference, a workman's complaint consists

of two elements. Firstly that he has been dismissed and

secondly that such dismissal was without just cause or excuse.

It is upon these two elements being established that the

workman can claim his relief, to wit an order for reinstatement,

which may be granted or not at the discretion of the Industrial

Court. As to the first element, Industrial jurisprudence as

developed in the course of the Industrial adjudication readily

recognises that any act which has the effect of bringing the

employment contract to an end and is a dismissal within the

meaning of Section 20. The terminology used and the means

resorted to by an employer are of little significance: thus

contractual terminations, constructive dismissals, non renewals

of contract, forced resignation, retrenchments and retirements

are all species of the same genus, which is “dismissal”.

Constructive Dismissal:

The constructive dismissal is a creation of the law, a fiction,

where a workman ceases employment on his own volition as a

result of the conduct of his employer and there upon claims that

he has been dismissed. As with all legal fictions it is subject to

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strict requirements being proved for it to sustain itself as a

dismissal de facts and de ju re and not translate into a voluntary

resignation where those prerequisites are wanting.

The principles underlying the concept “constructive

dismissal”, a doctrine firmly established in our Industrial

jurisprudence, was expressed by Salleh Abas LP in the case of

Wong Chee Hong v Cathay Organisation (Malaysia) Sdn Bhd

in the following manner:

“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 effects the foundation of the contract,

or if the employer has evinced an intention not to be bound by it

any longer”.

In Anwar Abdul Rahim v Bayer (M) Sdn Bhd [1998] 2

CLJ 197. His Lordship Mahadev Shanker held as follows:

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“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 contract or whether he has

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

In Leong Shin Hyun v Rekapacific Bhd & Ors [2001] 2

CLJ 288 High Court referred with approval to the principles

stated in the case of Lewis v Motorworld Garages Ltd (CA)

[1980] ICR 157 which was as follows:

“It is now well established that the repudiatory conduct may

consist of a series of act or incidents, some of them perhaps

quite trivial, which cumulatively amount to a repudiatory breach

of the implied term of the contract of employment, that the

employer will not without reasonable and proper cause conduct

himself in a manner calculated or likely to destroy or seriously

damage the relationship of confidence and trust between

employer and employee.

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It is a trite law that the implied term that the employer will

not, without reasonable and proper cause, conduct themselves in

a manner calculated or likely to destroy or seriously damage the

relationship of mutual confidence and trust is of great

importance.

Dr Dunston Ayadurai in his text Industrial Relations In

Malaysia Law & Practise 3rd Edition at p.297 states.

“To prove that the workman has been constructively

dismissed, it will be necessary for him to establish the followings:

- that the employer had by his conduct breached the contract

in respect of one or more of its obligation, owed to the workman,

the obligations breached may be in respect of either express

terms or implied term or both.

- that the terms which had been breached go to the

foundation of the contract: or stated in other words, the employer

had breached one or more of the essential terms of the contract.

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– that workman, pursuant to and by reason of the aforesaid

breach had left the employment of the employer, that is that the

workman had elected to treat the contract as terminated;

and

– that the workman left at an appropriate time soon after the

breached complained of : that is he did not stay on in such

circumstances as to amount to an affirmation of the contract.

Notwithstanding the breach of the same by the employer.

Once these prerequisites for constructive dismissal had

been established by the workman in a reference to a dismissal

under Section 20 of the Industrial Relations Act 1967, the

Industrial Court then moves into the limb of inquiry: and that is to

determine whether the employer had just cause or excuse for the

dismissal. Here the burden shifts upon the employer.

The Evidence:

The Claimant's case.

The Claimant testified on his own behalf and that which is

the essence of what he had to say.

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The Claimant had been with the Company for some 24

years before the events that transpired in this case. He joined

the Company on 1 November 1985 than United Malayan

Banking Corporation Berhad and continued employment until he

resigned in May 2008.

At the time of his resignation he was in Senior Manager

Group and his last drawn salary was RM6,950.00 per month.

He testified that the Company was undergoing a

transformation process in January 2008. As the result the new

organizational structure had been implemented and Puan

Fatimah Sidek had been appoints as Regional Director.

With the transformation of the Banking Group and the

implementation of the new organizational structure which has on

1 January 2008, the Claimant was not given any position or

responsibilities to carry out in the East Coast Region.

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He testified that last week of December 2007, all personnel

involved in the new structure of the East Coast Region had been

called for the briefing on the new posting except him.

