Kwp Engineering & Industrial Supply Sdn Bhd v Lin Sout Son (BA-16-22-05/2024)

This is an appeal against the Director General of Manpower (DGM)’s decision dated 8.5.2024 wherein she allowed the Respondent’s claim for termination benefits and arrears petrol allowance and commission amounting to RM39,731.60.

After careful consideration of the records of appeal and the submissions, this Court decided to dismiss the appeal. The following are the reasons for that decision. Proceedings before the DGM

Briefly, the evidence adduced before the DGM is as follows. The Respondent worked as a sales manager with the Appellant since 1.10.2007 and her basic salary was RM3000.00. She was also paid an allowance for petrol and sales commission.

On 5.1.2024, she was told her last working day would be 27.2.2024. Although she was told in December 2023 that she would no longer be paid the petrol allowance and sales commission, she continued her work.

The Respondent was not given any notice of termination. When she wrote to confirm her status, she was told to report for work on 1.4.2024. She did not do as the Appellant owed her arrears salary for January and February 2024.

Kuan Wei Pheng, the Appellant’s director gave evidence that the Respondent was not terminated but rather told to start looking for another job as the Appellant was facing financial difficulties. He confirmed asking her to report for work on 1.4.2024. DGM’s decision

The DGM allowed the Respondent’s claim. She held that the Respondent was the Appellant’s employee as defined in section 2(1) and the First Schedule Employment Act 1955 (Act 265). By the same token, she held that the Appellant was an employer.

As such the Respondent would be entitled to the petrol allowance and commission. Whilst the Appellant told the Respondent that they would not be paying these claims, they made no attempt to reduce the work days or overtime.

The DGM decided that the Respondent’s termination was constructive because the Appellant failed to pay her salary which was a fundamental breach of the contract of employment.

The Appellant argued that that at no point in time was the Respondent terminated. They pointed to the Respondent’s letter dated 4.3.2024 (Record of Appeal pg 141) which they submitted was indicative that she had not been terminated.

The Appellant also submitted the Respondent did not object when she was told the Appellant would no longer be paying the petrol allowance and commission.

The Appellant argued there was no constructive dismissal and referred to 7-Eleven Malaysia Sdn Bhd v. Ashvine Hari Krishnan [2023] MLJU 631 at [28] wherein the Court of Appeal held that to constitute constructive dismissal, the conduct complained of must be repudiatory of the employment contract (contract test) (Keretapi Tanah Melayu Bhd v. Mohan a/l Vythialingam & Anor and Another Appeal [2023] 3 MLJ 557 at 569, CIMB Bank Bhd v. Ahmad Suhairi bin Mat Ali & Anor [2023] 5 MLJ 829 at 840).

The Appellant submitted that the Respondent failed to discharge the onus of proving the 4 conditions of the contract test (Masitah bt Mohamad v. University College Bestari [2020] ILJU 311 at para [62]).

The failure to pay the arrears or delay the payment of the salary is not a fundamental breach of the contract of employment and therefore cannot tantamount to a constructive dismissal.

The Respondent submitted that the failure to pay the salary as prescribed in section 19(1) Act 265 is a fundamental breach of the contract of employment by the Appellant (Bayer (M) Sdn Bhd v. Anwar bin Abdul Rahim [1996] 2 CLJ 49 at 52). In fact, the arrears salary was only paid after the complaint had been lodged with the DGM.

There was no documentation to show that the Respondent agreed to not being paid the petrol allowance or commission which again amounts to a fundamental breach of the employment contract; resulting in the constructive dismissal of the Respondent.

The DGM’s decision was correct and ought not be disturbed Principles of law

Section 77 Act 265 provides that the procedure for an appeal from DGM to the High Court is the same procedure as an appeal from the Sessions Court.

The general principles of law in respect of the appellate jurisdiction of the High Court hearing appeals from the subordinate Court or statutory tribunals is as pronounced in Perembun (M) Sdn Bhd v. Conlay Construction Sdn Bhd [2012] 4 MLJ 149 wherein Abdul Wahab Patail, delivering the judgement of the Court of Appeal held at 153 – “It is clear it is a general principle and that there are exceptions when appellate intervention is necessary to ensure justice is done. In the cases regularly cited, the terms ‘intervene’ and ‘interfere’ are used interchangeably. A more precise use of terminology would remove much unnecessary confusion and argument. It is more precise to say that an appellate court will intervene to correct an injustice when it is shown to have occurred in the trial court, but it would be an interference otherwise.” (China Airlines Ltd v. Maltran Air Corp Sdn Bhd (formerly known as Maltran Air Services Corp Sdn Bhd and another appeal [1996] 2 MLJ 517 at 527 and UMW Motor Sdn Bhd & Anor v. Allan Chong Teck Hin [2021] 3 MLJ 107 at 117). Evaluation and findings

The relationship between the parties is undisputed, In Bayer (supra), Low Hop Bing J (as His Lordship then was) held at 52 – “… in order to succeed in a claim for constructive dismissal, the employee must prove to the satisfaction of the Court that the employer is guilty of a breach which goes to the root of the contract or if the employer has evinced an intention no longer to be bound by it. It is only in such a situation that the employee is entitled to regard the contract as terminated and treat himself as being dismissed. Constructive dismissal does not mean that an employee can automatically terminate the contract when his employer acts or behaves unreasonably towards him. Indeed if it were so, it is dangerous and can lead to abuse and unsettled industrial relations. Thus, it is settled law that the test applicable in a constructive dismissal case is “the contract test” and not “the test of reasonableness”. To claim constructive dismissal, four conditions must be fulfilled. These conditions are:

There must be a breach of contract by the employer;

The breach must be sufficiently important to justify the employee resigning;

The employee must leave in response to the breach and not for any other unconnected reasons; and

He must not occasion any undue delay in terminating the contract, otherwise he will be deemed to have waived the breach and agreed to vary the contract. (See Wong Chee Hong v. Cathay Organisation, supra)”

On the facts of this appeal, it is evident that the Appellant did not pay a portion of the Respondent’s salary for January and February 2024. This is a fundamental breach of the employment contract.

The Respondent did not accept the Appellant’s offer of continued employment because of this breach and did not delay in terminating the employment with the Appellant.

This Court also finds that the withholding of the petrol allowance and commission are unilateral acts by the Appellant which constitutes a significant breach of the fundamental term of the contract of employment between them.

All this tantamount to there being a dismissal.