Defend a Constructive Dismissal Claim

In 2024, constructive dismissal claims represented around 17% of the total dismissal claims filed under Section 20 of the Industrial Relations Act 1967. Employers were successful in only 49% of these cases, highlighting the challenges faced in defending against such claims.

Although the context of each constructive dismissal claim may vary, the legal principles remain clear. The requirements for an employee to successfully prove constructive dismissal are as follows:

• The employer must’ve breached or evinced an intention to breach the employee’s contract of service

• It must be a breach of a fundamental term under the employee’s contract of service

• The employee left employment as a result of that breach and not for any other reasons

If you are currently facing a matter / potential dispute which may lead to a claim of constructive dismissal, we would recommend considering the following:

1. Identify if there’s a ‘breach’

   Remember, when there’s no breach, there’s no chance for the employee to succeed. Exercising your rights as an employer would not (in most cases) amount to a breach.

   Understand the employee’s grievances and ask yourself - would this be deemed as a breach of contract?

   If so - do you have reasons for doing so and have you conducted yourself in a manner that is reasonable?

2. Always try to rectify by calling for a discussion

   Call for a meeting to address the situation. After all, if an employee walks off on constructive dismissal, the immediate remedy he’s seeking for at the IR department is reinstatement. It shows good faith to ‘reinstate’ / address the situation rather than to sit and wait. 

   It is also important to keep any discussions objective. Be open, transparent and listen to what the employee has to say. After all, there is no need to commit to an immediate answer. Take time to discuss and consider alternatives. 

3. Minute your discussions

   If you don’t have proof of an earlier communication - just remember, it’s never too late to build your document trail. The key here is to always have your story documented, it will serve you well if the matter is disputed in future. Have a meeting, recap your entire narrative and minute the session down. 

   While doing so, focus on:

   
   

   • State the intention of the Company and why you think your ‘change’ does not amount to a breach of contract

     
     

   • Steps that can be undertaken by both parties to accommodate to the ‘change’ 

     
     

   • Whether you can extend the timeline for the employee if he / she is facing a personal circumstance 

     
     

   • Whether you can consider any other alternatives for this employee

4. Burden of proof

   Unlike other cases where an employee is terminated by the employer, constructive dismissal occurs when the employee voluntarily leaves their position due to a perceived breach of contract. In such cases, the employee bears the responsibility of proving that a 'breach' took place. As an employer, it's crucial to focus on how to position yourself advantageously—ask yourself, "What steps can we take to ensure the employee fails to meet their burden of proving a breach?"

   
   

In conclusion, most constructive dismissal cases fail because of a few key reasons that employers can easily avoid. First, emotions often get in the way, with both employees and employers making decisions based on frustration, anger, etc. rather than objective reasoning. Second, many cases fail because employers don’t address problems in the workplace, letting issues go unresolved and lastly, when employers neglect to show care or take proactive steps to resolve problems, it creates an environment where employees are seeking out for assistance, speaking to external parties believing their only option is to seek legal redress.Need to speak to us about a matter you’re facing? Reach us at

consultants@e2consulting.com.my.