The Claimant personally went to see Puan Fatimah Sidek

at her office in Kuantan to inquire about his position. He further

testified that Puan Fatimah had told him that he was not fit in the

new Regional Structure of the Region and thus left him to the

mercy of the Human Resources Head Office on where they

wanted to post him.

As the result of the new structuring he had to hand over his

current job to his successor ie Encik Abdul Aznan bin Yaakob.

On the 2nd week of February 2008 he attended the meeting

at Kuantan whereby Puan Fatimah and Encik Ghazali bin Mat

Noh (COW-1) proposed to appoint him as Business

Development Manager for Area I East Coast which was under

Encik Ghazali bin Mat Noh.

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At the said meeting Puan Fatimah had promised to follow

up with HR on the issuance of the appointment letter within 3

working days. He had not received any appointment letter and

job scope until his last day with the bank which was 1 May 2008.

He made an afford to contract Encik Ghazali bin Mat Noh in

March 2008 but was told that the HR had yet to issue the letter of

appointment.

The Claimant felt so isolated it looked like the Bank had

forgotten his post contribution as Branch Manager and Head of

Regional Branch Operation East Coast and Regional Branch

Operation from July 2005 until December 2007.

He further testified that from the period of 1 January 2008

until 30 April 2008 he merely coming to office daily and starring

at his PC to read mail. He felt very demolishing and stressful.

He thought that he has a targeted to be manage out or was

this waiting game another form of mental torturing.

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He has admitted to Perdana Specialist Hospital in February

2008 and undergone an operation. He believe that it came from

his acts on just starring at PC while scratching “Ketumbuhan”

with finger nail on his neck and he got some sort of virus's

infection to it.

He submitted his resignation letter dated 1 April 2008 as he

believe that he has been victimized by the Company and

constructively dismissed without just cause or excuse. He seek

to be reinstated to his former job as Regional Branch Operation

Manager without any loss wages, allowances, service, seniority

and privileges.

Company's Case:

The sole witness called by the Company was one Encik

Ghazali bin Mat Noh, Deputy Regional Director Area Manager I,

East Coast Retail (COW-1).

He testified that in 2007 the Company started a major

transformation programmes as the result of amalgamation of

Several Banks.

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In the East Coast Region, Regional Commercial Banking

and Regional Consumer were streamlined and known as

Regional Retail Banking and as a result he was re-designated.

In 2007, the Claimant was the Regional Branch Operation

Manager in Grade PG4 and in 2008 the Claimant was performing

the function of Business Support Manager in Grade PG4 and

reported to him.

There were 11 employees involved of which 5 were from

Regional Commercial Banking and 6 were from Regional

Consumer Banking. All those employees were re-designated.

He further testified that there were no official notification

from Head Office of the Company. The Claimant was not

officially appointed to perform the function as Business Support

Manager and no job scope ever given to him.

The COW-1 testified that the Claimant tendered his notice

of resignation dated 1 April 2008 and HR Services Head Office

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accepting the resignation of the Claimant vide letter dated April

10, 2008 (page 79 of COB).

He denied that the Company had any mala fide against the

Claimant.

The Evaluation of the Evidence and the Finding:

The crucial point here is to ascertain what term(s) the

employer is alleged to have breached.

Having identified that the Court will have to consider

whether the said term(s) were essential to the contract of

employment.

For this the Court will have to asses the evidence adduced

to determine whether the Company had by its conduct

committed such a breach of contract as to entitle the Claimant to

consider himself dismissed.

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In Lewis v Motorworld Garages Ltd, Glidewell L.J. Stated

the principles as follows:

In order to prove that he has suffered constructive

dismissal, an employee who leaves his employment must prove

that he did so as the result of a breach of contract by his

employer, which shows that the employer no longer intends to

be bound by an essential term of contract …..

In that case the employee had claimed that the employer's

repudiatory breach was that of the implied term that “the

employer would not undermine the relationship of mutual trust

and confidence between employer and employee.

And in relation to “implied term” Lord Reid in Sterling

Engineering Co. Ltd. V Patchett [1955] AC 534 said:

“Strictly speaking, I think that an implied term is something

which, in the circumstances of a particular case, the law may

read into the contract if the parties are silent and it would be

reasonable to do so. It is something over and above the

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ordinary incidents of the particular type of contract ….. But the

phrase “implied term” can be used to denote a term inherent in

the nature of the contract which the law will imply in every case

unless the parties agree to vary or exclude it”.

Upon considering all the evidence before it, this Court finds

that the Claimant has succeeded in establishing the breach of

the following implied essential terms of the contract of

employment by the Company, ie of preserving the relationship of

mutual trust and confidence between employer and employee.

