Judgment

Siti Norma Yaakob JCA

(delivering the judgment of the court)

1. In this wrongful dismissal suit the facts surrounding the Appellant’s employment with the Respondent are not disputed and these are sufficiently set out in the judgment of the High Court. What is disputed is his claim that he had been constructively dismissed without just cause or excuse.

2. The Industrial Court agreed with him and in its Award No. 512 of 1994, dated 17th November, 1994 ordered that the Respondent pay the Appellant compensation and back wages in lieu of reinstatement. The Industrial Court also made a subsequent Rectification Award dated 12th December, 1994 stipulating the period when payment of the compensation and back wages was to be made.

3. The Respondent sought to quash both Awards by way of an order for certiorari and they succeeded in the High Court and also obtained an order of costs against the Appellant. Hence the present proceedings by the Appellant to set aside the High Court orders and to restore the Awards of the Industrial Court.

4. Before us only one issue was taken namely the test that should be applied when a workman is dismissed without just cause or excuse under section 20(1) of the Industrial Relations Act, 1967. In the Industrial Court, the Appellant had claimed that as a result of a re-organization exercise undertaken by the Respondent, he was demoted in rank

   1. as the post of Chief Accountant which he headed in the Accounts Division previously was re-designated as Accountant (Corporate);

   2. as he had to report to the Senior Manager, Finance and Administration, a post filled by a newly recruited officer who was placed in the same salary grade as him;

   3. as he was asked to move into a smaller room;

   4. as his former subordinates were no longer reporting to him;

   5. as he had to perform duties previously assigned to his subordinates; and

   6. as he was not informed of the re-designation and change of work.

5. Based on the six complaints the Industrial Court held that the re-organization of the Respondent was made mala fide and that the Respondent’s cumulative conduct is unfair and unreasonable and amounted to there being a unilateral variation of the contract of employment entitling the Appellant to treat himself as being constructively dismissed by the Respondent.

6. The High Court disagreed with the Industrial Court as the latter asked the wrong question as the real issue is whether there has been a change in the terms and conditions of the Appellant’s employment which worked to his disadvantage as a result of the re-organization.

7. We confirm this to be the true test as the employer’s conduct in reorganizing the business must be such as to amount to there being a breach of some term in the Appellant’s contract of employment and must be so fundamental as to evince an intention not to be bound by the contract of employment. Expressed in another way has there been a unilateral repudiation of the contract of employment by the Respondent as to entitle the Appellant to claim that he has been constructively dismissed? The test is definitely the contract test and the law on this is well settled. See the case of Wong Chee Hong v Cathay Organisation (M) Sdn Bhd [1988]1 MLJ 22 which was followed in Holiday Inn, Kuching v Lee Chai Siok Elizabeth [1992] 1 MLJ 230.

8. To come back to this appeal it is necessary to look at the reason for the re-organization. Was it done mala fide as found by the Industrial Court or for a legitimate purpose as found by the High Court?

9. There is evidence to show that the re-organization was necessary as the Respondent was running into debts and was faced with the prospect of winding its business and retrenching its employees. To avoid taking that drastic action the Respondent decided to reorganize itself and make itself more viable and profitable. That was the only practical solution that the Respondent could take and in this way it was possible to retain the employees and as such the Appellant had no cause to complain as he was still gainfully employed and there was no change in his duties following the re-organization. Likewise he was paid the same salary and perks previously enjoyed by him.

10. The only change perhaps was in the re-designation of his post as he was no longer known as the Chief Accountant but as Accountant (Corporate). He also had to report to a new Head his immediate superior in the newly organized department, and someone who was newly recruited. He also resented the fact that he was put in a smaller room and accumulatively he maintained that these factors amounted to a demotion. The High Court disagreed and we support that finding as these changes were administrative changes following the re-organization and do not have the effect of breaching any term of the Appellant’s contract of employment – at least there was no evidence pointing to such a conclusion. His other complaints are too trivial to amount to there being any breach of any term of his contract of employment.

11. We do not see any merits in this appeal and it is accordingly dismissed with costs and the deposit is to be paid out to the Respondent to account of its taxed costs.

Cases

Wong Chee Hong v Cathay Organisation (M) Sdn Bhd [1988]1 MLJ 22

Holiday Inn, Kuching v Lee Chai Siok Elizabeth [1992] 1 MLJ 230

Legislations

Industrial Relations Act, 1967: s.20(1)

Representations

P.Kuppusamy (K.C. Wong with him) for the Appellant

V.K. Lingam (R. Thayalan with him) for the Respondent.