Court Rules Executive’s Downgrade as Constructive Dismissal

The Court of Appeal has decided that an ex-insurance company executive was constructively dismissed after the employer downgraded his ranking seven years ago. 

 

A breach of employment contract

Judge Lee Heng Cheong stated that the bench believes that the employer's decision to "regrade" the employee, Ng Teck Fay, from his position as an assistant general manager (Grade 3) to a senior manager (Grade 4) in a restructuring exercise resulted in a breach of his employment contract.

The judge said this entitled the employee to deem himself constructively dismissed even though he accepted the company's decision. The judge added that as the assistant general manager, Ng also headed the Business Unit, Family, Group, and Medical Claims. 

When Ng was demoted and regraded, Judge Lee said that the employer took away the medical claims administration from his original scope of responsibilities and transferred the duty to a new employee. 

According to him, this action resulted in Ng having lesser responsibilities. Additionally, when he was demoted to senior manager, the employer also took away one assistant manager and one deputy manager from reporting to him. 

The other two judges who heard the appeal were Judges Mohd Sofian Abdul Razak and Lau Bee Lan. Lee said that the employer also reduced the benefits enjoyed by Ng because of his demotion. 

Constructive dismissal happens when an employee was forced to resign due to the employer's action on the employee, resulting in a fundamental breach of contract by the employer.

An employee cannot be demoted to a post they never held

The judge said the Industrial Court and the High Court had failed to acknowledge that an employee cannot be demoted, regraded, or downgraded to a post that they never held before. 

According to Lee, the court found that the appellant has managed to prove that his demotion and regrading was a breach of his employment contract and that he had correctly treated such dismissal as constructive dismissal. 

The judge said the bench found merits in the appeal, which justifies appellate intervention. The bench allowed the appeal with costs of RM15,000. 

The bench also allowed the appeal for judicial review against the High Court's decision and directed the Industrial Court award to be repealed. 

Further, the bench ordered the Industrial Court to hear the case and award the proper remedies sought by the appellant.

Ng began his employment on April 11, 2008, as an assistant general manager. His last-drawn monthly salary was RM17,150.

Source: Free Malaysia Today