The Claimant was expected to be given letter of

appointment and his job scope before he could perform his

duties. He should be invited for the briefing by the Company

together with 11 employees.

The conduct of the Company by appointing Encik Abdul

Aznan bin Yaakob to take over the job of the Claimant was

clearing demoralising him.

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He was not given any job scope and duties from 1 January

2008 until 30 April 2008.

The conduct of the Company through Puan Fatimah binti

Sidek clearly shows the Company indicated that the Company

wanted the Claimant to leave the Company. The words “you are

not fit in the new Regional Structure of the Region and it was left

to the mercy of HR Head Office”.

In such circumstances the doctrine of constructive dismissal

in this Section 20 claim for reinstatement can be called in aid to

established the jurisdictional fact that there had been a dismissal

in this case.

Though the Company had not literally “dismissed” the

Claimant but rather had forced him to leave the employment by

not giving him any job function and an appointment letter and so

be it the ruling of this Court.

This Court finds that the Claimant had put in his resignation

when he did solely by reason of the repudiation conduct of the

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Company. He had therefore exercised his option to bring the

contract of employment to an end.

The Company by its conduct failed to response the

allegation made by the Claimant in his resignation letter.

Under the circumstances, it is the finding of this Court that

the Claimant by tendering his resignation when he did, had acted

decisively and had not failed or delay in acting firmly in refusing

to accept the Company's breach.

The burden here is upon the Company to show an a

balance of probabilities that the Claimant's termination from

employment was for just cause or excuse.

The whole case revolved around the failure of the Company

to issue the letter of appointment and job scope to enable the

Claimant to perform his job.

The Claimant alleges that the Company's conduct towards

him was victimization and tainted by unfair labour practise.

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To sum up, all the evidence on balance of probabilities

points to a strong indictment against the Company which it is

unable to refute. The Company failed to convince the Court as

the reason why the appointment letter was not issued to the

Claimant 3 months after the transformation process took place.

There was no witness from HR office to testify as what actually

happened to the Company during the transformation process

and the new organization structure.

The consequence is that the dismissal is found to be

without just cause or excuse, and so it is the ruling of this Court.

The Remedy:

It would not be in the interest of either party to order

reinstatement of the Claimant to his former post.

Compensation in lieu of reinstatement and back wages

shall be the alternative remedy ordered here.

It is undisputed that the Claimant's last drawn salary was

RM6,950.00 per month.

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Compensation In Lieu of Reinstatement:

As there is prevalence in the Industrial Court to base

compensation in lieu of reinstatement on the multiplicand of one

(1) month salary, this Court can see no justification from

departing from this precedence.

The multiplicand is therefore RM6,950.00.

As regard to the multiplier, it is undisputed that the Claimant

had served the Company for a period of 24 years. The multiplier

will be 24.

In the circumstances, compensation under this head

amounts to RM6,950.00 x 24 = RM166,800.00.

Back wages:

In this case the effective date of constructive dismissal was

2 May 2008 and the hearing of this reference effectively

concluded on 9 September 2009 a period of 18 months.

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The amount of back wages thus awarded is

RM125,100.00.

In Dr James Alfred (Sabah) v Koperasi Serbaguna

Senya Bhd (Sabah) [2001] 3 CLJ 541 Steve Shim CJ (Sabah &

Sarawak) ruled that the Industrial Court in assessing the

quantum of back wages should take into account the fact that a

workman has been gain fully employed elsewhere after his

dismissal.

In the instant case, the Claimant had gained an

employment 4 months after his dismissal, therefore as a

consequence there is re-scaling of back wages at 20% (see the

case of Ravi Chanthran S. Sithambaran v Pelita Akademi Sdn

Bhd [2007] I ILR 475 (Award No. 130 of 2007), therefore the

amount of back wages are as follow:

RM125,100.00 less 20% = RM100,080.00

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The Final Order:

The Court now orders that the Company do pay the

Claimant through his Solicitors the sum of RM266,880.00 less

statutory deductions if any not later than 30 days from the date

of this award. The said sum is made up as follows:

Compensation in lieu of reinstatement – RM166,800.00

Back wages (after 20% less) - RM100,080.00

Total compensation before statutory

deductions - RM266,880.00

HANDED DOWN ON 17TH DECEMBER 2009

(DATO’ HAJI SULAIMAN BIN ISMAIL)CHAIRMAN

INDUSTRIAL COURT, MALAYSIAKUALA TERENGGANU

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